Qualitas Controladra Sab

Good morning and welcome to Qualitas' third quarter 2022 earnings results webcast. The conference will begin now. It is my pleasure to turn the call over to Mr. Santiago Monroy, Qualitas IRO.

Thank you. Good morning and thank you for joining Qualitas' third quarter and nine months of the year earnings call. I'm Santiago Monroy, Qualitas IRO. Joining us today our CEO, José Antonio Correa, and our CFO and international CEO, Bernardo Rizul, to walk you through our quarter and year-to-date results and performance. As a reminder, information discussed on 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 cautions you not to place undue reliance on these forward-looking statements. Qualicast 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 José Antonio, our CEO, for his remarks. Thank you, Santiago. Good morning, everyone. Great to be with you all. Volatility and uncertainty have been part of 2022 daily context, and third quarter has been no exception. Nevertheless, Qualitas has shown its ability to keep on growing in terms of written premiums and insured units while being profitable. We are pleased with the top-line performance of our business, but recognize profitability is not where we want it to be. To better understand these third-quarter results, we should break them into three main buckets. Mexico, auto underwriting, international subsidiaries, and financial income. where we have an important one-time impact. By going into each one of them, you will have more clarity on where we are, and most importantly, what we are doing to ensure all of them are headed to the profitable growth path. I will expand on the first one, our core, Mexico's insurance business, which makes up for 90% of our premiums while letting Bernardo walk you through the other two. In Mexico, premiums are up 15 percent, having 230,000 new vehicles quartered over quarter, and reaching a new watermark of 4.6 million Mexican insured units. This is the largest quarterly growth in the past couple of years. Equally important, despite several headwinds, we have posted resilient, underwriting results during these first nine months of the year. As all of you well know, The auto insurance industry has historically followed cyclical trends, and Qualitas has navigated the cycle during 28 years of history. This time, there are some particularities to consider. First, I would like to talk about the high inflation environment not seen in Mexico in the past two decades. It has reached 8.7%, while inflation for new cars is up 14.6%, which heavily impacted our costs. Second, supply chain constraints and shortages caused by the pandemic, and now the geopolitical conflict. Despite early signs of recovery, with year-to-date new cash sales posting a 3% growth, they are still 19% versus pre-pandemic levels, and certainly below demand needs. The signs of a future recovery are in the map, but not until mid-2023. While it is impossible to be certain, as it will also depend on the evolution of the macroeconomic variables and competition behavior, I expect that we will pick the cycle in the next three to six months with sequential recovery as we continue to adjust studies during 2023. As talked before, We have been disciplined on pricing, seeking balance between recovering inflation while staying competitive. We are also relying on our scale and innovation to mitigate some costs and relying on our endless journey for excellence in service to ensure our value propositions remain unmatched. These actions have allowed us to maintain a profitable underwriting performance. According to the latest industry figures in current environment, Qualitas Mexico had a better combined ratio than the top five companies and the industry overall, proving the health of our Mexican subsidiary and our strong fundamentals. I would also like to share that in September, we celebrated an important milestone for Qualitas Controladora's future. After several years of working on it, Our quality of health subsidiary is now a reality and has issued its first premium. With a talented team, a differentiated product, and a unique quality of DNA, I am confident this will become an important pillar in the next years, creating value and becoming an engine of growth for the long term and the sustainability of our results. We will be providing updates on the evolution of this business regularly But let me remind you that our entry into the market is gradual. This is not expected to be meaningful to the holding company performance in the short term. We are following the launch. We're going to learn. We're going to adjust and then expand the strategy, ensuring we can create value to all stakeholders. Overall, despite short-term challenges, our company is stronger than ever. The consistency of our results and the solidness of all subsidiaries that are part of the holding company was recognized by Standard & Poor's, which maintain our double B-plus rating and stable outlook. Finally, quality and sustainability commitment was reinforced by finding the SBTI initiative science-based target to establish goals and targets to reduce our greenhouse emissions looking for net zero emission schemes towards 2050. Qualitas will continue to implement measures and processes that also make sense for the business, of course, to mitigate emissions and keep with a never-ending journey towards sustainability. And before I hand it over to Bernardo, let me reiterate that our mission remains to create long-term value for all the stakeholders. Our strong balance sheet supports our leadership position and the commitment of our experienced management team lead us to navigate through this challenging environment, which is reflected in the execution of our strategy. We understand low ends of the cycle are never fun, but they bring along an opportunity for reinvention and to further stand out. I am certain of our ability to overcome the challenging environment and I'm very optimistic about the future for Qualitas AHEAD. Let's move now to review the financial details in a deeper dive on the quarterly results, and I'll ask Bernardo to please go ahead. Bernardo.