Qualitas Controladra Sab

Thank you for standing by. This is the conference operator. Good morning and welcome to Qualitas' second quarter 2026 earnings results webcast. The conference will begin now. It is my pleasure to turn the call over to Jorge Perez, Qualitas' IRO.

Good morning and thank you for joining Qualitas' second quarter 2026 earnings goal. I'm Jorge Perez-Rivero, Qualitas IRO. Joining me today are Bernardo Rizul, our CEO, as well as our CFO, Roberto Araujo. As a reminder, please note that information discussed on today's call 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. Qualitas undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. With that, I will now turn the call over to Bernardo, our CEO, for his remarks.

Thank you, Jorge, and good morning, everyone. It is great to be with you all again. Let me start by saying that while the second quarter confirmed that 2026 continues to be a transition year for Qualitas, we are encouraged by the way the company is navigating the demanding environment. The quarter reflects the complexity of the market, the resilience of our business model, as well as the early and ongoing benefits of the actions we began implementing at the end of last year. As we have been communicating, 2026 poised itself to be quite unique as we would have to cope not only with the implications of global turmoil and a Mexico's stagnant GDP growth, but also with the effects associated with the VAT regulatory change in which the self-tax-paying claims is no longer credited. On top of that, competition has intensified and supplier costs continue to rise due to minimum wage adjustments. In the case of Mexico, for example, GDP is expected to grow by roughly approximately 1%, tightening disposable income across both companies and individuals. In that context, we continue to move forward with initiatives focused on operating efficiencies, cost control, pricing discipline, and further leveraging the advantages that come from our leadership position, scale, and vertical integration capabilities. These efforts are helping us partially offset the new cost dynamics despite the mentioned challenging market conditions. From a quarterly performance standpoint, written premiums were basically flat while presenting a 7.7% growth on a year-to-date basis. To better understand these results, it is important to look at the market dynamics as we are at the stage of the underwriting cycle where several competitors are increasingly relying on price cuts to seek volume growth. This is not new, we have seen it before and even anticipated. but what has been a bit unexpected is the depth and aggressiveness, especially in a year where the whole industry is digesting the mentioned effects of EAT changes. In several cases, both fleets and individuals, premiums are below a year ago despite the explained inflationary headwinds. On this front, our compass for all decisions is doing what is best for Qualitas in the long term. We have never managed the company to deliver a quarter, but rather sustainable value creation. Easier said than done, but it basically resumes to defend all accounts where it makes sense to do so, but also wise when deciding to let some of those go, especially if there is certainty that those accounts will come at a loss. When it comes to pricing, we will be aggressive, but not irresponsible. In parallel, we will continue to strengthen our service, which, by the way, continues to improve, being at a high satisfaction survey in the past five years, and by doing so, seek to recover those customers that leave because of a lower price once the cycle normalizes. We have determined that while seeking efficiencies and productivity, we will not jeopardize services in any way, but rather double down on it as a long-term competitive advantage. The environment is pushing us to go beyond uncaused control, and we are relentlessly doing so. For instance, our loss ratio remains within our technical target range, despite not only the mentioned VAT impact, but the fact that this year's rainy season appears to be starting earlier than usual, with heavy rains already observed throughout the second quarter. Keeping loss ratio in control led to a cumulative combined ratio of 92.8%, in line with our full-year objective. Our investment portfolio continues to be a solid contribution to results, benefiting from the timely extension of durations. allowing us to continue generating financial income above reference rates despite the downward trend in interest rates. Overall, this translated into a ROE for the period of 21.4%. According to the latest admin figures, as of Q1 2026, Qualitas remains the undisputable leader in the Mexican auto insurance industry, with a market share of 34.2% in written premiums, 37.4% in earned premiums and 45.4% in the heavy equipment segment. In underwriting results, Qualitas accounted for 83% among the top five auto insurers in the sector. More importantly, our leadership continues to be reflected not only in scale, but also in profitability and operating performance, reinforcing the strength of our business model even during periods of elevated market pressure. Looking ahead, we remain cautiously optimistic for the rest of 2026. As we enter the second half, a period typically characterized by higher claims volumes and the impact of underwriting at lower premiums, we are committed to executing our defined strategic priorities, continuing to invest in key areas, and proactively adjusting our operations to remain agile and ready to respond. Regarding our three-pillar strategy, winning in Mexico remains our foremost priority. Our insurance business in Mexico continues to be the main driver of the group and the foundation of our long-term value creation. From a new vehicle sales standpoint, according to AMDA, the quarter continues to show a positive trend, both in light and heavy units, with growth of 7.1% in light vehicles and 8.2% in heavy units. These figures were a pleasant surprise and an outlier relative to some other sectors in Mexico. We do expect a slowdown in personal auto, while commercial vehicles, including trucks and buses, are expecting to recover from a year-to-date decline of 11.5%. New vehicle sales remain an important industry metric, even if the competitive landscape and the broader macroeconomic context continue to remain fluent. At the same time, Our priority remains on serving and retaining our existing customer base. Regarding our second pillar, we continue to see encouraging progress in our international subsidiaries. I would like to emphasize the traction and positive momentum we are experiencing with strong performance across all priority markets. Our LATAM subsidiaries grew 39% this quarter in U.S. dollars, consolidating as a strong option through our proposal that relies on excellence in service, We remain committed to investing in these operations and building their capabilities with a long-term perspective. We are making good progress towards them becoming an engine of profitable growth. As for our U.S. subsidiary, we continue to reshape the portfolio toward profitability. We are focused on properly managing the runoff of the businesses we have decided to exit while continuing to build a stronger and more competitive binational PPA proposition. This approach has reduced the risk associated with the commercial segment and reflects our disciplined focus on those businesses where we believe we have a clear right to win. Overall, in this important pillar, our strategy remains focused on disciplined growth, strengthening local capabilities, and continuing to replicate Qualitas operating DNA in those markets where we see attractive long-term potential. In parallel, we continue to move forward on our third pillar through our new businesses and vertical integration strategy. These businesses continue to strengthen our operating model by generating efficiencies, improving coordination across the value chain, and supporting better claims management and cost control. As in prior quarters, we see these benefits materializing gradually, but they are increasingly becoming an important component of our long-term competitiveness. We will continue to assess avenues of growth in new segments or markets as long as they fit with Qualitas DNA and can be accretive to our operation. Before closing, I would like to recognize our team. Their commitment, discipline, and execution continue to be the foundation of our results and the reason why we remain confident in the future of Qualitas. And with that, let's move on to the financial details and take a deeper dive into the quarter results. Roberto, please.