Qualitas Controladra Sab

Thank you for standing by. This is the conference operator. Good morning, and welcome to Qualitas' first quarter 2023 earnings results webcast.

Good morning, and thank you for joining Qualitas' first quarter 2023 earnings call. I'm Santiago Monroy, Qualitas IRO. Joining us today are Jose Antonio Correa and Bernardo Rizul. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's call. Let's turn it over to José Antonio, our CEO, for his remarks.

Thank you very much, Santiago, and good morning, everyone, and thank you all for joining us today. During March, we celebrated Qualitas' 29th anniversary. Throughout these years, we have had one goal in mind, to become the best auto insurance company by providing a service that exceeds expectations, while creating value to all our stakeholders. By delivering on that promise, we have reached market leadership in Mexico 16 years ago, and we have maintained that position thanks to the trust of agents and policyholders. Industry figures for 2022 continue to reflect discipline and passion of quality as people and the relevance of the DNA focus on service and control. We close 2022 with a strong momentum with a 32% market share and most importantly, profitability well above industry average. As part of this year kickoff, I have traveled around Mexico visiting around 10 states to meet and talk with our office directors, and over 1,500 agents. I participated in our claims officers training workshops, as well as in our annual ODQs forum. Conversations face-to-face with all of them provide the direct and unbiased sensibility of the market and actionable feedback of the things that are going well and those that we can do better, and also help us identify unmet needs of the market that evolves continuously. Those ideas will continue to set our path and confirm that agents and policyholders will keep seeking best-in-class customer experience and personalized service, where technology complements but never substitutes the possibility to talk to someone who is capable, willing, and empowered to understand and provide solutions. Doing so has always paid off, and what better proof of that than these quarter results where our top line came in ahead of our expectations growing 25% and a bottom line that is within outline range. Managing costs in this high inflation environment continues to be work in progress, but we have and will keep on taking the right actions, expecting to see an inflection point in the underwriting part of the business by the second part of the year. Net Ingo has been supported by the financial side, but there is no luck, obviously, but the result of the actions taken to set our portfolio in a way that will capitalize the benefit from the current high interest rates environment. One thing that I am pleased to see and certainly have a strong top line is new car sales performance, making sequential progress towards getting to that point in which supply meets demand and is up 24% in the quarter and just shy of 2019 volumes. There are interesting shifts in brands and car types, We are taking proactive action to set qualitas as the insurance of choice for all brands, including hybrid and electric vehicles. While we are encouraged with the recovery we have seen, we're still cautious on stating this as a step in permanent comeback, given the high interest rates that will eventually impact consumption. This quarter, insurance industry inflation stood at 12%, which has a direct correlation with our total lost costs. mainly through our material damage expenses and labor costs, which account for more than 50% of our costs. And while we cannot fully absorb these increases and pricing is required, we are seeking efficiencies to mitigate the heat, such as technology developments and vertical integration maximization. And certainly in pricing, we have increased them 5.2% when compared to October last year, while additional increases have also taken place during April. Net income posted a 22% growth versus a year ago, and 12% more ROEs to that 11.5%. Certainly, we will continue fostering actions to recover our sustainable ranges and increase our underwriting profitability. On this matter, we remain focused on executing on our strategy, and as you know, last week we successfully concluded a major share acquisition of a technology company related to telematics, business intelligence, and IoT. This will reinforce our commitment to further expand our competitive advantages, specifically targeting a successful and unparalleled risk prevention and data analysis focus. Before we share the financial specifics, let me remind everyone that later this week, we will be holding our general share focus meeting, where we are proposing a five-person per share dividend payment in the high-end range of our policies. This will be the eighth consecutive year that has paid cash dividends, that Polycast has paid cash dividends. In addition, as part of our efforts to strengthen our corporate governance upon approval, David Coppel will become an independent member of our board and investment committee. David is currently commercial director and member of the board in Grupo Coppel, and I'm sure that this, with his broad experience in financial markets, retail, and investments, will contribute towards the sustainability of our results. Furthermore, I am glad to report that yesterday we also communicated that Bernardo Rizult has been appointed by our board as the Deputy CEO of Qualitas Controladora, as a recognition of his track record and potential. His appointment will be key to strengthen our leadership position in Mexico, as well as to support and consolidate our international auto insurance operations in the beginning of the accident insurance segment and strengthening our vertical integration. I am pleased to have Bernardo in this new role and confident on his impact to further accelerate business developing and enhancing our organization. As we continue to navigate through the industry cycle and challenges remain, all Qualitas leadership team is focused on strengthening our unique DNA while taking advantage of those challenges. And now I will pass it to Bernardo for a deep dive in the first quarter performance. Bernardo, please go ahead.