Qualitas Controladra Sab

Thank you for standing by. This is the conference operator. Good morning and welcome to Qualitas' third 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' third quarter and nine-month 2026 earnings call. I'm Jorge Perez Rivero, Qualitas IRO. Joining me today are Bernardo Risoul, 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 we are very pleased with our third quarter performance. As we approach the final stretch of the year, these results reinforce our confidence in the strategy we have been executing throughout 2026, demonstrating the resilience of our business model and our ability to deliver profitable growth even in a challenging environment. More importantly, they keep us firmly on track to achieve our full year objectives. Turning to our performance, written premiums grew 7.7% for the first nine months of the year, in line with our expectations and ahead of the market. More importantly, this growth came with healthy underwriting profitability and a well-controlled loss ratio, reflecting the continued benefits of the initiatives we have been implementing throughout the year. Equally encouraging, we reached a new all-time high in insured units, surpassing 6.2 million vehicles during the quarter. This milestone is particularly meaningful given the persistently aggressive pricing environment, market volatility, and subdued economic growth in Mexico. It demonstrates our ability to continue expanding our insured vehicle base while remaining committed to disciplined underwriting and sustainable profitability. In terms of market environment, several competitors continue to prioritize volume gains through price, even as the industry faces higher claims costs. So far, we have seen no meaningful signs of a shift in these competitive dynamics and we expect them to remain for the balance of the year. Taking the right decisions for the long term continues to be our compass. We will continue to focus on overall value proposition and reinforcing the importance of maintaining a disciplined and selective commercial approach. When it comes to pricing our philosophy remains unchanged. We will be aggressive but not irresponsible. It is also important to remember that our industry is cyclical. We have navigated similar competitive environments in the past, and we understand that market dynamics will eventually evolve. While we cannot predict exactly when this will happen, we are taking the necessary steps today to ensure we are well positioned when the cycle turns. This is precisely why, despite the current pressures, we have remained fully committed to investing in the capabilities that differentiate Cuaditas. We continue investing in technology, talent development, training, and operational improvements to further strengthen our value proposition and customer experience. Our operational initiatives are also delivering tangible results. Despite the additional claims costs associated with the VAT regulatory change, we have maintained a well-controlled loss ratio, supported by favorable trends in claims frequency, vehicle theft, recovery rates, and our continued efforts to contain average claims costs. To recognize as well that in this third quarter, which historically sees the highest rainfall, we saw a milder one, an effect that, while we do not control, we certainly welcome. The sum of all efforts resulted in a healthy underwriting profitability, with a combined ratio of 92.7% for the first nine months of the year, improving our cumulative performance compared to the first half and reinforcing our confidence in achieving our full-year profitability objectives. On the financial side, our investment portfolio continues to make a strong contribution to earnings. The decisions taken over the past several quarters to selectively extend duration and lock in attractive yields continue to support our financial performance, while our predominantly fixed income allocation provides stability in a volatile market environment. Together with our solid underwriting performance, this translated into an attractive return on equity of 27.5% for the period, reinforcing the strength of our business model and the consistency of our long-term investment strategy. Beyond our financial performance, our competitive position remains strong. According to the latest available AMIS figures, Qualitas continues to lead the Mexican auto insurance market with a market share of 33.3% in written premiums, 36.1% in earned premiums, and 43.8% in the heavy equipment segment. Furthermore, we accounted for 59.1% of the underwriting results generated by the total auto insurance market. These figures are particularly meaningful in the current environment, demonstrating that our leadership is supported not only by scale, but also by strong technical profitability. Another important recognition of our commitment to service excellence came during the quarter, as Qualitas Mexico was once again recognized as La Aseguradora Ideal by insurance agents in Mexico, marking our seventh consecutive year receiving this distinction. Being recognized among the 100 insurance companies that operate in Mexico is extremely meaningful to us, as it comes directly from the agents who interact with our organization and serve our policyholders every day. Turning to our strategic priorities, winning in Mexico remains our foremost objective. As the foundation of our business, we continue focusing on strengthening our competitive advantages through service excellence, operational efficiency, and disciplined execution. Along the year, we have reinforced our service monitoring capabilities, closely tracking customer satisfaction and key operational indicators Thank you very much. Our weakest link in the past years, affected as well by the spare part inventory shortage, during Q3 we reached a 90% PS, an improvement of over 20 percentage points versus two years ago, led by a quicker valuation process, a closer relationship with shops, and better communication with the insurer. Furthermore, technology and artificial intelligence are becoming increasingly important components of this strategy. By combining more than 32 years of specialized data and operating experience with AI-driven tools, we are improving decision making across underwriting, claims valuation, risk prevention, and fraud detection. Moving to our second pillar, our international operations continue to make encouraging progress, particularly across Latin America, where written premiums grew 45.1% in US dollar terms during the quarter. Beyond growth, our priority remains to strengthen local capabilities and build sustainable, profitable operations. In Colombia, we now have 21 offices, and by the end of September, the operation continues to deliver over planned performance. These milestones reflect the progress we are making in expanding our presence, strengthening our agent network, and building a solid foundation for long-term growth. In the U.S., our strategic repositioning continues as planned. We remain focused on managing the runoff of the domestic and cross-border commercial business while strengthening our binational personal auto proposition, prioritizing a healthier long-term risk and profitability profile. Our third strategic pillar, focused on new businesses and vertical integration, continues to strengthen our operating capabilities and support greater efficiency across the claims value chain. Within this third pillar of diversification and long-term growth, I want to highlight Qualita Salud, a business that is completing its third year and where we continue to learn and adjust our model towards one that can create value to that 90% of the Mexican population that doesn't have a private medical coverage. In this fourth quarter, we will complement our portfolio by launching Mas Salud, an important milestone by which we will enter the group health insurance arena. The product is designed for small and medium-sized businesses. Combining preventive healthcare and major medical expense coverage through a closed network of hospitals with a differentiated and competitive premium offering. It will start in Mexico City with plans to expand nationwide by 2028. This launch represents an important step in the development of Qualitas Salud and reflects our commitment to creating innovative products that strengthen our value proposition and support Qualitas' long-term growth opportunities. As we approach the final quarter of the year, we are encouraged by our performance and remain confident in achieving our full-year objectives. One important thing to consider is that we anticipate a slower pace of written premium growth in the fourth quarter, reflecting the higher comparison base created by several large multi-annual policies issued in the fourth quarter of 2025, which, on its own, represented approximately five percentage points of growth. Since we will continue to earn those premiums, we expect earned premiums to grow several points ahead of written premiums this next quarter. These dynamics are well understood and already incorporated into our expectations of full-year written premium growth in the mid to high single digit, with combined ratio within our 92% to 94% long-term target and ROE above 20%. All this while continue to invest in the projects that continue to seed long-term sustainability. Before closing, I would like to thank our employees, agents, service offices, and business partners for their continued commitment and dedication. Their contribution is essential to our performance and to the trust our policyholders place in Cualitas every day. With that, I will now turn the call over to Roberto for a deeper dive into our third quarter and nine-month financial results. Roberto, please.