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

Good morning, everyone. It is a pleasure to be here with you to tell you about the evolution of the performance of the businesses of Catalana under GCO in the year 2021. The accounts were drafted yesterday by the Board of Directors, and we published them this morning. This is Francisco Arregui, CEO, General Manager of the group. And here with me, as usual, we have the CFO, Carlos Gonzalez. And first of all, as usual, I wanted to thank you not only for connecting remotely to this event, but for the attention you always pay to our business and the performance of the Catalana Occidente share. I'd like to let you know that I have a sore throat, and I cannot speak to loudly. I cannot speak up as I may need to pass the floor over to the CFO at some point, but I'm here with you, and you can ask any questions you may have remotely. We will process them, organize them, we'll try to group them and answer as many as we can at the end of the session, and the rest of them will be answered as per the usual channels. Before we start with the presentation of the year, I would like to say that in the relevant event notification that we published today, you can see that several directors have resigned as of April 28, the day of the AGM. And at the AGM, we proposed the appointment of a new independent director and a series of agreements pertaining to the Board of Directors. At least as a listed company, we are aware of the recommendations of good governance that are increasingly more focused on getting Board of Directors to be as dynamic and diverse as possible with the adequate size with the aim of making decision-making as swift and agile as possible. So we have decided to propose the AGM a series of agreements that you will find in detail in the documentation that was published. And in practice, this involves a restructuring of the Board of the company, which will now have 10 members, 3 executive members, the Chairman, Mr. Serra, CEO, Mr. Hugo Serra and myself. Three independent directors, one in Ignacio Guerrero, Javier Perez Farguell and [ Santino ] the new Director if the AGM so decides, Ms. [ Domingo ] and for directors, Ms. Serra Halpern Blasco, Serra and Alvaro Juncadella de Palleja. So we understand that in this way, we not only done significantly in terms of complying with the recommendation, which we do, but we also give the Board of Directors as much flexibility and agility in decision-making. At the same time, as we maintain their competencies and capabilities to their [ utmost different ]. So we were saying we were going to let you know about the year 2021. Without further ado, I would like to mention that we're in a still difficult context in which economic recovery is not full yet. We have closed the year, which I would believe is very good, even exceptional with very significant advances in the 3 main pillars of our general policies. In growth, with an increase of 7.1% in our turnover, profitability with a growth of 73% in the consolidated results. The most significant thing with an improvement of our operational results of the 2 businesses, 2.3% in the traditional business, and we have multiplied times almost for the result of credit insurance. And in terms of solvency, we closed this year with an estimated solvency ratio of 220%, increasing by 4 points vis-a-vis the closing of the year before. So as a whole, I think we can feel satisfied with the results of the past year. And now we are going to deal with the topics included in the agenda. As you can see on screen, we will start with the environment. You know the environment as well as we do. We have had many years of continuous growth in environments of a lot of volatility characterized by very low inflation and very, very low interest rates. Everything changed. You know that very well with COVID in 2020. We had the shortages in production chains. It started in China and it reached us with the lockdown in March and the consequences and realities are as you can see these very significant reductions in the economy in 2021 and this breakdown that you can see on the screen, which unfortunately means that Spain with this minus 10.8% is at the -- and the leader is one of the leaders in the lack of growth from the point of view of economic recovery in macro terms, 2021 has been a year of recovery. You can also see on screen with a global growth of 5.9%, and the IMF estimates a global growth for 2022 above 4%. As you can see there has been significant growth in the U.S., Latin America, emerging economies in Asia. With good prospects as you can see for 2022, Europe has grown adequately 5.2%. The bad news is that Spain has grown a bit less 4.9%, well below the decrease of last year, but the expectations of growth for 2022 are slightly higher than those of the eurozone. You see -- well, we will see the factors that may impact on growth and new circumstances around us, and increase in the prices of raw materials, specifically energy power. As you know, this is leading to an increase in inflation and of course, the very current topic of the Russia Ukraine conflict. Regarding financial markets, there isn't much more to add. Interest rates that are historically low, even negative and they are starting to slowly pick up in the past few months and stock markets with very significant revaluations in the exercise a year that we are going to be analyzing, the year 2021. But starting the year with poor performance, especially in the past few days. Regarding the insurance industry in Spain, it has been growing for many years since 2015. And in 2020, the year of the crisis, there was a decrease of 8% in premiums. But in 2021, the industry grew by 5% with a growth of almost 7.9% in life, growing both in risk and savings and 3.3% in non-life. Only motor with a drop of 0.9% in an environment that we all know, still low claims ratio in 2020 and a market which is extraordinarily competitive and with premiums that are going down. And in the context described, where I said at the beginning, things have been going, honestly, very well for us, traditional business with a growth in turnover and in attributable results, as I told you, despite the fact that the industry is very competitive in Spain and despite the adverse weather conditions, especially at the beginning of the year with -- amongst others, Hortensia and Filomena. And in credit insurance, doing exceptionally well with growth in premiums and very low claims ratio, which leads us to a truly exceptional result. We can see this year as a summary, but later, the CFO will dissect it a bit more. This is the summarized income statement. You can see with the top line and the bottom line. And we can see that we are growing by 7.1%. If we break down traditional business 3%, it is true that it has helped somewhat with single premiums life, 7.5%. They are the ones that contribute the least value especially with low interest rates as now, but we're growing by 2.4% in recurring premiums, and we are growing in all lines of business. Carlos Gonzalez will talk to us about this later, except for motor, where we're dropping by 0.9%, a bit more than the industry. But in this context that I stressed with still exceptional results in the industry and still with -- in this line of business and with the consequences of mobility restrictions in a very, very competitive sector. And in credit insurance, last year in the framework of the crisis, we decreased significantly by 5% due to several reasons, but especially because of the lower volume of sales of our policyholders. And now we have this increase in turnover by 13.2%, 10% in acquired premiums with growth, which are very different based on the different geographical areas and the foundation of this growth is multiple. On the one hand, we have some recovery of new production, but also a quite good performance of cancellations around 7%, with increases in rates globally and as an average in the year in renewals. However, increases focus on the first half of the year and the past few months, we've, of course, a downward trend based on the very high claims ratio that we are experiencing. And of course, with an increase in sales by our policyholders in the framework of the economic recovery, and in terms of results, you can see them at the bottom of the slide, our consolidated result rose by 73.4%, 62.9% attributable result and still with a negative impact, EUR 17.8 million coming from non-ordinary results, very similar to last year. But 2 things that, as you will be able to see later and you can see in all of the annexes of the presentation, we've been very conservative in the cleanup of financial assets in this year. What's truly significant as I stress traditionally is that we have an improvement in results in both our businesses, ordinary and operational results, [ 22% ] in traditional business. And before Carlos Gonzalez analyzes this, I would like to analyze the exceptional behavior of motor with 9.8% decrease still affected by mobility restrictions versus 2020 in which the first quarter was still pre-COVID. However, the result has diluted over the past few months with the recovery of traffic and claims ratios and as more reduction, 6.1% in multi-risk with an increase of claims frequency, amongst other things, due to greater use of the home. And additionally, with an important impact of weather events, such as Hortensia, Filomena, which have had an impact after reinsurance, which has been quite similar globally speaking to the previous year with Gloria. And the truth is that the behavior of this line of business has normalized in the second half of the year. If you remember, at the end of the first half year, the results of multi-risk were dropped being by more than 20%. And in credit insurance, as you can see an excellent result, EUR 241.8 million, almost 5x that of 2020 based on a very low number of claims with 27.8% net of insurance. So a level which is very good difficult to maintain. We'll be able to maintain it, of course, with recovery, but we continue to be very conservative with our provisions. As you know, we have a global system for the calculation of technical provisions, which anticipates claims ratios from the moment the sale is made. And this is done based on parameters that we are just based on the circumstances of the economic environment, the industry, the country and the company. It is also true, and you will see these when Carlos analyzes the income statement in detail, that we've had a very high cost of reinsurance, EUR 419.8 million, of which EUR 253 million come from governmental agreements of reinsurance to protect trade in the framework of the COVID crisis. And the truth is that, well, you know that they were extended until half year, and they are no longer in force now since June 30. We will give you some more details about that later. But since the business has been performing well and it has yielded a profitable -- we've had to share these positive results with reinsurance as a whole and governments, in particular, but this has come with the advantage to us that it has not been necessary to take any more drastic selection and cutback measures, cutting back on the limits, which improves relationships with our customers in the long run. Not much to say in terms of the global makeup of our portfolio. Credit insurance has a substantial importance since the incorporation of [ tradees ] to the group. Our traditional 60-40 is this year beaten towards credit insurance 42% to our greater growth in this area. And from the point of view of geographical distribution, you know this, we are international, even if in a limited manner vis-a-vis credit insurance, but Spain is still our main market. And you can see this here, 2/3 of our business. And the rest is in Europe, 6.8%, Asia, Rest of World and the Americas are outside of Europe, the last 2 bullet points. I don't want to bore you with the rest of more qualitative aspects because you will find all sort of details in the accounts, the annual report. But I do want to say, as I did in -- on previous occasions that in the current context, we are paying special attention to the ordinary management of our businesses, which in the circumstances is the most important thing to do. But in no way are we losing focus on strategic aspects that the long run depends on our future, depends on digitalization, of course, innovation. And I wanted to stress because of how we've made headway during this year on sustainability, which is not only no longer a legal and ethical demand. It is now, as we said on previous occasions, it is now a demand of the market, investors, international funds, et cetera, all demanding this. And it will soon also be a demand of our customers. We've done many, many things in the area of sustainability. We've integrated it completely in our risk management system, and you will find also the details in the sustainability report on the corporate website and the document for the CNMV and as a result of all of these efforts, we've gotten a very good rating from Sustainalytics, as you can see on screen with a grade of low risk. Third method, we maintain a solid solvency position. I will talk about this more later. We have a dividend policy, which is conservative, cautious, but with an increasing dividend in absolute term and we maintain our strong commitment of shareholder remuneration even at difficult times as the ones we've been going through over the past couple of years. You know the share price evolution perfectly well in the short and long term. I will not speak about this for too long with the revaluation rate of 11.72%. And this period is much better than that of the indexes close to us. In 2019, we did was in the market, which grew and we dropped by 4.4%, but we were more defensive in 2020. With this drop that you can see and in 2021, we've grown by almost 3% less than the Ibex, of course, and EuroStoxx. And at the moment, the performance of the stock markets in these first 2 months of the year is well known by all of us. And we've all experienced these drops, and they are taking place, especially over the past few days. As to earnings per share, our dividend policy is cautious and conservative, but with an increasing dividend in absolute terms. We had dividends that grew very much in the period, even before the graph between 2008 during the financial crisis, we were even able to maintain and improve slightly improve the dividend. And from 2010, we've had consistent increases of the dividend between 6% and 7% in the past few years. It is also true that you know that when we were about to pay out the complementary dividend, we had to follow the recommendations of the European bodies and the DG insurance, and we were compelled to reduce the complementary dividend, the one pertaining to May 2020 by 45%. So the dividend of that year dropped by 17.41%. In 2020, we already reestablished our dividend level. I remind you that the dividend of May last year was twice as much as the complementary dividend of the year before, which meant a total dividend, as you can see, of EUR 105.85 million with an increase of around 30%, the greatest in the recent history of GCO. And in the year, you can see this in the red square on screen with the dividends of October and February 2021, with an amount of EUR 20 million, meaning a 5% increase vis-a-vis the same date of the previous year. And at the moment, the news that you've been able to see in the documentation that we published is that the Board of Directors meeting that we held yesterday is proposing a dividend charge to 2021 results distributable in May to be paid out in May of EUR 53.55 million, meaning an increase by 10% vis-a-vis the same date of the year before, taking the global dividend to an increase of 7.3%. And Carlos, I think now it's over to you with greater detail on the P&L, on the income statement.

Yes, as usual, I will now continue breaking down in more detail, both traditional business and credit business. We'll start with the traditional business. And the first thing that we should say here is that our product diversification and the high customer retention has allowed us to maintain growth in terms of turnover with an increase of premiums like 2.4%, up to EUR 2.473 billion, technical result continuing with the trend of previous years with a reduction in general insurance, especially in motor still positively impacted by the reduction of mobility in pre-COVID quarters, whereas the technical result of life is impacted by the decision we have made of accelerating the adaptation of survival tables vis-a-vis the [ stringent ] period set by the regulator with an impact of EUR 10 million. Without that adjustment, if we did not fund that adjustment, the technical result would have increased by 3% as compared to the reduction of 0.9% that you can see on screen. The combined ratio increases by 0.3 basis points due to the normalization that we already mentioned about the normalization on claims ratio, especially in motor. Now at 88.9% with a positive differential vis-a-vis the industry by 3 points. If we distribute it by lines of business, multi-risk growing by 5.1% in line with the business, whereas the combined ratio is at 90.1%. 1.1 points above the year before as a consequence of a more intensive use of the home, whereas the impact of weather events in this year, basically, the effects of the Filomena storm is comparable in terms of net claims ratio to what we posted in 2020, where we had Gloria and Elsa. Finally, the technical result drops to almost EUR 70 million, similar to that of pre-COVID years with a positive gap vis-a-vis the industry of the combined ratio of more than 7 points. In motor, we have a drop in premiums by 1.9%, EUR 641 million. This poor performance in the rest of the industry with a drop of almost 1%, 0.9%. But we should also point out that we have been able to have a net increase of the number of policyholders, despite the fact that the number of new vehicle registrations has not gone back to pre-COVID levels. Combined ratio is at a comfortable level of 89.3%, 5 points below the industry, which is working with ratios of around 84%. Here, we have a low technical cost, 65.3%, where we can see a reduction of the number of claims compared to pre-COVID quarters. It is also true that in the past few months and especially after the holidays, the situation is normalizing. And these low technical cost has allowed us to increase the technical result by almost 10%, up to EUR 69.6 million. In other, the line of other, earned premiums increasing by 6%, and we've been a positive impact of the recovery of the economy, whereas in results, we maintained excellent combined ratio results of around 85%, with a technical result of EUR 46.2 million. Life improves periodical premiums in health, funeral and the rest of lines of line of life around 2%, whereas in single and supplementary premiums, even if you can see an increase of the premiums, this is as a consequence of a one-off transaction group policy because the appeal of these types of policies is still very low due to the current low interest rate scenario. Results, the financial technical result improves up to EUR 98.6 million. We have absorbed the provision of the adaptation of new biometric tables, which is what we had to do. It was a period to do so and EUR 10 million corresponding to future years. Without this advance of this EUR 10 million, the financial technical result, the technical financial result would have increased by 14%. And additionally, the lines of health and funeral still have a good claims ratio behavior. You can see 82% funeral and 85% health, so very good rates. And as a summary for the traditional business, the increase in turnover and the good behavior of the combined ratio due to the lower frequency in motor allows us to maintain the technical result, EUR 258 million and accelerating the adaptation or the adopting of the [ biometric tables ] that we just mentioned. On the other hand, the financial result increases by EUR 8 million despite the extension of the scenario of low interest rates. So the ordinary result is finally increasing by 2.3%, up to EUR 244 million, as you can see on screen. And now on to the credit business, acquired premiums or earned premiums in credit insurance go up to EUR 1.9 billion with a growth of 10%. So breaking the dropping trend of last year, where we said we were dropping by 5%. And here, we should mention the repricing of the portfolio, which took place mainly during 2020 and the first quarter of 2021 with a price adjustment, so as to adapt prices to the risks that we are taking. And in this and regard from the second half year of 2021, we are also modifying prices downwards. We also have a positive impact in the turnover of our customers, and we have a change in risk appetite on our site with greater commercial activities and an increase of risk exposure. On the other hand, the technical results, net technical result has gone up to EUR 309.7 million as a consequence of the low claims ratio posted, which in the end allows for an increase of results with EUR 241.8 million, improving even above pre-pandemic levels. The improvement in premiums is very relevant in some geographical areas. You see double-digit growth in some of them aided by the better macroeconomic conditions and the capturing of new global customers. Whereas in Spain, we continue to see a lower growth rates around 3%, 2.8% specifically. In terms of profitability, the combined growth ratio drops to 64.2%, historically low with a reduction of 30.8 points of claims costs, mainly due to the drop in claims ratio, which has been even more intense than we expected initially. I would like to say at this point that we continue with our cautious provisioning criteria already described in 2020 that we have mentioned in all quarters in 2021. Regarding our risk exposure, we have a notable growth with an increase of 18% as a consequence both of the maintenance of our support to our customers, which in turn improves their level of activity and the capturing of some new relevant customers. Currently, risk exposure is 8% above pre-COVID levels, but we should stress here at any rate that the makeup of these risk exposure has taken a turn towards quality has rotated to its quality in the past 2 years. As a summary for the credit business. These are the main drivers, income going up, notably with the greater economic activity and the increase of prices, technical result before reinsurance has been boosted by the low claims ratio and vis-a-vis reinsurance with the better prospects for the direct business. This has translated into a greater transfer of these profits towards reinsurance almost EUR 420 million, EUR 253 million of which correspond to government contracts, which we expect will not see significant modifications in the coming periods. We expect we have included the total impact of those agreements in our accounts already. So at any rate vis-a-vis reinsurance for the second half year of 2021 and for 2022, we maintain our transfer agreements of 37% to the usual panel of reinsurers. I would also like to mention that the financial result also improves. So as a consequence of the positive results obtained by our associated companies that also deal with credit insurance and who have benefited from these low claims ratio environment and these repricing. Finally, the ordinary result is at EUR 241 million. So times 5 almost to the result of 2020 and exceeding the results of 2019. Francisco, I don't know if you would like to continue, or shall I continue with the last -- this last part of the presentation.

I'll try. I'll see how I can go with my voice today. So yes, let's continue now outside of the P&L. As usual, we talked to you about the permanent resources and solvency. You can see the usual chart. You can see that our permanent resources at market value exceed EUR 5 billion, almost EUR 5.2 billion, EUR 5.191 billion, so an increase of 11.3% in this year. And you can also see the long-term evolution, very significant multiple lying almost times of 15, starting with EUR 332 million to this EUR 5.192 billion. So we've done this without capital increases, without asking investors for money, without diluting them asking third parties for capital. So we have retained a significant part of our profits, applying a conservative dividend payout policy, which has funded this expansion period. This is what also happens during the year. On the left-hand side, you can see that will contribute to this improvement of 11.3% is basically the result benefit and this year with a very significant contribution by the valuation adjustments. So the greater value of our financial assets. From the point of view of solvency, of course, this is an essential magnitude in all insurance groups. As you can see on screen, the solvency -- the estimated solvency ratio still pending audit, but it is 220%, which means an improvement of 4 points vis-a-vis the end of the previous year. You will get all sort of details, sensitivity, scenarios, et cetera, when we publish the report on the financial situation and solvency, in SFCR, but I can already say that the main drivers of the increase have been on one hand, of course, the retained profit of the group. Secondly, the slight rate increase impacting the value of our liabilities more than our assets and the excellent claims ratios in credit insurance despite the increase, as Carlos Gonzalez said of risk exposure and the loss of protection granted to us by government reinsurance agreements. And precisely because of all of this, the rating agencies acknowledge our capital position, our solvency position and the solidity of our business model. And they maintain both A.M. Best for all insurance and Moody's for credit insurance, this rating of A and A2 that you can see on screen, respectively. And finally, I think this is the last slide. You can see an infograph of our investments amounting to EUR 15.712 billion, 6.5% increase as compared to the funds managed at the end of 2020. I don't want to give you too many details. I don't want to bore you with this, but you have all of the details in the report and the annual report and the annexes of this presentation. And I would only like to stress as usual that we have a conservative investment policy with diversified investments in the terms you can see on screen and what's most important, and we must not forget as an insurance company, we have adequate assets fitting with our liabilities in terms of duration liquidity and in all terms demanded by the joint asset and liability policy. And I think with this, we've given you an overview of the year, and we are here to answer all the questions we can. Patricia, if you could please transfer the questions we've received.

Thank you very much, Francisco and Carlos for your presentation. Next, we will start with the questions that we've received during the presentation. As usual, the questions received have been grouped by topic, and we will start with the traditional business question, specifically for motor. The combined ratio of motor is still below 90% and it improves vis-a-vis 2020. In the year 2022, can we expect any impacts due to the adjustments, what impact may inflation have?

Well, we still have a very good combined ratio in motor. Exceptional results, as I pointed out at the beginning of the presentation and as the CFO also told us about. And there are 2 things here. One is the potential impact of the update of the scale of assessment. The one for damages in motor with an increase of price of certain benefits affecting around 4% for big injuries, and it will come with an increase in frequency as well behind all of the mobility restrictions during the pandemic. It is also obvious regarding the second part of the question, there will be pressure on repair cost of material damage as a consequence of inflation. However, truth is that in the group, we have mitigation measures for those costs. We have a network of professionals and trusted workshops that try to apply the best repair practices, but adjusting costs offering the greatest quality and service to customers at the same time. We, of course, maintain rigor in the underwriting of risks, which allows us to continue improving on maintaining our profitability standard, which is above market. At any rate the potential price increase due to an increase in claims ratios cost, both by the tables and those driven by inflation will depend in the end of the commercial strategy of each company and the performance of pricing. Our impression is that Spain is a very, very competitive market, even more so in motor, and it does not seem possible or it doesn't seem that the potential increase of the cost of claims will be transferred directly or will have an impact, a direct impact on prices. And going a bit beyond the scope of the question, I would like to say that this expectation can also apply to multi-risk, specifically family home product because we have a very close relationship with our repair network, and this allows us to mitigate in part the effects of inflation on the average cost of claims.

The second question is also related to inflation. With the increase we are seeing in inflation, do you foresee an impact on results or on the solvency ratio due to an increase of interest rates?

Well, the truth is that the impact of inflation on general results, I think, is what I said is the same thing as I mentioned for motor and multi-risk family home. The potential impact of the solvency ratio, well we -- if you look at the report on the financial situation and solvency of the last year, the last one that we published, what you can see is that there is sensitivity analysis to the solvency ratio. Well, we established an increase of 100 basis points on the claims curve would mean 8.2 percentage points, which means an increase of excess capital. And if the sensitivity analysis were to be applied, we run with the reduction of the [ car by ] 100 basis points solvency ratio would be reduced by 9 percentage points and the excess capital would drop by EUR 189 million, EUR 190 million. So in that context, and between those limits in that range, we do not expect significant impacts on our solvency ratio due to changes in inflation and their potential impact on interest rates. But of course, a rate increase would have -- of course, allow us to make fixed income investments. We are a bit behind in our investment plan due to the current context. So we could do that at higher rates. We cannot quantify the effect because it will depend on the amount and the timings the date and which will make these investments. Carlos, can you continue?

Yes, of course. I think we should say here that we have a treasury position of almost EUR 2.5 billion that we could, of course, optimize with more financial profitability inasmuch as this interest rate scenario normalizes and growth.

We continue with questions about credit insurance. At the end of the year, the combined ratio in credit insurance is still at historical lows. So what can we expect for 2022?

Well, we closed 2021 with results that we have already mentioned and qualified as exceptional with a result, which even went above and beyond 2019. And the current context, of course, has definitely come from a significant improvement of claims ratio, despite the fact that we -- for 2022, we expect a normalization in terms of the number of claims that we receive. This will take place throughout the year on a progressive manner. And we should also take into account 2 differential factors in 2022. The first one is that the average premium is above that of 2019 and the risks that we are taking on are based on the current uncertainty on the market are priced that way. And finally, the accounts of 2022 will not be impacted by -- negatively impacted by government equipments, which ended in June 2021. And we should remind you that we continue with very cautious provisions, especially now with the economic uncertainty. Having said this, we believe that in 2022, the profitability of the business will normalize with the gross combined ratio. It's the one that we normally monitor and this combined ratio will have to increase and come closer to pre-COVID levels. Although we believe this will not have a negative impact on the profitability perspectives of the credit business. And because on the other hand, we will not need to take on the cost of the government agreements.

The following question is about the non-ordinary result. Can you explain it in more detail, especially the one coming from the financial result?

I think we should talk about the one coming from financial results and expenses in the end. And while it's true that non-ordinary results have had a negative EUR 17.8 million negative impact, which is similar to what we had in 2020, but the source of this is different. The financial non-ordinary results have had a positive impact, EUR 19.8 million, and this is mainly due to opportunistic sales in some variable income products, to expenses, the impairment has been significant, almost EUR 50 million coming from the review of the value -- or the revision of the value certain assets. What we've tried to do here is to accelerate the amortization of intangible assets as much as possible coming from the acquisition of Plus Ultra, which has been negatively impacting the P&L of the group currently. And we've also accelerated the amortization and acknowledgement in the P&L of certain internal IT projects. So all of this burden of almost EUR 50 million of this exercise of this year that has had a negative impact on this year will not have a negative impact on future years because we have accelerated the recognition of these items.

The next question links the solvency ratio and excess capital with the dividend policy. With the solvency levels accumulated, are you still not planning on conducting any actions to return this excess capital to shareholders? What are the future plans in terms of the dividend?

Well, not many novelties here vis-a-vis the dividend policy. We've always said, and we just said it again during the presentation that the group has a conservative, cautious dividend policy, but in absolute terms, a growing one, which has proven that we are strongly committed to shareholders vis-a-vis this dividend payout and this commitment has been honored even in exceptional situations, such as in 2008 crisis, the recent crisis of COVID. And I would like to remind you here that this growing dividend policy in the end in a crude manner produces a quite substantial increase in the dividend level in the past 10 years, an increase -- we've seen an increase of the dividend per share by almost 70%, and we've doubled it vis-a-vis the previous crisis of 2008.

If you allow me, Carlos, what is indeed a fact is that the increase in our solvency during this period, while it's [ very common ] essentially, as I said a few minutes ago from the fact that we've retained a significant part of our profit by applying a conservative dividend payout policy allowed by our shareholders in order to fund this expansion period. This means that we've been able to -- in the past 3 years, we've been able to conduct several acquisitions without the need for funding. We have not given up inorganic growth. We still -- we still have an eye on the market and any opportunities that may arise. But for now, no interesting opportunity has crystallized. We have an estimated ratio of 220%. We are not at solvency levels high enough as compared to the marketing that would allow us to contemplate an exceptional action. If we compare with our competitors, our average profitability, excluding 2020 because it was exceptional is at 11.4%. And this is similar to that of many international multinationals and better than that of some of our Spanish competitors.

And just to finish a question on our exposure. Following the international news, what is your exposure to Ukraine and Russia?

The question, well, is obviously a [ tradee ] has no presence -- has no direct presence in Ukraine. And in Ukraine and Russia, we keep a residual level of exposure. Of course, we follow the development of current events to take them into account in our dynamic analysis of credit risk of Ukrainian and Russian companies. And of course, we will comply with any international sanctions that are imposed. We are monitoring the situation so we can manage our risk exposure as per our underwriting policy and our risk appetite in the rest of geographical areas. And here, we need to take in mind that the weight of exports of the EU with fresh is not relevant. I think it does not exceed 2% of the total. So while it's true that Eastern European countries have rated weight. In this area, we have an eye on the conflict. And despite the fact that we do not have this direct exposure, we are aware of the fact that Europe has an energy dependence on Russia and energy crisis could have an impact via increasing the inflation trends. These inflation trends have already been detected over the past few months. So our management of this scenario would not change substantially. We would accelerate any actions in this regard. That's what we would do.

Thank you very much, Francisco and Carlos. And with these answers, we close the presentation of results of 2021. As usual, I would like to remind you that any unanswered questions will be managed directly via the Investor Relations teams 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 Friday, 29th of April 2022, presenting the results of the first quarter of the year, and you can visit our website where you have all of the financial and sustainability information available to you. As usual, thank you for your interest and participation and see you again soon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]