Grupo Catalana Occidente, S.A. (GCO) Earnings Call Transcript & Summary

Good morning. This is Clara Gomez Bermudez. You know me from previous presentation of results, I am the Financial and Risk Management Officer. And here with me in this presentation are Isidro Lapeña, CFO of GCO; and Nawal Rim, Director of Investor Relations, who coordinates this entire presentation and who, as you very well know, will proceed to collecting all of the questions that you post. We will try to answer them, either individually or in an aggregated manner. Before we start, as usual, we would like to thank you for being here with us in this presentation which, as you know, is a remote one and also for your interest, the interest you've always shown on the evolution of our business and the performance of our share. We would like to mention a regulatory issue, which is that the financial information included in this presentation of results is crafted under management information -- using our management information and the IFRS 4. And since it is a quarterly presentation, we will not give information on IFRS 17 and 9 for insurance contracts and financial investments. On this occasion, we should mention it is the first presentation of results that is carried out after INOC S.A., controlling shareholder of the group, announced on March 27 their intention of a voluntary public offer for 100% of the shares of GCO. As you may have seen in the information provided by INOC S.A., it was approved on April 30 by the AGM at INOC S.A. And was also presented on the 28th of April, they presented a formal request for authorization to the CNMV. And starting now with the evolution of the first 3 months of 2025. You can see this on the screen. Our assessment is a very satisfactory one in all regards and in the 3 lines that we are showing to you in each line in growth. Turnover increases by 5%, as you can see on screen, EUR 1.955 billion for a quarter. And we will see this later in more detail, but I think what deserves special attention is the growth of Occident. You also know that the growth is also part of one of the essential guidelines of the strategic cycle of GCO for 2025-2027. And I would like to stress the good performance of the mass lines of business that we will see later in more detail and the good commercial activities. And on the results, more than satisfactory consolidated results with the EUR 194.6 million, so you can see on screen, 9.1% increase versus the previous year with a very good turnover both in Occident and Atradius. You can see increases in the combined ratio in Atradius that normalizes its claims ratio, but has less peak claims at a combined ratio of 75.1%; and at Occident, excellent behavior of nonlife. We will see this in greater detail later, exceeding the impact of inflation that you know accompanied us during 2024 specifically, and a clear improvement in Motor with a very positive trend in 2025. I would like to stress the combined ratio of Occident at the moment, just below 90%, as you can see on the screen. Nothing to stress about permanent resources at market value. There's been a positive trend. We will see this later in this specific slide of permanent resources. And you know that before going deeper into the results of the group, we'd like to give you some context. We want to show 3 blocks: macroeconomic situation, markets and Spanish global insurance. And the step that allows us to give some context, truth is that the quarter started in a very turbulent manner because of the geopolitical situation, the impact of protectionist measures, generally speaking, announced by the President of the United States and the impacts of this in economic activities in the growth by countries and sectors as well as a potential new increase of inflation. We still show you on screen the estimated growth estimated by the IMF in April 2025. You can see this on screen globally 2.8% forecast for 2025, a better performance of Spain than the rest of Eurozone countries. We're also offering information on financial markets. As usual, you know these better than ourselves. But if we start with the evolution of interest rates and as a consequence of the volatility of -- and uncertainty mentioned before, the interest rates at the end of the quarter picked up again, 3.4 the Spanish 10-year bond, an interest rate, which is somewhat higher than what we had experienced at the end of the year. And from the point of view of the insurance business and for us, in particular, the upwards trend of long-term interest rates is positive, amongst other reasons because it allows us to offer our customers more attractive interest rates in savings insurance. And even if it's not shown on this slide, when you see later the financial results, you will see an increase, an increase as compared to the previous year, but with a somewhat lower growth than what we were used to. And this is precisely because of the interest rates applied, the interest rates that we offer our customers in savings products. At the top right, you can see the evolution of financial markets. You know this even better than ourselves. It has been a quarter, as we said before, with volatility and uncertainty. And here, the first half of April is not included, which makes this situation even more severe, better performance of European and Spanish markets. You see here IBEX and a worse behavior of American stocks with a big impact because of the reduction in the values of technological companies. And in the insurance sector, where we have the highest volume, you can see the Spanish insurance sector goes back to the growth path that we didn't see last year. You see this growth of 6.8% total with a good behavior in Life. Last year, it was very much impacted by the behavior of single savings premiums with less issues than in 2023 and an excellent behavior of Non-Life. You can see Motor and Multi-risk to stress the main lines that are very competitive and very mature in the Spanish insurance sector and what to say about the growth of Health with this 12.2% comparatively with us, and we will see later in more detail, the better performance of Occident vis-a-vis Life and Non-life. And in the case of Non-Life, a bit less growth in Motor, we're growing at 8.4% and in Multi-risk, 9.4%, which the CFO, Isidro Lapena will tell us about in more detail a bit later. And now on to our quarter. And as usual, we would like to offer this summarized P&L with income and results. In income, I will not get into too much detail because I already made some comments about this [indiscernible] the comparison with the Spanish insurance sector. But the truth is that the turnover increases by 5% globally. But in terms of insurance volume as well to stress the good behavior of Occident with 7.8%, which compares better than the rest of the Spanish insurance sector. And throughout this presentation, we will see this, but basically a very good performance of Multi-risk and Home and an excellent commercial activity. And I would like to remind you that in Multi-risk, we are also including large industrial risks that always make the comparison a bit worse than if we only consider simple Multi-risk. So a good behavior of recurring premiums with 6.1% that you can see on screen. And as to single life premiums, which increased by 29%. The most important thing here is that single life premiums are not the only thing included here, but also supplementary premiums, which are the ones that additionally to the payment plan or the plan of each insurer in its savings product, they can do additionally, and this is why they are called supplementary. And they are the ones that allow for this growth of almost 29% as compared to last year. So very positive because we consider these are premiums that offer more stability in growth for more value to our customers and more value for the group. In Atradius, and we already said it during last year and at year-end, this is the least attractive aspect of the evolution of the business. It is tough to grow there. You know this because we've mentioned it on previous occasions because of the lower amount of sales of our customers, our policyholders. Despite that, we see a growth of 1.3%, as you can see on screen. Mainly the growth difficulties are in short-term credit insurance, which is our product -- our main product in the Atradius business, which we have partially offset with the accepted reinsurance and with the surety insurance, which is a more long-term form of insurance, and we need to do very cautious underwriting. And despite the fact that growth in Atradius is the most complex aspect for this year, and it could be aggravated by the tariffs and the lower growth in economic activities, we are taking many measures to continue to promote commercial activities at Atradius. And finally, you can see the evolution of the Memora business. This 4.2% compares very positively against the previous year. And later, we will offer you a more level of detail. And at the bottom, you can see results, the main lines of each of our businesses. We've already mentioned this, 9.1% growth with this EUR 194.6 million consolidated results. And this 9%, if we consider it attributable result, EUR 175.4 million, which you know discount our minority shareholders. And for each of the businesses, well, a very positive assessment, the ordinary result of Occident grows this 6.4%, bearing in mind that the EUR 3.5 million that we can see at the bottom of the screen as non-ordinary results are -- they come exclusively from Occident, mainly due to financial investments. If we then consider the total amount of the Occident result, ordinary and non-ordinary, it would amount to a growth of 10%. So very balanced growth in the 3 businesses of Occident, Atradius and Memora. In Occident, we would like to stress the good performance despite the higher weather-related claim ratio that we've had. We've also had some peak events, large industrial risks, as I already mentioned before, and the good performance with evolution, as you will see later in more detail with the CFO, Isidro Lapeña of Motor with a combined ratio of 92.8%. So all in all, and even if you're not seeing it on screen, Non-Life grows by 11.5% with EUR 53 million result. And it is true that the Life business in this past quarter has been more impacted by claims. There have been more claims. And therefore, the ordinary result of Occident is 6.4%. We will give you greater detail later. In Atradius, the good evolution is mainly due to the lower level of peak claims. Growth by 9%, so more than satisfactory results. The ordinary result of Memora is also very satisfactory, 8.4% growth. We will give you more detail later in the specific explanation of the results of Memora. And as forecast for this year, we can expect that this situation stays like this in the 3 businesses, but with certain caution, for example, in Occident weather-related events and a potential pickup of inflation, depending on the evolution of the economic situation in Atradius, the prospects are good. Atradius can always suffer from a peak event and the impact of worldwide political tensions. I will not stop to talk about the EUR 9.4 million. I already mentioned it from Memora, because later, we will give you more detail about that. So all in all, and as we mentioned, EUR 194.6 million result, EUR 175.4 million attributable result, which means an excellent result at the end of the quarter and a very good growth of the turnover of 5%. You know this because we presented it in the different presentations of results. But I always like to talk about the diversification of our business because I consider it to be one of the key elements that explains the good performance of the group over the years. Our good diversification, not only in the 3 differentiated businesses, Occident, Atradius and the recent incorporation of Memora, but also within Occident, in the breakdown by products, you can see here, Motor has a lower weight than Multi-risk. This Motor is 12.4% and Multi-risk is 13.7% of the total, and it includes simple Multi-risk, but also industrial Multi-risk. And a very relevant weight of Life, which is almost 23%. And as you can see, with the recent incorporation of Memora, which is almost 4% of the business. I will not stop to talk too much about international presence. You know this very well. Spain has a greater weight than the rest of countries. International presence is mainly in Atradius and Memora, where you know that we are present in Portugal as well. Regarding sustainability, we always like to offer a brief comment about this. We continue along the same lines as usual, as couldn't be otherwise because the Sustainability Master Plan is a long-term plan 2024-2026 in this case. And all of the sustainability details are available in the publicly available information on the corporate website of GCO, where you will find the sustainability report with all of the information of good governance, social commitment, environmental responsibility as well as all of the KPIs that we publish within the report. We always stress our commitment to sustainability, and we will continue to make the necessary steps that are included in the master plan already mentioned. As to the share price performance, you know this better than ourselves again. It is true that this first quarter is impacted by the announcement on March 27 of this year by the controlling shareholder, INOC, S.A of the public offering leading to this EUR 49 that you can see on screen. And with all of that, I think the way we need to measure it is in the long term, considering the period since 2002 to this first quarter of 2025, the group has far exceeded reference indexes. You can see this on screen with this growth by 11.9% as compared to IBEX 3.55% and EuroStoxx 4.63%. So looking at the evolution and without taking into account the effect of the past 3 days, the truth is that the evolution of share price of GCO can be considered to be excellent. And if you see it from the numerical point of view, this EUR 4 per share that you can see on screen to this EUR 49 or if we were to consider it the day before the announcement of the voluntary takeover bid, which was EUR 42.25. It is still an extraordinary evolution. As to dividend payout, you know this based on the announcement published in the CNMV on April 30, the AGM approved the complementary dividend of main, which will be payable on May 8. Growing by 10% as compared to the previous year and representing this EUR 71.3 million, growing by 10% as compared to the previous year and which takes us to all dividends charged to 2024 is EUR 145.8 million amounting or an increase of 7.8% that you can see on the screen, which confirms -- or 8.7%, which confirms the constant policy of increasing remuneration to shareholders, this commitment that we've been able to meet even in crisis years. And without further ado, I'll pass the floor over to Isidro Lapeña, CFO of the group, who will tell us in more detail about the evolution of the year that I mentioned before and the main indicators broken down by business.

Thank you, Clara. Good morning, everyone. As usual, we will start with Occident. At Occident, thanks to the good performance of sales and retention of our customers, we've managed to post a very high growth in turnover going over EUR 1.091 billion, an increase of 7.8% as compared to the first quarter of the previous year. If we talk in terms of recurring premiums, the increase has been 6.1%, stressing increases in Multi-risk and Motor with 9.4% and 8.2% increase, respectively. The ordinary result is EUR 72 million with an increase of 6.4% and the technical result has grown by 5.4%, amounting to EUR 75.7 million. Divided by business in Non-Life, the combined ratio has increased 0.3 points, going up to 89.8%, with an important increase in Motor and in Life. The technical financial result shows a similar performance as to the first quarter of last year, but with a slight decrease of 1.1% due to the worsening of the technical margin in Health as we will see later. And now if we break it down by lines of business, Multi-risk continue with EUR 267.2 million, written premiums with a growth higher than the sector, sector [ 70.3% ] and in our case, 9.4% as a consequence of combining good retention and care of our customers with also the necessary premium increases to absorb the higher claims ratio. The combined ratio is at 89.3%, presenting an increase of 0.7 as compared to the first quarter of the previous year. We would like to stress on the one side, the increase of the technical cost, a consequence of a higher claims ratio due to weather events and key events in industrial risk. And on the other side, the relevant increase of written premiums and better productivity with a drop of 0.7 in the efficiency ratio, 1.7% increase in the technical result amounting to EUR 24 million. Now on to Motor. We see the increase in written premiums is 8.2%, aligned but somewhat below the sector, 9.2%, amounting to EUR 243.4 million in a competitive environment that even with prices pushing upwards in our case, this does not lead to an increase in cancellations. Combined ratio is at 92.8%, 1.8 points below the ratio of the first quarter of 2024, mainly thanks to 3 factors: the increase in earned premiums that with 8.4% aligns with the increase in turnover and even exceeds it; the better declared claims ratio and reinsurance results, which leads the technical cost to drop by 0.8 points and an improved efficiency ratio with a drop of 1 point as compared to the same period of the year before. So the result of this line of business has seen an increase of 43.4% (sic) [ 43.9% ], including technical benefits of EUR 13.6 million. As to other, we see an increase in written premiums by 4.5%, which goes up to 6%. We talk about earned premiums with an increase of technical costs as we can see, offset by the improved efficiency ratio. As a consequence of this, the line maintains an excellent combined ratio of 85.4%, exactly as in March 2024, very much in line with the other quarters with a technical result of EUR 15.3 million, 6.5% above the first quarter of the previous year. If we now move on to Life, an increase in periodic premiums of 3%, increasing written premiums in all lines. And as to results, the technical financial result performs similarly, although somewhat worse than the first quarter of the year before, and it is at EUR 41.2 million, EUR 0.5 million below the year before as a consequence of the worsening of the technical margin in Health with an increase of average costs and frequencies and the combined ratio is at a technical loss with 104.4% that you can see on screen. As a summary for Occident, the increase in earned premiums and written premiums and a cost reduction of 9%, more than EUR 6 million as compared to the first quarter of 2024 have allowed us to offset the moderate increase of the technical cost that we have experienced as compared to the same period of the year before. So in the end, we are improving the profitability of the business, an improvement of the combined ratio by 0.3 points, 89.8%, reaching an ordinary result of EUR 72.1 million with an increase by 6.4%. Additionally, the contribution of EUR 3.9 million of non-ordinary result coming from investments offset by special costs and published costs leads to a total result of EUR 76 million with an increase of 10.2% as compared to the same quarter of last year. And now on to Atradius, we see earned premiums amount to EUR 571.6 million with a slight decrease of 0.3% as a consequence of the downward pressure in renewal prices, lower commercial activities of our customers, our policyholders who are affected by the uncertainty of the geopolitical situation, but we're optimistic because the world growth prospects for 2025 seem to be positive. The ordinary result is EUR 109.7 million with 9% increase and the technical result is at EUR 158 million with an increase of 9% as well. We would like to stress the excellent claims ratio, which is normalizing upwards in terms of number of claims, but the lower amount of severe claims lead to a claims ratio staying at very contained levels, reducing the combined ratios by 2.1 points as compared to the first quarter of last year. As to the geographical distribution of income, we see a decrease of earned premiums in Americas, Central and North, but there's growth in the rest of areas, stressing South of Europe, good evolution of the surety business in Italy and 2.1% rest of the world, whereas Spain, Portugal and Western Europe, more discrete amount as we can see on screen -- more discrete increases. As to profitability, we would like to say that we continue with our cautious provisioning trends and the combined loss ratio continues with an excellent behavior at 75.1%. Even if the number of claims increases, the claims ratio is very much contained, specifically 4 points less than year-end 2024. As to risk exposure, an increase of 2.7%. We continue to maintain strict selection criteria, and we continue with an adequate diversification of risks by countries and sectors, which allows us to have an excellent quality of our portfolio. As a summary, a slight decrease in revenue due to the uncertainty of the current geopolitical and economic situation. The technical result before reinsurance increases by 9% despite the upwards normalization in the inflow of claims and our cautious provisioning policy, as I said before, thanks to the lower incidence of severe claims. Reinsurance worsens the result by EUR 4.4 million, maintaining transfer ratio. And the financial result improves due to reinvestment and new market rates of fixed income and liquidity. With all of this, the ordinary result is at EUR 109.7 million with an increase of 9%. Additionally, the total business result is impacted by nonrecurring losses of EUR 0.2 million corresponding to extraordinary expenses amounting to EUR 109.4 million with an increase of 8.5% as compared to the previous year. And to continue now Clara Gomez will tell us about the Memora business.

Thank you, Isidro. Just like in the rest of the businesses here, we offer you the evolution of Memora on this slide. Very good performance, both in income and results, you can see it on the screen. Income growth by 4.2% and the ordinary result, EUR 9.4 million, leading to a growth of 8.4% versus last year. In income, we see an increase. You know this. We are working on the long-term vision with our customers in such a way that we can have a growth in the -- a sustained increase in income, organic growth, as you know, which is fundamental, just like inorganic growth if we had the opportunity to make more acquisitions in Memora. And the ordinary result increases by 8.4%, as you can see on screen, as a consequence mainly of an increase in income but also the cost contention policies that are characteristic of the group and that slowly but surely lead to very good results. This margin over EBITDA may be surprising. It's clearly above year-end, which was closer to 25%, and it is now 28.8%. It is a good behavior, a behavior that allows us to grow as compared to the previous year, but you should also be aware of the fact, as we mentioned at year-end, of the seasonal component of Memora. In other presentations, we already mentioned that the Memora business has to be -- is better analyzed from June to June. And we believe that this 28.8% will come closer to 25% in 2025 and not this upwards of 28% that you can see on screen. And then as usual, we will offer some explanations about the financial strength of the group, the good performance of permanent resources at market value with this 3.3%. You know that permanent resources at market value includes permanent resources included in our accounting and capital gains of balance, mainly real estate. You can see it here, the EUR 545 million and the growth of which is mainly visible not only in the good evolution of the results of the group this quarter, but the year also due to the capital gains that you can see of EUR 46.4 million. And with the goal of offering information about the financial strength of the group, a slide on solvency and rating. You know our rating. Moody's for operating entities of the credit group offers this A1. You can see on screen and AM Best, both for operating entities of the credit business, but also Occident entities gives us this A that you can see on the slide. They both speak of the strong competitive position of the group, the low leverage level and the conservative portfolio of investments in the case of Moody's, but also good operating results and an excellent combined ratio in the case of AM Best. On the left-hand side, you can see the solvency of the group. We ended 2023 with this 232% that you can see on the slide. And we are showing an estimation of the solvency ratio at year-end 2024. And I'm saying it's an estimation, this 241% because this is the estimation made before year-end in the framework of the prospective risk exercise, the solvency planning midterm in keeping with the business plan and which we estimate we would be closing at 241% non-audited figures. All of the solvency information will be provided in the financial situation and solvency report, which is public, as you know, that will be published on May 20, which will be audited and is under review. And this estimation of 241% could be somewhat reduced. So it could be a bit below this 241% that you can see on screen at any rate. On May 20, you will have all of the solvency information in the SFCR report where you'll be able to find all of the information on solvency and the evolution as compared to the previous year and all of the breakdown. And finally, we always offer a slide on the evolution of investments. I think that seeing how markets evolved in the first quarter, we should probably stop to talk about it a bit more than on previous presentations. You can see it, we continue with a very conservative and diversified investment portfolio. The main asset is fixed income. You can see how it grows as compared to the previous quarter by 1.2%. And we should also stress the strong treasury position of the group with the more than EUR 2.2 billion in equity -- in treasury position. Atradius has a very strong treasury position as a consequence of the specificities of this business that need more liquidity. And you can see at the bottom, the performance of equity. We have a relevant equity position, which increases by 6% versus the previous year due to the positive evolution of the markets at the end of the quarter. And we would like to confirm that under equity, we still have a very diversified portfolio. The main weight is the financial sector less affected by protectionist policies. You know that we've discussed this throughout the presentation. We do have a certain weight in tax. We are comfortable because it's not a relevant weight and also because of the good diversification of the equity portfolio. And with this, we would finish the presentation. And as on previous occasions, now we will answer the questions posed throughout the session. We would like to thank you again for your interest, an interest that is proven by the amount of questions received before and during the presentation, we will answer them in a polled manner because there were many, knowing that if any of the questions asked cannot be answered now, you know you will be able to address the Department of Investor Relations, and we will answer these questions via the usual methods. Thank you very much.

Thank you very much, Clara Gomez and Isidro Lapeña for your presentation. As Clara said and as usual, we will start this Q&A. We polled them together by topic, and we will start with Occident Motor. We have several questions about Motor, Isidro. On one side, written premiums increased by 8.2%, a good growth, however, below the sector, which grows at 9.2%. What are the forecasts in this line of business? And as to the combined ratio, there's been an improvement of 1.8 percentage points versus last year. It is now at 92.8%. What is this due to? And what do you expect for this year -- for the rest of the year?

Thank you, Nawal. About the first question, a growth of 8.2%, I think it's quite in line with what the sector is doing and is a consequence of a good commercial work in terms of sales and absence of cancellations. And despite competitiveness, the truth is that the Motor sector is facing an increase -- a significant increase of the cost of claims, material costs, also the geopolitical situation and also bodily injuries. The sector is at losses. So if the situation doesn't improve, probably we need to continue adjusting rates. If this were to happen, this would be done as usual, placing special care in the long-term relationship with our customers who, as you know, are at the center of our strategy, which is leading to an increase in the number of policyholders. And we expect to continue in line with the growth experienced in previous quarters during the rest of the year. In order to answer the second part of the question, on the profitability of the line of business, we continue to maintain and even increasing our positive gap with the rest of the sector and having a combined ratio of 19.2% for me is very good news. This is, as we said in the presentation, due to the increases in earned premiums. As we already said at year-end, they are in line with the turnover increases. And even in the case of Motor over that, the lowering of technical costs and the improvement of the efficiency ratio. This leads to the technical results after expenses increases considerably. And given the current context, we are happy with those EUR 13 million, EUR 13.6 million at the end of this first quarter. And in the end, we will continue to work to continue improving these results during the rest of 2025, and we would like to say that we expect to continue seeing improvements of the combined ratio due to earned premiums and the cost reductions due to efficiency measures taken.

Thank you, Isidro. For Multi-risk, we have received several questions as well and mainly a worse combined ratio than 3M 2024. The question says, we are seeing a worsening of the combined ratio in 2025. What do we expect for this line in 2025? And even if it's recent, they asked us if we received any impacts due to the blackout of last week.

In this first quarter, our combined ratio has posted an increase of 0.7 points as compared to the first quarter of 2024, the unfavorable behavior of weather events and some key events in industrials have led to this worsening despite the relevant increase of earned premiums and the improvement of productivity, which has dropped the efficiency ratio by 0.7 points. For the remainder of the year, we expect earned premiums to continue to increase, equaling turnover. It's still 0.4 points below. We continue to be cautious, especially in industrial risk, and we will continue to obtain efficiencies due to the merger of Occident. We expect to maintain the combined ratio in Multi-risk below or around 90%. It is true that for the remainder of 2025, we have the question mark of weather events despite the consortium and the reinsurance program, they can always have a negative impact in the P&L as we are seeing this quarter as is happening. And another factor that could impact us is that despite our careful risk selection, we may suffer from peak events that may lead to additional claims ratio as happened in April 28 during the blackout, which has led to an increase in claims, mainly in home insurance because of refrigerated goods and electrical damage. In this specific case of the blackout for us, the priority was to care for our policyholders from the operations point of view, we have not yet assessed the impact on the P&L because there's not much information about the cost, but we are reassured because we understand it is not going to have a relevant impact on us. But these question marks, as we said on previous occasions, are part of the insurance business. These are eventualities that our policyholders want to cover, and we trust our risk management for a good 2025 and to maintain the combined ratio around 90%, as we said before.

We will continue now with a question coming from the Health business. There's a growth in premiums of 0.4%, well below the sector on the combined ratio. What is this growth due to? Why an increase of the combined ratio?

As to the first part of the question referring to turnover, in order to analyze the turnover of Health, which for us is a strategic line, even if it's not very relevant in terms of volume, we need to differentiate the business we got in the agreement with Telefonica and the rest of the standard business. We're very happy with the collaboration we have with Telefonica, but we must take into account that with it being a business with pre-agreed renewals in January, this has a negative impact in the total of the line. If we focus on the rest of the business, the one that truly depends on our management and operations. Here, we can see a different type of growth around 5%, 6% below the sector. Yes, that's true, but much better than the global result of Health. As to the second part of the question about the combined ratio, Health is a line that is very seasonal with a lot of claims in the first quarter because of the winter months, but we are indeed experiencing an increase of average costs and frequency. This is why we are taking selective measures to adjust our rates upwards to absorb this higher claims ratio, always protecting our policyholders and adapting to the risk profile of our customers. In the end, what I can say vis-a-vis the future is that we expect to reconduct the health situation during 2025.

We continue with you, Isidro, with several questions about Atradius, the credit insurance business. Many questions are about growth. They want to know the prospects towards the end of the year and whether we are taking any measures. On the other side, people are surprised by the improvement in combined ratio, 75.1%. What is this improvement due to? And what is the normalized ratio of the line?

Regarding growth, there's a bit less earned premiums because it's a bit more difficult now to grow in credit insurance in Atradius, we are placing special focus on commercial activities. So we expect to improve this increase throughout the year. Having said this, income is conditioned by the sales of our policyholders. And as you all know, they are impacted by the macroeconomic situation and the tariff uncertainty in that sense. So we are reassured our average customers are European customers, domestic commercial activities, and we shouldn't see significant impacts due to these policies, but we have to wait and see how the negotiations evolve in the year proceeds. We are optimistic, and we expect the situation to normalize on our side. In terms of risk appetite, we will continue to be conservative and with a strict selection as per our underwriting policy. As to the combined ratio, we should stress that we have mainly improved because of a recollection of a large case. These peak events in the first quarter has had a very significant impact and that we will see 2025, but it is within the expected range. We start to see an upward normalization in the frequency of claims that will consolidate throughout the year. So we expect to maintain a stable level of income with a normalized combined ratio in an environment of uncertainty about the performance of share prices and the tariff policies.

Okay. So with this answer, we finished the questions about the insurance business. And finally, we've received questions about the funeral business, some questions about the growth and the EBITDA. The 28.8% you already mentioned it during the presentation, Clara, but maybe you want to say something about this business?

Thank you, Nawal. There are many questions beyond the specific question about Memora. I don't think we need to stress anything specifically because we already mentioned it during the presentation. The Memora business is very seasonal. We are very happy with the growth in terms of income and results. I wouldn't stop to break it down too much. Nawal, maybe we can start with the rest of the questions, which may be of greater interest for the audience, and any other additional questions that you may have about the Memora business, you can send it to the Investor Relations department who will be able to answer them via the regular channels.

Okay. So that's going to be -- Otherwise, we're receiving quite many questions about the takeover bid by INOC, S.A, as we call them here. And I've summarized it in 2 questions. First is they want to know about the process and the calendar.

Well, of course, there are many questions about the takeover bid. And you know that you've heard in the media and the information that INOC, S.A. has provided that INOC, S.A. controlling shareholders of GCO with direct and indirect control of 62.3% of the share capital launched a voluntary takeover bid on the total shares of GCO with the goal of increasing its direct control on GCO. But if the thresholds were reached in the regulation of takeover bids, INOC, S.A. has the intention of promoting the exclusion from trading of GCO. Public information has been provided. INOC, S.A. has 2 conditions. First, reaching direct control of 50% plus 1 share of GCO. And secondly, obtaining the approval of the General Shareholders' Meeting of INOC, S.A. As to the second condition, as you may have seen through the -- in the public information, INOC, S.A. put it to the shareholders' meeting on April 30, and it was approved by a large majority. As to the process, you've asked several questions. There's not much we can say about this. INOC, S.A continues with the planned time lines. As we've been able to see in public information on April 28, they presented the request for authorization for the bids together with the prospect and INOC,S.A is planning on presenting all of the complementary information attached to the prospectus in the time line foreseen in the regulation 7th of May at the latest. You've asked questions, I think, also about when this information will be public. And we understand the information will be public when the CNMV receives the -- or issues the authorization. At any rate, INOC, S.A. will provide all of the information in due time about the evolution of the process as couldn't be otherwise.

Okay. And the final question remaining out of the ones grouped related to the takeover bid. Well, there are several questions, especially about the price of the takeover bid and the actions of GCO in general terms during this process.

I already mentioned in the previous answer, but there's not much more we can say from GCO. I think -- and you know this, it is, of course, necessary to say that all of the process will be reviewed by the CNMV. They are the ones who will authorize the operation and will consider whether the price is fair. and the CNMV will -- or has been offered part of the information, the prospectus and all of the complementary information necessary. And I understand INOC, S.A. will incorporate the assessment reports issued by the independent expert and the CNMV will analyze them together with all of the underlying information and hypothesis, and they are the ones who have to authorize the transaction. Having said this, during the bid and it was already specified in the previous announcement by INOC, S.A., the Board of Directors of GCO will request an expert report, a fairness opinion to a prestigious organization to assess the report by the INOC, S.A. expert. You also know because there's public information about this, that a follow-up committee on the bid has been constituted made up of all of the independent directors like, Raquel Cortizo Almeida, Beatrtiz Molins Domingo, and Francisco Javier Perez Farguell. As you may imagine, GCO over the past few months, we've received several questions of different nature. We've answered these questions. And as the process evolves, we are positive that INOC, S.A. will continue to offer information in due time and with the transparency and rigor necessary in this transaction.

Okay. So with this answer, we conclude the presentation of results of the first quarter of 2025. I would like to thank Clara Gomez and Isidro Lapeña for their presentation, especially for the answers to the questions received. I would like to remind you that as usual, the questions and answer will be managed directly by the Investor Relations team in the coming days. And I would like to take this opportunity to invite you to the next presentation of results, which will take place on Thursday, 31st of July 2025 presenting the results of the first half year. And finally, I would like to remind you that you can visit our website where you will find all of the sustainability and financial information that may be of interest to you as you would like to thank you for your attention and participation and until next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]