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

Well, good afternoon. It is a pleasure to be here with all of you to tell you about the evolution, the performance of the businesses of GCO in the first half year of this year and as per the accounts drafted by the Board of Directors this morning. I'm Francisco Arregui, General Manager of the group. And as usual, here with me today, we have the CFO, Carlos Gonzalez and Nawal Rim, Investor Relations. And first of all, before we start, I would like to thank you, of course, for your attendance at this event online, but also I would also like to thank you for the attention you base to our business and the Catalana Occidente share. You can ask all questions you may have online. We will try to, as usual, group them and answer as many as we can at the end of the presentation. And the rest, do not worry, they will be answered as per the usual channels. And I was saying that we are going to be analyzing how things have been in the past half year. We will follow the index you can see on screen. But first of all, I would like to say, without further ado, that in an economic context which is still tough without a full recovery from the crisis in Spain with inflation, which is quite significant with the shortage of supply in the Russia-Ukraine conflict, but the truth is that we have locked a first half year that I should say is really very good with significant advances in the 3 main pillars, basic pillars of our general policies. We will see in a minute with clear growth of 9% in turnover, with an improvement in profitability, our consolidated result increases by 20% and with also an improve in solvency because from the publication in May of the report on the financial and solvency situation. You may have seen that we ratify the estimations of 4-point improvement until 220 for our solvency ratio. Regarding the economic environment, you know these aspects very well. I will not give you too much detail. We were used to a very long growth period with interest rates that were very low and no inflation with certain volatility and you know very well. And you can see on screen that all that changed suddenly with COVID at the end of 2019, starting in China with a shortage in the production change -- chains, 2020 lockdowns. The industry stopped and the result was a drop of GDP of 3.1% globally with significant drops in all countries, as you can see on screen. And unfortunately, especially significant in Spain with that minus 10.8%. The good side of things, so to speak, is that in 2021, as you can also see on screen from the macro point of view, was the year of recovery, globally speaking, with 6.1% growth and significant growth in almost all countries despite the fact that in Spain we've got 5.1%, we are still far from recovering from the drop of 2020. And the expectations for 2022 weren't bad at the onset. But the truth is, and we'll see this at the end of the year that we will see the impact of the increase of prices of raw materials, the increase of prices in electricity and other sources of energy on inflation that is having a special predominance in the past few months. I will see the impact of all of that on growth at the end of the year. I don't want to give you more data on the economic environment that you already know very well, you know about the evolution of financial markets with interest rates. And as I said, historically have been very low, and they have increased significantly in all terms, especially short terms with a significant volatility in the longer terms. And with stock markets which went up significantly in 2021 and in 2022 are having a poor performance, especially poor in technological values, as you know, very well, technological stocks. And in this context, the Spanish insurance sector that I always say where we're international even if it's on a limited manner, only in credit insurance, but 2/3 of our business are in Spain. And therefore, we are very much tied to the Spanish economy, and of course, the economy or the performance of the sector. The truth is that the sector which was used to constant growth in 2020, the year of the crisis dropped by 8%. In 2021, we saw growth of 5%, and now we are on this upward trend, in this growth trend. We have data on the end of the first half year with this 4.4% that you see globally and growth in all lines of business, almost 3% in life and significant growth in non-life businesses with a combined 5.4%, including the growth of motor despite the fact that we come from exceptional results in this line of business as a consequence of traffic restrictions in previous years. So with a very competitive market, that is especially competitive in motor in our country. And as I was saying, with this environment, the truth is that we've had a very good half year, I will not repeat myself. But briefly, we used this to analyze this summarized P&L with the top line and bottom line. In terms of growth, our turnover grows by 9%. As you can see on screen, 3.6% traditional business, which is growing better if we look at recurring premiums, 5.6%, which are the ones that contribute the most value to our business with a drop in single premiums life in this environment of low rates. And with the upward turn of the card, we are not focusing especially on that and a clear growth in credit insurance business. Remember that credit insurance in the framework of the crisis in 2020, it dropped by 5%. Last year, in 2021, we already had a significant growth of some 13%. And at the moment, you can see that our turnover in credit insurance increases by 16.5%, specifically in terms of acquired premiums is 17.1%, and this is due to several factors, but mainly the higher volume of sales by our policyholders, both because of the growth and also because of the impact of inflation on the turnover of these customers. We have a very significant business retention rate. And cancellations of only around 5%, which is the opposite of the reasons that I mentioned. So the consolidated result increases by 20.2%, 19.5% if we look at the attributed result. And what's truly significant is that 1 more year, operational results of both businesses increased both traditional business. You can see 7.9% increase with a very good performance overall in all lines of business. And we will see this in more detail with figures. The CFO will tell us about the in a few minutes. And I wanted to stress a couple of relevant aspects. The exceptional performance of the multi-risk lines of business where you will see an increase of 30% in the results, and this is linked to the absence of adverse weather events especially in the first quarter of the year as compared to Gloria, Filomena and others of the 2 previous years. And an excellent result despite the fact that an increase of claims reached consolidates, especially in home and some increase in cost of services as a consequence of inflation. And the second fact to stress that you will also see a significant reduction, some 39% of the result in motor as a consequence of the normalization of user vehicles. And in the end, as a consequence of the claims ratio in half year, which compares with the first half year of last year where there was still some traffic restrictions, mobility restrictions. At any rate, you will see how the result that we have in the moment in absolute terms in the first half year is -- well, it drops by almost 40% as compared to the first half year of last year, but it is similar to what we saw in the first half year of 2020, and better, clearly better than the first half year of 2020, which was before the economic crisis. And in credit insurance, you can see the result increases by 36.4%, EUR 147.6 million, a result which is excellent is still based on a very low amount of claims, which places the claim ratio and the CFO will tell us about it in a bit more detail. That was slightly above 40%, which is still a low level, somewhat higher than that of the previous year, though. At any rate, what I can assure you is that we continue to book provisions, generally speaking, but specifically in credit insurance, we are very conservative with our provisions foreseeing a potential worsening of activity at the end of government aid for COVID and also as a consequence of the situation of inflation and potential crisis or consequences that these may lead to in coming months. You know we have a global system for the calculation of technical provisions, which anticipates claims ratios at the very time of the same taking place. And we can regulate also based on parameters that are adjusted based on the economic circumstance is also true. And you will see that we still have a relatively high cost of reinsurance, EUR 122 million, a bit above EUR 122 million, of which some EUR 42 million or still a consequence of government agreements -- reinsurance government agreements, which came to an end last year, but we were considering claims with an amount that was lower than what was provisioned and we have a profit that we have to share with the reinsurance, which is what we are doing through this. Truth is that these agreements have had a relatively high cost. But as I said, oftentimes, they have this so as not to take more drastic management and underwriting measures, which always improves our mid- and long-term relationships with our customers. From the point of view of the structure of our business, not many changes here. We always say 60-40. And as you can see, the weight of credit insurance has increased somewhat as a consequence of the growth we are seeing in this line of business. And from the point of view of the territory distribution of the business, you know that we are multinational regarding credit insurance. But as I said at the beginning, Spain is -- still makes up 2/3 -- almost 2/3 of our market, and the rest you can see is basically Europe. Outside of Europe, we have approximately 7%, as you can see in Asia, Rest of the World and America. And finally, I would like to talk a bit about sustainability, qualitative aspects. It's almost the same slide as in the last presentation. Just to issue the message that it is obvious that in the framework of the COVID crisis and post crisis and in the framework of the difficult financial context in which we develop our activities this year without a full economic recovery. And with inflation, we are, of course, focusing on the ordinary business and management of our business, but we must not forget about those aspects that our future depends on, especially innovation but also sustainability, which, as I said oftentimes at this moment is no longer a regulatory demand, but also it starts to be or it has recently become a demand of the market. Currently, many of our investors demand a rating in sustainability. And of course, it may so happen that in the near future, our clients will demand that as well. We have done a lot in the field of sustainability on the website of the company. You can find the sustainability report. And more significantly, at the end of last year, we obtained an excellent rating by Sustainalytics. Other topics we discussed, the share price evolution, share price performance. You know this very well, and I think maybe even better than myself. The 2 piece that this -- well, this is the long-term evolution from 2002. And you can see on the screen, a very good performance with a profitability rate of 10.78% annually from 2002 to the first half year of 2022. Much better than the indexes that are nearest to us, as you can see on the screen. And in more recent terms, in 2021 we increased only around 2%, the stock market did better. And the share is showing a more defensive performance as others. We are around 29% with this minus 0-point something that you can see on the screen at the moment. And the other leg of the share, which is shareholder remuneration, dividend, I must repeat what I always say. We have a conservative dividend policy, but policy of growing dividends in absolute terms, maintaining our strong commitment of shareholder remuneration. We have respected this even in the toughest years, the years of the financial crisis 2008, 2009, the first of the series that you see on screen which had a clear impact on the results of credit insurance and where we were able to maintain even slightly increase the dividend for our shareholders. And since 2010, we've seen consistent increases in the dividends between 6%, 7%. It is true that during the AGM of 2020, we were forced to reduce the complementary dividend as a consequence of the recommendations of the European Authority, EIOPA and [ DG Insurance ] in the context of the COVID crisis. But in the AGM of 2021, we doubled the complementary dividend. We recovered our level of dividends. And as you know, the last series of dividends, July, October, in February, we increased the dividend by 5%, and we completed in the AGM of just a few months ago, April 2022 with an increase of 10% of the complementary dividend, which led to a global increase of the U.S. dividend of 7.3%. Recently, regarding the event of 2022, as you know, we have paid out charged reserves, yes, with a different technique, but we have paid out the first dividend which is the usual one in July with an increase of 7.5% as compared to the dividend of the same date in the previous year. Carlos?

We can get into the analysis of the different lines of business. Yes, as usual, I will give you a bit more detail about the performance of both businesses, traditional and credit insurance. And we will start with the traditional business. I would like to mention here that our diversification of products and the retention of our customers allows us to maintain an important level of growth in turnover that you've seen in the past few quarters. In this case, in the half year, we have growth of recurring premiums of 5.6% up to EUR 1.452 billion. And you can see on screen. And regarding the technical results, you can also see a favorable performance of these results, a favorable evolution with the growth of 5.8%. In general insurance, the result of multi-risk allows to offset the normalization of the results of motor which is what Mr. Arregui told us a bit about before. The combined ratio despite increasing by 0.8 points is still below 90%, specifically 88.9%. On the other hand, there's also been a favorable evolution on the technical result life and financial that you will see in future slides. And now we will break it down to the different lines of business. First, multi-risk. Multi-risk has experienced a significant growth, 7.9% better than the sector, which is at 5.6%. And this is mainly due to the growth of premiums of home as a consequence of a good evolution of the average premium and the commercial activities of the group. The combined ratio is at 88.9%, 2.9 points below the year before. And as I also said, as a result of the lowest impact of weather events, Filomena, Hortensia last year. This year, there's also been said in weather events, but of a lower impact. And here, we've also talked about a sudden increase of the baseline claims ratio frequency and a relative impact of the cost of claims. As a whole, these relevant increase of turnover and the maintenance of the combined ratio, which is also very good, allows us to see a result that grows by 30% up to EUR 42.1 million. And now on to motor, it maintains the growth pace on the year before. Increases in turnover of around 2%, 2%, specifically up to EUR 348.9 million. And this is in line with the performance of the sector, which is growing at 2.4%. And here, we can see a relaxation of the competitive environment vis-a-vis prices. Commercial activity in our case, that has allowed us to grow in a number of customers. And regarding the combined ratio, it is at a comfortable 91.3%. And here, we can see a normalization of the technical cost, 67.3% at the moment, 5.4 points above 2021. But taking as a reference baseline years, which are more comparable of the pre-COVID period, we should compare it with 69.5% of year 2019 or 17.5% in 2018 so you can see that it compares favorably with those other periods. And the technical results, it finally reaches EUR 27.7 million above the results, not of 2021, which continued to be an exceptional year due to the COVID situation, but it does compare favorably with 2019 with EUR 20.9 million over the same period of 2018 with a result of EUR 18.9 million. Regarding other. Turnover increases by 9.4% with a positive impact of the recovery of the economy. And in terms of results, we keep excellent results of combined ratio around 84%. All of this leads us to a technical result of EUR 26.7 million with a growth of almost 25%. Now on to the last line of business that we analyze, life, with continuous growth in health, funeral and the rest of periodic premiums with an acceleration of growth up to 5.1%, whereas single end premiums are still unattractive and appealing commercially speaking at the moment, we will see the evolution of interest rates in these types of products. And regarding results, the technical financial results improved by 27%, up to EUR 68.4 million with a good combined ratio for funeral, 90%, and health, -- also an excellent ratio, 80.7% for funeral and 92% for health. Traditional business, an increase in turnover and a good performance of multi-risk because of the lower impact of weather events also with very good results in life. This leads us to offsetting results of motor and as a whole, increasing the technical result up to 5.8%, going up to EUR 142.5 million. In the other hand, the financial result increases by 15.6% because of the greater contribution of dividends and real estate income, EUR 142.4 million total result. And now credit insurance business. Here, acquired premiums in this business, earned premiums reached a volume of 1.08 billion, 17.1% growth. Growth factors have already mentioned, especially the good evolution of the turnover of our customers, both because their economic activities in previous quarters and also because of the impacts of inflation on their turnover. There's also greater commercial activity although in a more selective manner. And as a negative impact in the evolution of turnover, there's still downward pressure in renewal prices at a level similar to those from the beginning of the year and here, things have not let up. As to the technical result, we continue to see an improvement with a growth of almost 50% up to EUR 182.3 million as a consequence of the low claims ratio posted and also due to the cancellation in 2021 of the reinsurance agreement with government as a whole. All of these allows us to have a growth of 36.4% in the ordinary result going up to -- well, going up to EUR 147.6 million. In terms of turnover, you can see the increases in the distribution of turnover by geographical area on screen. You can see that all geographical areas are growing very significantly. We would like to stress America with very significant growth, but mostly due to exchange rate effects. I would also like to stress the relatively lower increase in Spain, 7.2, so high. And I would like to mention that the decrease of turnover in Russia and Ukraine is not having an impact on the growth of Central Europe, geographical area, mainly due to the fact that these countries have a low relative importance in our total picture. Regarding profitability. The combined gross ratio continues with a good performance, 74.1%. And significant growth in turnover that we've mentioned previously allows for a reduction of the cost ratio, whereas the claims ratio goes to 41.9%. The number of claims here, it's true that it increases. Obviously, we compare with year 2021. But this baseline year is a historically low year and I should also stress that we have seen relevant increases in claims related to the Russian-Ukrainian conflict. In our provisions -- in our prospective provisioning, we include potential impacts for the future. And in this point, I would like to mention I would just strengthen this idea that we continue with our conservative provisioning system already described at year-end 2021. In terms of risk exposure, 10.5% increase in line with the increase of turnover and the reasons are similar in the end. This growth goes hand in hand with the inflation effect and the growth of our customers. We are not being less cautious in this area than in previous periods. And regarding our exposure to Russia, it has dropped to less than half as compared to our exposure at the beginning of the year. And in relative terms, it is at 0.4% of our total risk exposure. And finally, as a summary also for the credit insurance business, the basic ideas are the ones I already mentioned. Income has increased notably basically because of the increase of the turnover of our policyholders linked to their own activity, but also inflation. The technical result before reinsurance is becoming normalized with the improvement in cost ratio and a moderate increase of claims maintaining our cautious provisioning policy. Regarding reinsurance, we've already mentioned this, there are still negative runoffs of the government agreements in this amount that Mr. Arregui mentioned. And regarding our regular reinsurance panels, [ 57% ] transfer, which is what we had before the COVID period. On the other hand, the financial results also improved up to EUR 8.2 million, basically as a consequence of the positive results obtained by our associated companies. And as a summary of all of these baseline ideas, the ordinary result is EUR 147.6 million and a substantial increase of 36.4%. And that will be all from me.

Okay. So we are now leaving the P&L aside and a few words about capital and solvency, investments and solvency. Our permanent resources at market value come up to, as you can see on the screen, on the left-hand side, EUR 4.9 billion, with a reduction, therefore, of 5.7% as compared to the figure at market value at the end of last year, and it is a magnitude that, as you can see on the right-hand side has had a spectacular evolution in this century, multiplied times 15. And as I always say, this has been possible without capital increases, without asking our shareholders for money and without dilution. As a consequence of us retaining a significant chunk of our results applying, as I said, a cautious, conservative dividend policy that our shareholders allowed in order to fund this expansion period. It is true that this is -- well, what happens in this half year where we have results, you can see them on the left of EUR 287 million minus the dividends paid, but this half year has a special impact, which is the drop of the stock markets, the changes in interest rates with a negative change in valuation adjustments of EUR 500 million net of taxes and accounting asymmetries, basically the participation of life policy holders, the variation of the assets. And from the point of view of solvency, which is an essential magnitude in any insurance group, as you can see on the screen, the most recent information is that we closed last year, we approved the report on the financial and solvency situation in May, which is online, available to you on the website with a ratio of 220%, an improvement of 4 points as compared to year-end 2020. Basically, the drivers of this improvement are many, but the main drivers are, of course, the retained profits of the group. Secondly, the slight interest rate increase that already took place at the end of last year. In our case, it affects the liabilities rather than assets because liabilities in life have a longer duration than the portfolio of fixed assets and also the excellent results and the excellent claims ratio of credit insurance despite the increase in risk exposure and despite the fact that we, at the end of the year, no longer had the government reinsurance agreements. At any rate, it is a very good solvency ratio as we see it. We're very happy with it. It is better than most than -- that of most of our competitors. All companies are above 180%, and we are around 160 even in adverse scenarios. And as you can see on screen, own funds are of high quality because 95% or more than that are Tier 1. And precisely for this reason, the rating agencies acknowledge our capital position and also the robustness of our business model. So AM Best for all operating entities and Moody's for credit insurance give us an A rating, A and A2, respectively. And on screen, you can see the distribution of our investments that amount to EUR 15.024 billion, 4.4% less as compared to year-end '20 -- or last year, 2021, because of the drop in the stock market and the interest rate increases. I don't want to bore you with the breakdown that you can see on screen and all of the annexes and in the annual report. But just as a message, I would like to repeat that we have a conservative investment policy and a stable one. We have diversified investments in the terms that you can see on screen. And we have assets that fit our liabilities in terms of profitability, liquidity, duration and -- well, in all magnitudes of the joint ALM management, which is what we work on. And nothing else really. I am available to you for any questions, and Nawal will summarize the main questions that have been posed.

Thank you very much, Francisco and Carlos, for your presentation. We will start with the Q&A. The questions that we have received during the presentation, as usual, the questions were grouped by topic. The first question is about the traditional business, specifically motor. And it says, in motor, we see a significant impairment of the combined ratio of the sector. Inflation seems generate significant impact in the average cost of claims. Combined ratio has been -- your combined ratio has been impacted too, but it's below that of the sector. Do you think you will be able to maintain that gap with the sector? And if so, what are the reasons?

Well, we'll see. Truth is that we had already talked about these in previous presentations. I seem to remember, especially in the last one. And we said that we already expected an impairment of the combined sectorial, a combined ratio in the sector in motor because it is an extremely competitive sector in Spain. And as a consequence of this, we thought it was unlikely that the increase of cost due to inflation and the update of the tables could be completely transferred on to prices. The truth is that we see that in this half year, the turnover of the sector has increased by 2.4 points. We do not yet have data of results, comparative results of the first half year. But at the end of the first quarter, the combined ratio of the sector had increased somewhat more than 8 points at 96.2%. So our turnover has increased in line with the sector and the combined ratio is still well below the sector, specifically 91.3% but with an increase of 5.5 percentage points. This increase is mainly due to -- and we already mentioned this, the increase or the recovery of the claims ratio as compared to a period in which we were still affected by mobility restrictions. Although it is also true that we felt some inflation pressure in the average cost of repairs, material damage, although we do have a cost mitigation measures in place. We have a network of trusted professionals and workshops that try to apply the best repair practice sales, adjusting costs and offering the utmost quality and service to customers. And we, of course, maintain rigor in the underwriting and price setting, which means we can have this very good profitability ratio and we believe we will be able to continue like that.

Okay. Let's now continue with questions about the credit insurance business. In credit insurance, the increase of premiums is still significant. Is it due to an increase of average premiums or new portfolio? And the TPE increased 10.5% due to uncertainties in Europe, are you not concerned about this?

I think the volume increase of premiums is very significant. And this is what I refer to and the CFO as well, basically 2 reasons. The first one is the increase of sales of our policyholders due to generally speaking, economic recovery and secondly, due to the impact on inflation on the volume of sales. And secondly, we maintain a very high rate of retention with a cancellation rate, which is very, very low, of some 5%. At any rate, what we should say is that we work alongside our customers in their growth, and we, in that manner, ensure the risks taken. We are very conscious with our policies, and we're comfortable with our risk exposure levels. At any rate, we should not forget that the essence of credit insurance is that of ensuring within the rigorous underwriting policy of the company or the operations of our policy holders. This is a basic principle of credit insurance if we do not want to have anti-selection effect. Regarding the increase of 10%, we're comfortable there. I think that maybe what may concern you more is the situation of Ukraine and Russia. The CFO a minute ago had mentioned this topic, and I just wanted to repeat that from the beginning of the conflict, we are not underwriting policies in Russia. Secondly, we have basically reduced the exposure related to exports in Russia. We brought it down to a minimum. We have reduced by more than half our risk, which is basically internal trading risk in which we are not seeing increase of claims. And having said this, we believe that our TPE is well diversified by countries and sectors, and you can see this in the annexes of this presentation. And what is true is that claims ratio or claims frequency is increasing. We are still at levels below the pre-COVID period, and we expect that these claims frequency increases, it will be the normal situation, it should normalize because this is the reason why credit insurance is used at any rate. But again, I would like to repeat that we have a very conservative provisions policy with a global system, which anticipates the claims ratio at the time of the sale, and we adjust parameters to be completely certain that we are well provisioned. In case there were to be a normalization of solvency in the second half year, as per economic forecast, the truth is that for all of those reasons, we do not expect a significant impact on claims ratio, substantially different to the one that we are reporting at the moment.

And now a couple of questions about the macro environment. The first one reads, how is inflation impacting you? What should we expect if this situation continues for a long time?

Well, first of all, we don't know. We don't know how long the situation is going to last. It seems that the situation is going to be with us for many months. But in the short term, there's still a lot of uncertainty because one essential element, the increase of inflation is the shortage in production and distribution chains and the war in Ukraine -- the Russia-Ukraine war and also with the lock downs in China, which has basically not grown in the last quarter. These are 2 variables that are difficult to combine, to predict. So it's difficult to predict how inflation will continue. And what we already said, I've said it myself and the CFO is that the generalized increase of prices and inflation does not have a direct impact on costs in our case due to our activity structure in motor. We just told you that we have mitigation measures in place and that we expect good results due to the professionalism of our network of professionals and workshops, but in other lines of business such as multi-risk and home, we have a very close relationship with our network of repayment, and this helps us mitigate somewhat the effects of inflation. Another line that may see a higher impact of inflation is health. The good side of things is that we have hospital agreements signed that protect us from inflation and they are applicable to 2022 and 2023. Regarding the impact of inflation, in credit insurance, we already talked about this. Aside from the direct impact on turnover, we cannot deny that the potential -- the created tensions in companies may involve certain problems, but these are factors that have already been taken into account in risk selection and the booking of provisions that I mentioned. So we cannot hide, of course, that this sustained inflation over time is one of the most significant challenges faced by all economic sectors, especially insurance. We do not expect negative impact, especially significant in the new future, though.

And the second question about the macro environment REITs, what impact are you having? And do you expect due to the increase of interest rates?

Well, the increase of interest rates is a fact and we've recently seen this with the European Central Bank and with the Fed. The increase of the European Central Bank, what we expect no increases in interest rates because it follows the Federal Reserve in the Bank of England. You have seen that the increase of interest rates has impacted us. We just reported on a reduction by valuation adjustments of our permanent research market value by EUR 500 million as a consequence also of the drop in the stock market, but also an impact of the increase of interest rates, EUR 500, million net of tax and accounting asymmetries. However, the truth is that if we were to conduct the exercise in terms of [ AML ] management, truth is that the increase of the interest rate curve impacts our liabilities more than our assets as a consequence of the longer duration of life assets. But what happens here is that this positive impact is not translated into the accounting balance at the moment because the provisions for most of our policies are calculated by using the historic rates of our portfolios. And this will most certainly change when IFRS 17 comes into force. In general terms, we will be forced to discount the risk-free interest rate curve, both -- we need to discount both assets and liabilities in this curve. But you can see an idea of this in the impact in solvency that we have in the report -- solvency report published last year that we published in May and which is available on the website. We have a chart in which we include these sensitivities to different factors, stock market up and downs, ratio up and down. And you can see how an increase of the rate curve of 100 basis points, what it produces is an improvement of 4.8 points in our solvency ratio. And besides these considerations that are purely value and balanced consideration the truth is that we've always said that an increase of interest rates in an orderly fashion and a low increase is favorable for the economy and for insurance companies because it will allow us in the mid and long term to obtain more profitability from our assets, offering also more profitability to our customers with more attractive products and with a greater profit margin.

Okay. And just to finish, one final question on the share price performance. Despite the good results that you've been reporting, it seems like the market is punishing the share price. Why do you think this happens?

Well, I think this question is the current question. I'm not so certain that we can apply it to the present moment in which the share price is performing correctly, in an offensive manner in this year. And it is true that historically, we understand that our share is undervalued from the point of view of the share price, maybe partially because of the lack of liquidity. But reality is that on other occasions in the phase of stock market drops, our share has performed nicely. And also credit insurance may have an impact on these. It is credit insurance is the great unknown, and the market punishes it excessively without knowing the drivers of the business. When you know the business well, because we've proven this, you can see that it is a very profitable business in the long term as long as the risks are managed adequately. And in this sense, our role should continue to be that of communication and explanation of this business in all 4 that we made. And I said at the moment, the share price is around EUR 29 per share, very similar to the end of last year with a drop that was below 1% at the end of the half year, so much better than any of the indexes and at any rate. Almost all of the analysts are recommending average objective prices of around EUR 40. And we expect that in as much as the market feels more comfortable and the uncertainties split up a bit in the field of credit insurance. The share price will come closer to the actual value of the share. And what is clear though is that -- well, we believe that what shouldn't punish the share price is whether we have an excess of capital or not, we have a surplus or not. We've repeated again and again that we believe we have a growing dividend policy in absolute terms. We've retained a significant proportion of them. And this is what has made it possible for us to fund with our own resources. All of this expansion period where we have multiplied times 10, 15, basically all of the magnitudes of our business. We continue paying attention to the market and actively looking for growth opportunities via acquisitions. But unfortunately, for now, none of them have materialized.

Thank you very much, Francisco. With these answers, we conclude the presentation of results of the first half year of 2022. And as usual, pending questions will be managed directly through the Investor Relations team in the coming days. I would like to encourage you or to invite you to the next presentation of results on Thursday, 27 of October 2022, where we will present the results of this third quarter of the year. And I remind you again that you can visit our website, www.grupocatalanaoccidente.com, with all of the information that may be of interest to you. We would like to thank you for your attention and participation, and we wish you a very, very happy summer, and see you soon.