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

Good day, everyone. It's a great pleasure to be here once again with you to talk about the evolution of Grupo Catalana Occidente in this first 9 months of the year, whose accounts have been formulated this very morning by the Board of Directors. My name is Francisco Arregui, General Director of the Group. And here, I have with me, as always, the CFO, Carlos Gonzalez; and Nawal Rim, Investor Relations. Firstly, I would like to thank you all as always, for your attendance remotely to this event, but also for the attention that you're always delivering to the development of our business and the share of Catalana Occidente. I would like to remind you that you can remotely ask all the questions that you deem necessary. Nawal will be organizing and grouping them, and we will answer as much as possible at the end of the session. And the rest of them will be dealt with through the ordinary channels on the website. As I was saying, we are going to analyze how things have been going in these 9 months, but as on other occasions and without further ado, I want to anticipate that in a context that is still difficult without the financial recovery being full in Spain. And globally, we have super high inflation with the conflicts and battles that you all know, we have closed these first 9 months of the year, which I would qualify as extremely good -- very good with significant progress in the 3 basic pillars of our general policies. Growth with an increase of 8.5% in business volume, profitability with our consolidated results, which grows by 21.5% and in solvency, you all have seen, it's been published since May. The published report on solvency, and we closed the year with a 220% improvement of 4 points as compared to the previous year. So we are going to talk about a series of things following the program and the agenda that you can see on screen. We will start with the economic and sectoral environment as you know, it's like me or even better. We have had lots of growth -- continuous growth years in the context of volatility and globalization and characterized by 2 methods, which are super low inflation and interest rates that have been historically very low. You know that all this changed abruptly with COVID. In China, at the end of 2019, the lack of supply chains reaches the rest of the world at the beginning of 2020. There is the lockdown, there's the appearance and top-off industry in production, you can see 3.1% on the 2020 with those differences by geographical areas that you're seeing. And unfortunately, Spain is at the lead of developed country with the minus 10.8%. The good news, although it's delayed is that in 2021, globally, was the year of the recovery, as you can see on screen too, with a growth of 6.1% or 6% globally, much higher than the drop of the 3.1%. But despite having significant growth, even in the Eurozone, Spain stayed at 5.1%, much below the drop of the previous year. And the truth is that expectations at the moment are not hugely good in terms of financial growth, even more so for 2023 than 2022. We will see how things end up going in terms of this cycle of price increase in raw materials, particularly energy, it's clear that there's been an inflation of high, which has been very significant, an increase of interest rates as a consequence of the position of central banks and the truth is, as you can see on screen too estimations of growth, which are gradually more adjusted and more reduced in Spain, which is affecting us more. We still have good growth estimate for 2022, but much lower for 2023 of 1.2%, as you can see. And with an inflation context that is still high, and that's not going to be something for the short term, it will be extended at least during the next year. And this really sets forth a complicated issue and problem from the financial standpoint in terms of markets. You already know this frankly, very well. Interest rates that are rising very low historically in recent years and have risen significantly in all the different terms, as you know very well. I don't want to stress any of them. But your Ribor per year at the year -- at close of year last year was negative and 270-something now the public Spanish, just to give you an example, was at -- is 0.5 and now it's above 3.5. And at any rate, very significant increases in stock exchanges with drops that are already very significant after the revaluations of the year 2021. And we are having, as you can see, and I'm leaving it here a very bad behavior in this year. And the insurance industry, which grew continuously for many years. In the year 2020, the year of the pandemic, the year of the crisis, it dropped by 8% in premiums. In 2021, there was a growth of 5% and this year it is having a good behavior with that growth at the third quarter, as you can see, up 5.7% with growth both in Life up 5.6% and risk insurance savings and the other Non-Life branches and growth as well in all the different branches, including the Motor pillar, although it's extremely competitive in Spain. And in this context, I wanted to anticipate that things were going frankly well in traditional business with growth of turnover and slight improvement of results and in credit insurance exceptionally well with growth that are very significant in turnover and results of an improvement of 57% despite the fact that the helps from governments have been stopping to commerce and industry and the threat of the starting of the recession that you all know about. So we must stress this in global terms with this P&L just first-line income and finally, results, we grew at 8.5% in volume of business in traditional business. As you can see, that 1.4%. But in true this is 5.4% in recurring premiums, except for single premiums life, which are the least valuable for the company, as we have said on so many different occasions, very much aligned at 5.4% with the growth of the industry. And with growth in practically all the different pillars -- will be talking -- the CFO will be talking about this much more. And credit insurance spectacular growth of 17.8%. 18.4% in terms of acquired premiums, and this is mainly due to a certain recovery of production in these months, but also especially because of very low cancellations, we are retaining the business really well and very especially the greater amount of sales of our customers based mostly on the effect of inflation and withstanding the portfolio renewal rates that have constantly dropped pressures in this case of claims ratio, which -- in which we move. And regarding results, as I was saying, 21% of increase in the consolidated result, 21.5%, which is 19.3% in terms of attributed results. And the most significant thing here is that we continue to improve ordinary results of both businesses and traditional business is 0.4% only on our results, which was exceptional in 2021 in the framework of the restriction, the post-pandemic restrictions, specifically in motor and health. And out of the results of traditional business, I only want to highlight one, what you will see. There is a significant drop of 41% in the motor pillar because of the normalization of the use of vehicles versus 2021 with mobility restrictions. Frequency has gone up. The average cost of material damage has gone up. We have had some more serious claims ratios. But all in all, we cannot forget that the EUR 36 million, you'll see that we earned in the motobilities and months exceeds the EUR 31.7 million that we made in the 9 first months of 2019, which was the latest prepandemic year with the use of vehicle, which is much more similar to what is normal at the moment. Secondly, a reduction of result in 10% in multi-risk with home and family, particularly. The frequency has dropped, but it's greater than what we had in 2019. The average cost has gone up in homes significantly. And as for weather events has been less than last year, but they have particularly affected us in terms of the rains in Catalonia and the eastern part as well as hail and there have been more claims of a lesser amount. So the consortium has not been activated because of that and the reinsurance much less, 7% of drop in the results of Health to which obeys to exceptional results of last year as a consequence of the pandemic. People went less to the doctor as you all know. And generally speaking, very good results in the rest of pillars and branches in others too, as you can see. And now the CFO will talking about this in credit insurance, is a result of EUR 279 million (sic) [ EUR 275.9 million ], 57% (sic) [ 57.2% ] of increase, which is basically a low claims ratio, although the claims ratio is increasing now. This year, it was a very low one before that, and it's now placed at a 37.7% in terms of accumulated results. And as I have said in previous presentations, we continue to provision very carefully and cautiously in the face of a possible worsening of the claims ratio in the current context. At any rate, we have a global provision calculation system that anticipates claims ratio when the sale is performed to the customer based on parameters that we keep on adjusting taking into account all the financial circumstances. Reinsurance continues maintaining considerable cost of EUR 204 million. You will also see this and the CFO will say, EUR 45 million of which correspond to the reinsurance of governmental agreements that stopped to be in force over one year ago in July 2021. But the reality is that we've had positive runoffs of the provision ratios -- claim ratios, and then we must share this with the insurer. But having had this government reinsurance cost that was obviously very high, as I've seen in previous presentation or as we have said, this was very useful in the sense that they allowed us to not adopt more severe measures in terms of underwritings, which always has a positive effect on the mid- and long relationship with our customers regarding composition of portfolio in global terms. As I always say, the weight of Atradius in our group is obvious. In credit and insurance business, we talk about 40% on credit, high growth over the last 2 years on credits make this slightly above credit insurance. And regarding international implementation, we are international, although it's basically credit insurance, Spain, we've said it on many occasions continue to represent 2/3 of our business, something less right now because of the same reason I've just said when measuring the premiums. And the rest is basically Europe, only 8.3%, as you can see here at the end of the list that belongs to the rest of the world. I don't want to stress anything particularly regarding sustainability. A lot is being done. And the reality is that despite in this difficult current context for one or other reason for several years now, we are focused on the ordinary management of our business. We are not losing sight of the truly interesting and important things regarding the future, basically, innovation, digitization and also sustainability, which has ceased to be just a trend or a fashion or even a legal requirement just to become market requirements. And now our investors are demanding that we are sustainable and it's sustainable through a raising. And now it is within the context of a big company, people demanding our services are also demanding this. We have worked a lot in the last year on sustainability. You have the memo on the website where you can actually check it all out. And as a summary, I would say that in terms of rating, the different ratings are reflecting the efforts done during the year especially sustainalytics that we are showing here on screen, where we get our rating, which is excellent. So Mémora, yes, we have not publicly talked at this myself since the moment. We -- not much after the presentation of the 6 first months of the year, a relevant fact, which has been published so far, 29th of July, where we announced that we have reached an agreement with the Ontario Teacher's Pension Fund for the acquisition of 100% of Grupo Mémora. The reality is that this was -- I think we can see it on the screen -- on the next screen. This was because of the price -- well, the price that you can see on screen, EUR 387.5 million with some financial adjustment. Mémora is the first group in the Iberian peninsula in funeral services, with funeral parlors, crematoriums and cemeteries and also in Portugal with a turnover, as you can see there in 2021 of EUR 188 million, EUR 47 million EBITDA and the Spanish market, first operator, Grupo Catalana Occidente entered with the acquisition of Previsora and is growing in funeral services, as you can see on screen, through Asistea where Funeuskadi Group joined going with Previsora and the subsequent acquisitions that have taken place, in particular, the most important one in Remedios in Madrid. With other acquisitions, we have reached a turnover of EUR 28.4 million and a market share of 2%. The financial results in Grupo as you can see on screen reaches EUR 217 million in turnover with figures of 2021 and EUR 57.3 million EBITDA with a clear leadership position in the market in Spain. And naturally, the operation is subject to the attainment of the different authorizations within Portugal, which we already have. And also in Spain, which is still pending processing. And in our opinion, the strategic fit of the operation is obvious in our business in the funeral, burial service is a very stable one. We were already there with Asistea. It has an obvious complementariness with funeral insurance and Mémora and Asistea have very complementary businesses, as you can see on screen, in blue. With market share, greater for Asistea and in green, Mémora. We obtained a clear leadership position in Spain. And finally, the operation will enable synergies, additional synergies given the integration of the businesses. At any rate, we are very satisfied of having reached this agreement, and we will inform you when the integration takes place. The next message is the one regarding remuneration and dividend policy. You know that we have dividend policies, which is very cautious with growing dividend in absolute terms and that we always maintain the commitment to remunerate the shareholder regarding the evolution of the share price. As you can see, well, you know it really well as we do, very good one in the long term with that rate -- internal rates in '20 -- 2002 of almost 11%, much better than the closest indexes. The truth is that 2021, we went up only 2.9% versus more significant revaluations in indexes. And in this third quarter, we are with a loss of 14.5% at the closure of the quarter, that is very close to IBEX and Stoxx Insurance. And it has a behavior in recent days, which has been slightly better in terms of the Catalana share better than the indexes. And regarding the dividend story in the framework of the policy I was talking about just now, some commitment of shareholder remuneration is shown in the table. We managed to increase the dividend during the financial crisis in 2008 and 2009. And from that moment on, there has been a consistent increase of dividend between 6% and 7.5%, reaching 2020, where, as you all know, the recommendation of the European supervisor for insurance and also for General Director of Insurance was to stop the complementary dividend. We didn't do that. We just made it drop to half. And very quickly on the following year, we doubled the amount for complementary dividend. And we did an increase of practically 30% of the dividend, which was the greatest in the history of Catalana Occidente last year. We increased the dividend by 5% in the first dividends and 10% in the complementary dividend agreed by the AGM in the month of April. And very recently, we have paid out the first dividend that technically in terms of authorization of the AGM, we are doing it with reserves charge, but they are 7.5% as compared to those of the same dates in July and of October last year. And if you now wish we will now go in deeper into the income statement.

Thank you very much. Yes, as Mr. Arregui was saying, and as is now common, I will talk about the main items of the income statement of the business, both for traditional business and the credit insurance and without further ado, we will start with traditional business. Here, the fact that we have a product portfolio that is very well diversified and that we maintain retainment of our customers means that we have high retention, and this has enabled us to maintain the significant growth of turnover with an increase of recurring premiums of 5.4%, up to EUR 1.9 billion and we have to stress the growth of 7.4% in multi-risk and 8.3% in others. And regarding results, the technical result has been touched. It drops by 4.6%. And the general insurance business, in this quarter, the result of multi-risk does no longer allow to compensate the Motor one, we will talk about this later. But the combined ratio is still around 90%, specifically, 90.3% despite having increased in 2.3 points versus last year. On the other hand, there's still a positive evolution of the life growth with a growth of 27%. We now move on to talking about each one of the branches. We will start with multi-risk with EUR 580 million in premiums. It continues to experience a strong growth. 7.4% mentioned before better off than the industry, which is around 6% and also with the growth of premiums of the mass branches. And in this sense, the growth is an agreement with a good evolution of the average premium. So the prices, which basically also needs to be aligned with the increase of cost of claims ratios stemming from inflation. Combined ratio is at 91.6%, 1.5 points above the previous year as a consequence of the increase of the claims ratio costs and inflation and several peak claims ratios and weather events is similar in both years at the closure of the third quarter of 2021 and 2022. However, in these last months, there's been several events that have not been covered by consortium or the reassurance panel. So finally, the -- 10.2% up to EUR 46.7 million. That's the final result. In Motor, the growth speeds up as compared to the previous one with a growth of 2.5%, EUR 493 million. And this is aligned with the behavior of the industry, which is growing at 3% -- 3.2% in reality. Here, what we can see in the industry is a relaxation in the competitive environment of prices. It is possible in some cases to see growth in prices. And in our case, this is also -- our commercial activity is also shown, and this has enabled us to grow in a number of customers. And these two factors are actually leading on to this result. Combined ratios at 92.6%, below the ratios in 2019, 93.5%. And I'm talking about 2019 because this was the time that frequency rates is the best comparable one in history. So there's a normalization of the technical cost as for frequency. And also, we've talked about a slight increase of costs because of the inflationary pressure. So the technical cost is at 68.5%, 5.2 points over the year 2021, in which we still were affected because of the lack of mobility due to COVID. And then finally, as per result, we reached EUR 36 million, which compares really well and exceeds the result obtained both in 2019, directly comparable with EUR 31.7 million or even in 2018 with EUR 28.4 million. As Other category, I would like to say that the turnover increases by 8.3%, being positively affected by the recovery of the last quarters and 2 years essentially. And in terms of results, it is at excellent figures of combined ratio of 83.3%. So we have a technical cost of 49.3%, with an increase of 23%, as you can see on screen. In Life, we continue to grow in single premiums, in health, funeral insurance, around 4.7% in earned premiums, whereas single and supplementary premiums, in this case, are especially negatively affected because in the previous year, in the third quarter of last year, there was a special operation of a relevant amount, around EUR 43 million, which this year has not taken place, and we do not expect it to happen. As for technical results, it improves by 27%, as we were saying before, EUR 111.3 million, continuing with a good behavior, both in funerals, as you can see, less than 8% of combined ratio, life risk and health with a combined ratio of 84.1%. As a summary and just to be more specific in traditional business, the increase of turnover and the maintenance of profitability between the branches of life or others as well as the behavior and the significant improvement of over EUR 12 million of the financial results allows to compensate for the normalization of the motor behavior and the worsening that we have suffered this quarter in terms of multi-risk as compared to previous quarters. So finally, the ordinary results keeps at levels that are similar to the previous year, obtaining EUR 203 million that you can also see on screen. Now we move on to the credit insurance business. Let's start with premiums. Acquired premiums reached a volume of EUR 1.669 billion with a significant growth of 18.4% mainly due to the good evolution of the turnover of our current customers, both for the reactivation -- the financial reactivation of recent quarters as well and essentially because of the effects that the increase of inflation has on these turnover. There is a greater commercial activity that has already been mentioned, although it is true that in a selective fashion, so it has no greater influence in this growth. These are the positive lever. And on the other hand, we still have downward pressure in renewals despite having increased the perception of risk by our customers. Regarding the technical results, the business continues to improve with a growth of 57.2%, EUR 331.5 million. And as a consequence of the low claims ratio registered which continues at reduced levels and essentially because of the cancellation in 2021 of the reinsurance agreements with governments. This allows us to have a growth of results of 57% to EUR 275 million of ordinary results. Regarding the geographical distribution. And if we are more specific in terms of acquired premiums, it's very important and homogeneous in most geographical areas, stressing, as you can see on screen, growth in the American area with a growth of 48%, benefited by interest rates -- exchange rates changes. Otherwise, it would be at 20%. Also, we must also stress the less relative growth of Spain with 9.4%. And also, we would like to mention the situation of the turnover in Russia and Ukraine. They're placed on the slot of Eastern Europe. And as you can see, it has no impact in the geographical area because the turnover in these countries has a very low relative significance. We now move on to talk about the profitability, named the combined growth ratio, good behavior. It is slightly below 70%, 69.9%. And here, we can see the significant growth of turnover that allows a decrease in the cost ratio and the claims ratio goes up 13.4%, 17.3%, increasing or improving the situation of the previous quarter, which is at 41.9%. Here, I would -- also to say that although the number of claims ratio goes up, the basis with which we compare in 2021 is historically low but we're still finding a frequency that is below the one shown in pre-COVID times. I would like to say, as Mr. Arregui already said in this section that we continue to have our cautionary criteria provisioning described in 2021, and it has also been done repeatedly in previous presentations. As opposed to risk, there is an increase of 17.3%, in line with the growth of the turnover of our current customers. And I would like to say at this point that we are maintaining our strict selection criteria. And finally, and regarding the situation of Russia, our exposure in the region has been reduced to half as compared to the beginning of the year, at 0.4% of the total of our risk exposure. So quite residual at the moment and mainly focusing this coverage in commercial operations that are local. And as a summary, and with this I'll finish. We can go through the drivers of the year. The income has gone up notably because of the growth of insurance of policy holders because of the inflationary context too. The technical results is becoming enormous with an improvement of moderate claims ratio, maintaining provisioning policy and regarding the reinsurance, there is an improvement and the result as a consequence and the fact that the first half of 2021, we have governmental agreements, whereas for this year, we maintain exclusively 37% obsession to the reinsurance panel as is common. And the financial result also improves by EUR 11 million to EUR 21.3 million, basically as a consequence both the positive results obtained by our associated companies as -- because of the profitability of investments. And with all this the ordinary result is EUR 275.9 million, almost EUR 276 million and an increase of a very significant -- very high significance of 51.2%. So let's talk about capital investment and solvency. So as always, a few words on capital and solvency. As you see on screen, there is evolution of equity, which goes to the figure that you see on screen, which means a reduction of 6.5%. There is EUR 4.8 billion as compared to the closure of the previous year, as a consequence of the drop of stock exchange and the increase of exchange rates that have affected the valuation of our investment. Permanent resources at market value have had a spectacular evolution throughout this period, practically this century. They have gone from EUR 332 million to almost EUR 5,200 million at the closure of last year, 4.8 now multiplied by 15. And all of you know, but without capital increases, only having good profit retaining part of those profits supplying this cautionary dividend payout policy that you have allowed us to do to finance this entire period of expansion from the result retention perspective, if anything happens in these 9 months, EUR 476 million as a result of EUR 116 million in dividends, but the incidents, as I was saying, is here the change in valuation adjustments, which covers the drop of the value of our financial investment, variable income because of the drop of stock exchange and fixed variable because of the increase of exchange rates. And this is net of accounting asymmetries and the participation of life insurance in the capital gains and losses. In terms of solvency, we don't have any news. You already know the ratio of the closure of 2021 of 220% that we made public in the month of May, you have on our website the report on the financial situation on solvency at a consolidated level and as companies at the closure of 2021 and this meant a drop of 4 points, as you can see on screen. As compared to the closure of the previous year. The main drivers where, of course, the retained profit, a slight increase of exchange rates that affects more the value of liabilities than assets because live liabilities have a longer duration, and we have assets that are not fixed income. And also the good behavior of credit insurance claim ratio, better solvency ratio than our competitors. All companies in the group are above 180, and they are at the context of 160% in adverse contexts being equity of high quality because 95% are tier 1. And the truth is that, this is why rating agencies acknowledge our position and the robustness of our business model and AM Best for all operations in the group and Moody's for credit insurance business allocates the rating of A and A2, respectively. Here on screen you have all our investments 14.968 billion of administered funds, 4.8% less than the closure of the last year. It is true that this drop base to the same reason as stressed before, drop of stock exchange and increase of exchange rates. And as you can see on screen, you see the distribution, I don't want to tie out with details you have in the memo, in the appendix. Just I would like to remind you, as I always do, that we have a very cautious policy and a stable one. We have diversified investments in the terms that you're seeing and as an insurance company, we do have appropriate assets to our liabilities in terms of duration liquidity, profitability and in general, all terms of the general management of assets and liabilities. And with this, we have finished our presentation, I would like to refer before we move on to questions. I'm sure you will have seen that we've published, well in fact after the meeting of the Board of Directors, which affects me personally. I am close to turning 66, so I'm going to retire of my position, and I'm also waiving my position as Director as of 1st of January 2023. The truth is that this has been a very long track record since I started in Catalana Occidente and in the Board of Directors and the Management Committee of the group at the beginning of 1998, practically 34 years ago. After serving the public administration for 25 years and my condition of state lawyer and attorney and it's been a great experience for me personally and professionally, having been able to work with the teams in Catalana Occidente and to contribute modestly my modest contribution to the growth and consolidation of Grupo Catalana Occidente as one of the leaders in the industry. And of course, I would like to stress the tight relationship I've had with all of you forever and particularly since we were in the stock market at the end of 1996. I have been informed by the evolution of our businesses or quarters. And thank you very much honestly for the treatment received and the trust as well in our group and our explanations, both in good moments such as the current one and also in more difficult moments because we've also seen those. So in principle, I am now open to whatever questions. Nawal leads out to me, but this is the last presentation of results that I will be doing with you. So beforehand, I would like to thank you for everything, and we will see you.

Thank you very much Francisco and Carlos, for your presentation. We will then start with the Q&A, the questions that we have been receiving. And as we normally do, we have grouped them in terms of topics. The first one is related to the latest acquisition of the group. And in general, they ask us whether we can go in greater detail regarding the acquisition of Mémora. What is the fit and what synergies are expected and whether there are any synergies.

Well, I think that regarding the strategic fit, the operation, I have just explained it. It's true that we have not explained it personally in public beyond the relevant fact or significant event that we brought out. But I think the strategic fit, which is the first part of the question is clear. I'm not going to repeat it. The acquisition regarding details at EUR 387.5 million and makes us leaders in burial services, in the Iberian Peninsula, through the purchase of our group that is specialized in funeral services, both in Spain and Portugal. I want to remind you once that the operation is still conditional to the obtention of approval of competencies in Spain. We already have this in Portugal at the moment. As you know, I've already said the Grupo Catalana Occidente is owner of Asistea, which is a funeral service that comes from the acquisition of Previsora and in which we integrated the group Funeuskadi in the past country and subsequent acquisition Remedios in Madrid. Without a doubt, as we have also seen with a map with different colors and with different indications. Mémora and Asistea are absolutely complementary in terms of geographies. We will be in 23 provinces and both have in common the will to offer burial and funeral services. These access are the protection of people who are committed to providing personal and quality service to the families. At the end of the day, this is a way of ensuring quality of services to customers in the funeral insurance always -- funeral service, always maintaining the freedom of our policyholders and funeral insurance, of course, of choosing the funeral parlor with which they want to have their service. This is evidence of what we always say, we are always in the lookout in the market actively trying to find opportunities for growth regarding this acquisition, regardless well, the question also talked about the level of synergies and savings that we are going to obtain regardless of the level of synergies that we finally managed to implement, we have, of course, analyzed this, but in a very preliminary way because the operation is still pending competencies and approvals, but our profitability calculations for this operation reflect that without any doubt, it will generate value for the shareholder, and it allows us to increase our presence in business with stable growth of around 2% or greater and with big margins, 20% and 25% in terms of EBITDA on income.

Okay. So let's continue with questions this time on traditional business, specifically in multi-risk pillar or branch, we are told that there's payment of the technical result and consolidated ratio. Can you please explain or dwell further into this?

We can go and repeat it again, but not in great detail because I said it myself, and also Carlos talked about this. But the question, of course, is perfectly understood before the explanation, of course, because the margin has dropped. That's the case. It's true that this is reduced. The combined ratio has been 1.5 points versus September last year and 3 points -- percentage points if we compare to the closure of the first half of the year. This increase is mainly due to the increase of average cost of claims as a consequence of inflation on the one hand and to the different topology of events of weather events that have taken place and this has determined that there were more in those areas where we are geographically more implemented or established and as the CFO mentioned, they are small claims, so they are less covered by the consortium and by the reinsurance platform. So they had a greater effect in our P&L.

And additionally, we have had a greater impact in peak claims. This has determined the increase of 1.5 points I have referred to a minute ago. Despite this, we have historically low combined ratio below the industry, and we are taking measures currently in pricing in order to mitigate the impact that the inflation has produced in terms of the increase in the claims ratio.