Qualitas Controladra Sab

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.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To redraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from George Henderson with Santander. Please go ahead.

All right, thank you very much. for the opportunity and thank you for the presentation. And I have two questions. My first is in terms of top line. I wanted to ask you about the growth of the premium segment in cars against trucks and also about your expectations on new car sales in Mexico. Also, I wanted to know if you have some color on the industry pricing. Thanks. Thank you, Jorge, for joining us today. Let me tell you that we continue to see, particularly in the fleet segment, a lot of competition. We know that many of our competitors are really pushing, and sometimes they are going below to be reasonable. meaning that they are even quoting for these businesses below the loss ratio, which is obviously not going to be something that we want to do. During the first quarter, we have quite increased that versus the past quarter in 2021, where close to 10%. I want to say that we have done that. As a leader of the industry and as a responsible from a profit standpoint, we have to do that. We are always assessing this very, very carefully. But we know that considering the growth that has had the loss ratio in the last probably, I would say, eight quarters or so, we know that that is also the inflation. we need to recognize that there has been a lot of inflation on this one, and this should help. So to answer specifically your questions, I think that it's going to be in the middle of the GIFs in general, but that's probably going to be growing more in the individual part of our business, not in the financial institutions. That will continue to go below last year, and that's because of the sales of cars. As I have been talking to some of the key manufacturers, car manufacturers in Mexico, I can tell you that all of them, and most of them, are expecting that the first semester is soft and will continue to be soft because of the logistics and the thing that we all know in terms of what is going on worldwide. But all of them somehow expect that the second semester is going to be better. And I would like just to say that we are seeing, there's some inflation in car prices. We know that, interestingly enough, It's around 9%, slightly below 9%, according to the INEGI, but has been the inflation of new cars, even though they are not necessarily available. But interestingly enough, there is also increases in the used car segment, and that is somewhat surprising, and it is the first for many, many years in Mexico. So all in all, we expect to be growing with the mid-single digits, which is what we expect for the year. But let me ask two questions. relevant things on the top line. First, on new car sales and the financial institution segment, we need to dimensionalize the size of the impact given the slowdown on the car industry. And to do so, we are now comparing, just as a reference, what would have been the increase on our top line if we had seen new car sales at the 2019 level. And it is a $300 million in premium. That is just the first year. So in other words, there's three percentile points on recent premium since that had we seen the 2019 new car sales amount. And the second, as Antonio already alluded to the benefits and the good performance of the individual sector. But I don't want to be shy about the relevancy. The individual sector segment is top 10%. But it's not only 10% disk water. It's up 30% or more or close to a billion dollars in premium relative to 2019. That means that in a contracting market where new car sales have not increased, Qualitas continues to be able to capture new cars either because they do not have an insurance or else we're bringing them from competition. And that is due by playing towards strength. The fact that we just open up new offices in the first quarter, seven of them. The fact that we've increased up to 19,000 of agents in our network speaks to our ability to be able to reach and capture those individual customers, which actually have a higher loyalty and they also have better profitability. And those two items, I think, are relevant to consider when seeing a top line that just like a number may seem that is shy at a one percent but that is foundational very strong when you look at those predictions thank you thanks a lot for another one for Antonio it was very useful I know we have a follow-up question it's on your guidance I don't know if you have the same guidance that you gave the last call that it was and the loss ratio between 63 and 65 percent, the combined ratio between 90 and 94 percent, ROI between 100 and 150 basis points over the reference rate, and another really low end of 25 percent. Is that still the case or changing some of the expectations? Sure, Jorge. Let's start with the indexes. Yeah, we are slightly ahead of our target in terms of 65.7%, but it is important to note that, you know, the fact is that probably as we stated in the earlier remarks is that, you know, the mobility and the dose ratio increase a little bit faster than we had anticipated, and that's why we are taking the right actions regarding our pricing on that one. But it continues to be within the top side of our range. And for the combined index, it continues to be within our long-term target, obviously. we have had a very good result back in 2020 as a result of the pandemic. But considering where we are now, we believe that we will be within those levels. Now, do you want to take this? Let me expand a little bit on the financial income because this was something that, well, I alluded to in my initial remarks, but that is important to consider. Our financial income for the quarter has to, one on the equity position, as I mentioned, and the other one on how we're tying our portfolio in terms of duration versus the increase on reference rates. We are increasing the reference rate expectations from the previously expected 6% to 6.5%, which, by the way, was a consensus at the beginning of the year, to now an 8.5%. The fact that only a portion of our portfolio, around 60%, captures immediately the benefit on rate increases or decreases means that we will not be able to fully capture that upside in interest rates this or fully this year. And therefore, delivering between 100 to 150 points ahead of reference looks a bit more challenging. That also considers the fact that we are behind the curve on the first quarter results. But we're taking the right actions without jeopardizing or taking unnecessary risk and always in compliance with our investment guidance to maximize the portfolio. looking very challenging to be where we want it to be between 100 to 180 . Okay, that was very clear. I mean, I want to get back to you. So you're still talking about what you mentioned, you're still expecting to post an ROE between 20 and 25% or in the low end of this launch, right? Our long-term commitment remains unchanged between 20% and 25%, but as we overdeliver a few years back, and we have consistently overdelivered in the past four, there might be some We may be falling short in the next quarter. This quarter was at 17%. And this is not only based on business performance and the profitability quarter by quarter, but also recognizing what we have said about our capital and equity base. The denominator is now at a high end. Actually, it's at a new watermark, above 20 billion. And that plays against us when we're looking at ROE. We're taking the right measures, we're increasing dividend payouts and giving back to shareholders, and we're also increasing the projects that will provide the sustainable growth and profitability for the long-term of the business. So next, we should expect the next quarters we may still be down of the 20%, but that doesn't mean we're shifting our long-term commitment of that range. I would add to what Bernardo said, Jorge. that our business and our industry is cyclical to some extent. So we are now in the low end of the cycle that we had like seven or eight years ago. So this is no different than that, but we expect that at some point in time, the market will cover some sense and we go back to that. But as Bernardo indicated, we continue to be with those targets in mind in the medium and long term for sure. Okay, so again, thanks a lot for the call and your time.

The next question comes from Carlos Lejarepa with GBM. Please go ahead.

Hi, thank you. Good morning, and thanks for taking the question. Just in terms of the policy, let's say the prices for the policy, according to INEGI data, those have been increasing by around one point below the CPI overall increase. This is for 2022. Is that something that makes sense to you, given the data that you've seen for you guys in the market? Well, let me tell you, Carlos, and thank you for staying with us today. Let me tell you that the United States is a very general number. I mean, I have ask the technical people here to find what they need to say. And I found that it is very general. And it is important to note that we have very specific in terms of pricing in our different business lines. So it is very difficult to say that that is because they usually, they consider that in terms of new car pricing only. And we take everything. We take fruits. financial institutions, we take individuals, we take everything. Yes, and it is, as I mentioned earlier, the inflation in car prices, in new car prices, was slightly below 9%, but we have seen also that in the used cars, we have been increasing more than that. So we take and we price according to zip code, we price by risk, taking risk, so it is very difficult to compare this to the making. So because what we are trying to do is to write price on the risk to make sure that we have a trustable business that we underwrite, no? Thank you. That's what I had in mind. Just wanted to confirm that. Thank you, Carlos.

The next question comes from Carlos Gomez with HSBC. Please go ahead.

Just a little bit to go back to the growth that you expect for the coming years. As you said, you have high inflation today. How much do you expect your units to grow for the next two or three years? And do you think part of the current inflation, especially in the used cars, might be reversed? How would that affect your business? Thank you. So, well, we're going to have a magic bowl of your blood out. What we would go back to is we want to grow ahead of the industry, and that is an ongoing expectation. We understand that the actions that we are taking that are ahead of the market, and as I mentioned, may have an impact in the short term in the next few quarters. What we have forecasted for the next few current operations ongoing is around mid single digits, so anywhere between four and six percent. It will always be affected by new car sales and how the recovery goes. And on top of that, we expect that the international subsidiaries contribute to around two points of growth, and then the new venues are expected to contribute between one and two points of issue. So we do have a line of sight that as a foreign company, we want to grow between 8% and 10%. But again, that is broken down differently by business units. And for the most relevance of our business, I would say that mixing with digital is what we have in the base model for us. Sorry, that's for the year or for the coming two or three years? That's for the coming two and three years. And I would say that the year expectations fill in the mid-single-digit goal. It's certainly going to be an uphill, not two quarters, but anywhere between low and mid-single-digit would be filled perfectly. And Carlos, one more thing. You also mentioned number of units. I think that's a... That's a tougher one, no, because when I mention growth in terms of premiums, that incorporates some pricing. The number of insured units we've grown over the past five years, our compounded annual growth rate is 4.5%. I think it would be fair to assume. But as I said, the strength of our business is evident when we look at growing 100,000 units in just one quarter or over 350,000 units in a year in a declining and contracting market. And also I think that will continue to be our priority to go out there and capture as many units that do not have an insurance or that may be positive to our business. And I would add, Carlos, I would add that if you look at how is the breakdown by all of our business lines in Mexico and the different countries All of them, and I repeat, all of them are growing in the number of units of insurance. Thank you. And about the price for the cards, in particular the used cards, how is that positive or negative for your business? Actually, there is an increase in used cars. So it's actually what we have been doing is the insured amounts we are increasing. And it is surprising because we started seeing this at the beginning of the year. and in which we are seeing the market value of used cars have increased. So actually, that is increasing the way the total amount insured. And obviously, our premiums reflect those increases for our customers, for sure. And isn't that what we should expect, what is happening in the US, which is the reference market? And my question is more, what happens when the price is reversed. Would that be very negative for you, or that's the normal event flow on your basis? So I think there's two folks. One, in terms of cost of premiums, we follow the dynamics. So when we see those prices going back, we will adjust accordingly. Now, there's a different angle to this that is having a benefit, actually, by having used car sales going up, which is our salvage recovery. As you know, Qualitas, as the market leader, generates around 2,000 total losses per month. And those total losses are sold through an auction, and we recover a good percentage of the cost. Now, that percentage has also been following the trend of used car sales. We're now recovering close to 50% of the value that we pay to those, and that converts around the 30 to 35% historic percentage of recovery. And therefore, when you look at clean cost, all of that is helping mitigate the clean cost average increase. And it's all part of the equation and we consider it as such. When we see that turning point, which we know will happen eventually, We will also see that percentage of recovery going back down. And therefore, we'll have to see and adjust to other items. But also the claims will go down. So that's not going to be an issue. Thank you very much.

Once again, if you have any questions, please press stars and 1.

I think we'll now go with the green ones. So we'll start with Javier Lozúa from Musa Gestión. Good afternoon. In addition to the 10% price increase implemented in first quarter 2022, what level of price increase should we expect in the following quarters? Thank you. Well, let me thank Javier and let me tell you that Really, the 10% increase is considering versus last year that we have been done since the second half of 2021. Now, we have implemented, again, we implement this by our The breakdown of the type of equipment that we have is quite substantial, so we analyzed that very carefully in order to take the price increase. Now, to answer your question, you know, very simple, is that the second quarter, we should be taking around 5% in terms of price increases. That actually we are in... in the implementation phase as we speak. So that should help us. And the key here is to be able to make sure that we stay within our targets in terms of loss ratio as we have anticipated. So that would be the short answer. Mr. Ricker, we have gone through the whole technical assessment of pricing every four months. And therefore, in the next four months or sooner if needed, we will look again at the trends and the prices and the cost increases and adjust as needed. And the competition, because we cannot, you know, we need to make sure that at some point in time, as you know, and as it is public information, some of our top competitors are with a combined ratio in excess of 100%. Hopefully, they will have some incentives to increase prices, and it will depend also on that price. We will now go with Carlos Botelo from Linear. To what extent do you expect ROE levels to recover to historic levels above the 20% range? What would drive the recovery? Carlos, I think the recovery will be led by two folks. One is the business. We want to continue delivering strong underwriting results and strong financial results. We acknowledge that this quarter we fell short on financials. But moving forward, we should expect that part of the recovery is by regaining the strong top and bottom line in the in the operation speed and a strong financial income in $90,000. The second piece on the ROE recovery would be just to reduce our capital to sustainable levels. And that is going to do, that is going to happen by the actions that I mentioned, both maintaining our dividend policy and consistency as we have done so in the past, income bias in the revised dividend policy that was issued last year, And second, by making sure we put that business to work. I love that, put money into new venues that probably not in the immediate or short term, but in the mean long term, can be attributed to that 20 to 25 percent. That is one of the things that we're highly considering when we're assessing new potential avenues. If we were not to come up with any of them, then the money belongs to shareholders, and we would give them support, at least in the right time. We will now go with the question. Hello, good morning. Can you comment on the strong performance from international operations? Where do you see sustainable premium growth? Certainly, certainly. All right, thank you. We're very encouraged with the international... performance. They're growing broadly in terms of insured units. We're gaining new agents on a monthly basis. We're opening new offices following the Mexico successful model. Over the past months, we've opened up in Peru, for example, a second office in Lima, a new office in Arequipa, a new office in Cuba, and there's line of sight for two more cities to be opened in the next month. So I think We've taken some time. The international expansion is quite unusable, but we're putting our foot on the gas pedal and we're pushing further because I believe we now have what is a model that is relevant for the local market. in which agents are seeing Qualitas the company they can trust, and we're creating value for all stakeholders. It is important to note that different businesses are in different levels of maturity. For example, in Costa Rica, this first quarter, we crossed the milestone of 10 million premiums in weekend premiums and a 13% market share. Both of them record numbers. In Salvador, up to a nice recovery. And Peru, as I mentioned last year, is looking very strong, and we believe that we have what it takes to continue that 20% growth momentum. Now, just to wrap it up, in the U.S., we know there's a huge potential out there. The U.S. just crossed last year the 100 million premium milestone. But that can be a business of $200 to $300 or up to $400 million in premiums. What we need to pay is we need to acknowledge that it requires a lot of capital. It needs a different model there in the U.S. And also we want to balance top line and bottom line momentum because profitability is a different story as well in the U.S. considering long litigation periods. cost and timing, especially in the Texas state. Thank you. Thank you. We'll go with now another question from Carlos. What is the potential for increased penetration of insurance coverage in Mexico, and what is the current level of noncompliance with mandatory coverage, and is there any impetus to improve compliance? That's a good question, Carlos, and thank you for your question. The potential is very substantial. Having said that, it's not going to happen anytime soon. And the reason being, more than anything, we are around 31% in terms of penetration of car insurance in Mexico. But let me tell you that as long as the economy is soft, and it continues to be soft after the pandemic, we need to remind everyone that in 2022, we have not yet recovered the economy, the Mexican economy, to the levels prior to the pandemic. And that's important because in order to improve penetration, it is important that the economy behaves in a healthy way, something that is not happening. Now, having said that, I'm considering the other part of your compliance with the mandatory insurance. With the mandatory insurance, That's something we are working with the industry to make sure that there is a big chance of that. But let me tell you that the mandatory insurance, in the case of Qualitas, is not moving the needle. I mean, we would like that to be better. Certainly, we will continue working through the industry. But really, it is very, very, very low the impact in Mexico. And, you know, we are the leading sector. a company, an insurance company in Mexico. It is amazing that there's such a low level of insurance being a mandatory insurance. I think we do not have any other questions. So if there's no other phone ones, then I think we can call it off.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.