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

Good afternoon. This is Clara Gomez Bermudez, General Director for Risk and Finance at GCO. And as on the presentations of the first 2 quarters of this year, I'll be here with me in this presentation of results. Carlos Gonzalez is here with me, as usual, CFO of the group; and Patricia Zamora from Investor Relations, will collect and group together all of the questions that you ask throughout the presentation, so that we can answer them at the end of it. Before we start, I would like to show my appreciation to all those of you who are attending online and for your interest, not only on the envision of the business, but also division of our share price. As we already mentioned in the precision of the first quarter, of 2023, the basis for the presentation of the financial statements on these occasions in its quarterly financial statements will be exclusively the consolidated financial statements based on IFRS 4, which is the one we are used to because in the half year, we published based on IFRS 4 as well as the new international accounting standard IFRS 17 for insurance contracts and IFRS 9 for financial investments, which, as you know, apply to listed companies. So as a consequence, the basis for the financial statements that we will now discuss is the accounting that we use to reach is based on IFRS 4. And now starting with the evolution of the business, and taking into account the geopolitical environment we're in, which recently has become more complicated because of the Middle East conflict the uncertainty vis-a-vis the evolution of the world's economy with the complex context of inflationary tensions that we all know about. So I think we can say that the results of the first 9 months are very favorable and with a very positive performance in the 3 strategic pillars that you can see on screen, both growth, profitability and solvency. Regarding the first section. In growth, the total volume of the business has increased very positively, 9.2%, more than EUR 4.4 billion total volume in the months of this year, and this confirms the upward trend that we saw in the first half year with a relevant growth in the traditional business and a bit more sustained in the past quarter in the credit business. The total volume that you can see on screen, you already know base incorporates our 3 businesses, traditional business with more than EUR 2.3 billion total volume in the credit business with almost EUR 2 billion and the funeral business, which now amounts to EUR 164 million. Refinery business incorporates 8 months of business volume, as you know, on previous presentations, we said that the acquisition was made final in February 9, 2023. Regarding profitability at the center of the screen. We already talked about the favorable evolution, EUR 526 million result, in the 9 months of the year with a growth above 10%, specifically 10.4%. And we should stress that traditional business has improved as compared to the first 6 months, an improvement that confirms the upward trend with 1.1% growth in ordinary results and the favorable evolution of the credit business with a bit of a more sustained growth in the first 6 months of the year and very much in line with our forecasts that we had already shared on previous presentations. In the traditional business, the truth is that we exceeded EUR 2 billion result with a slight increase. We mentioned 1.1% as compared to the previous year. the ordinary result on the screen, you can see the combined ratio, 92.5%. That compares very favorably versus the combined ratio that the sector has published today, the ratio of the first 6 months and maintaining the positive dispense with the rest of the industry. With growth slightly, if we talk about the combined ratio of the traditional business, all of the due to the inflationary pressures of this year, but we continue with the combined ratio that we consider to be very positive as compared to the combined ratios of our competitors. In the credit business shows very positive results in the total result, EUR 312 million your 13% growth versus the year before, you can see on screen 71.2% combined ratio with a slight positive increase 1.3 percentage points due to the slowdown in turnover due to less commercial activity. Regarding the first 6 months of the year, we value the financial performance of the group very positively from EUR 67.2 million in continue to almost double EUR 144 million of financial performance in this year, financial performance, which incorporates the ordinary and non-ordinary performance. And finally, in the funeral business, already contributing EUR 9 million in the 8 months of the results of this year in the group. And then last year, solvency also confirms our strong position, which allows us to face future challenges with the solvency ratio in the first 6 months of the year in non-audited figures of 226% completely incorporating the acquisition of the Mémora Group, which, as you know, has been fully acquired with own resources. And all of that was not only confirmed by rating agencies that give us great rating. I invest give us an A rating and even in operating entities of the group business increases the rating from 2 the positive outlook to a one with a stable outlook. On the right-hand side, well, you are familiar already with the exceptional performance of the group in GCO which has multiplied 9 turnover times '15 results going from EUR 33 million to more than EUR 500 million, which we assess very positively. And once the main keys to the [indiscernible] explained a few comments about the economic environment in the areas that we consider can have the greatest impact in the region of the business. I think the most significant piece of data regarding the economic environment as compared to previous presentations is the recent Middle East conflict an economy which is more exposed to volatility in a general context of more uncertainty regarding the first indicators this year, yes, we continue to see a positive trend as per the latest publications of the IMF in October, specifically in the United States, which express the job creation rates, we can see slight increases. This 2.1% estimated GDP for 2023 versus the data from June, that's at 1.8% and a slight decrease in inflation. In the Eurozone, we continue to see higher in countries, better growth expectations in the Spanish economy with a 2.5% growth expectations as compared to our peers, this 0.7% that we can see in the presentation with slight downward revisions as compared to the presentation in June. And regarding markets you know this perfectly well. You are on top of things regarding markets. But after many years of very low rates, central bank policies have led to an increase in interest rates and interest rates have increased in October, especially longer term. As a consequence, among other things of the Middle East conflict. And in the first half of October 10-year Spanish debt has been slightly above 4.1% with slight increases in the spreads, both corporate and public debt. At the bottom of the screen, you can see stock markets in the past month marked by the destabilization due to the geopolitical situation. At the bottom, you can see the positive evolution of Ibex, but the truth is that there's been a slowdown in the past few weeks with a drop in the past week. And the positive evolution of European indexes and especially American indexes, mainly NASDAQ in this case as a consequence of the evolution of big tax. And so, we offer you a few ideas about the insurance industry in Spain, long lines of the growing evolution to 2023, there's growth in all lines of business. You can see on screen, double-digit growth in turnover with is 20.3%, clearly promoted by the Life Savings business, almost 58% growth in this year and due to the attractive interest rate situation as compared to previous years. But also with very good growth in nonlife, 6.5% in the lines pulled together and in the mass lines of business well above what we usually see in the sector, which is very competitive and undoubtedly due to sectorial combined ratios of motor and home. Growth very similar to non-life GCO, it is different from GCO life risk growth above the sector, you see this negative 1.8% and a bit more sustained in the case of savings, as you know, because we've told you on previous occasions due to our more moderate strategy regarding singles preferring recurring premiums, which contribute more value but things has been very relevant as well in this quarter. And now regarding GCO, as usual, on screen, you can see 2 summarized P&L, both income and results. There was favorable increase in income in all lines of business on 9.2%. And you can see on screen, 7.6% growth in the traditional business, more than EUR 2.3 billion turnover with the increase in recurring premiums that you can see on screen is very similar to the rest of the sector, 5.1%. And regarding single premiums, we've already talked about this. We have connected 3 issues of guaranteed products, offering very interesting interest rates to our customers in spite of the situation of interest rates in the market with this growth of almost 37% that you can see here in single premiums life. Regarding the performance of the credit business and different from what we have been seeing in previous months, we see some slowdown with the growth of 4% turnover due to some slowdown in commercial activities and of our insurance sales, which has an impact on this first line of the P&L. We estimate that in the last few months of the year, the slowdown of insurance sales will continue at a stable pace. And for the CFO, Carlos Gonzalez, will give you detail about the evolution of income, but we have a favorable estimation for the last quarter. Finally, I would like to talk about the funeral business. You see almost EUR 164 million income. We've already mentioned it in the 8 months of the incorporation of the Mémora Group into GCO Group. And in results, I'll give you a pared about the key parameters of the group results, very favorable growth in consolidated results, EUR 526 million, so a growth by 10.4%, which after deducting external partners and the attributable result, we get to a 9.3% consolidated result after discounting external partners, which grew very favorably as well as a consequence of the nice growth of the consolidated result. The traditional business continues with a positive trend as compared to the first few months of the year with a slight growth as compared to '22 is 1.1%. And you can see on screen exceeding the EUR 200 million ordinary result. And of course, we will give you greater detail later with the combined ratio below 93%, well below the average of the sector despite the inflationary situation and the weather events that we have been experiencing, especially during the first few months of the year. In General Insurance, I think we can say we've gone from less and more. We have taken many measures implemented many measures, cost contention, et cetera, and motor drop as compared to the combined ratio compared to the previous year, but with a good behavior with the combined ratio, 96.2%, very contained in the last 6 months of the year due to the measures we've implemented. I would also like to stress incorporation of the Mémora business within the funeral business of the group with this EUR 9 million result which is a result of 8 months of activity in the group and will be required it this is an EBITDA of almost EUR 40 million, EUR 39 million specifically and 24% if we talk about percentage. The funeral business has been affected by lower mortality as compared to the previous year. And cost increase due to inflation. We also adopt cost reduction measures, making use of the fact that now the Mémora group is within GCO. In insurance, you can see that our results are above EUR 300 million, specifically EUR 312.5 growth, 2 digits above 13%, 13.3% specifically but we continue to see very positively. And in this regard, we already anticipated a certain slowdown in the turnover of the credit business in the second half year due to less insurance sales. The Q3 is that the claims ratio is very contained and site and this despite the cautious provisioning listed reserve. So our conclusion for the end of 2023 is that the drop in insurance sales will stabilize and that the growth of the claims, which will continue to be very gradual, which will allow us to close the year with growth that will continue to be very positive in the credit business. And the good consolidated results, EUR 526 million are barely affected by non-ordinary, you can see it on screen it is EUR 3.1 million. And this is essentially explained by financial investments, specifically realization of funds that, as we already mentioned in previous presentations with the purpose of compensating the volatility of mutual funds with the new international content change have a different treatment they have been partially offset with extraordinary expenses of the group, specifically the adaptation to this international accounting and the publicity of the advertising campaigns that we have conducted for our new brand Occidente. Regarding the distribution of our business, not much to say as compared to previous years. We maintain a very diversified portfolio, which allows us to face and will allow us to face future challenges. The traditional business makes up 54.2% versus 45.8% credit business very diversified vis-a-vis the different products, the traditional business. You can see the balance between motor and multi-risk, 12.6% versus 14.8%, respectively, which is favorable to us in this profitability of the traditional business versus our competitors that are more exposed to motor. To date, it is true that the weight of the print business in the group has dropped slightly, and we need to at the funeral business, which represents 3.8% of the business volume. Our international presence that we always talk about mainly focuses on the credit business. In the credit business, it is true that Spain continues to take on the greatest weight. Additionally, within corporation, the Mémora business into the group, we have a presence in Portugal, which undoubtedly contributes to more diversification of the business. And as usual, we give you information on sustainability. You know very well that our 3 strategic pillars of growth, profitability and solvency over the years have led us to an absolutely sustainable business and the different actions of the past few years, we have improved them in the sustainability plan 2021-2023, a plan that we will renew at the end of this year for 2024-2026. And as usual, the general lines of which we will share with you. At the bottom of the screen, you can see a summary of different actions in terms of sustainability. On the left-hand side, we have information and transparency. You know that we publish a sustainability report, the nonfinancial information, everything verified by our auditors. It is available together with the sustainability policies on the website of the group, and we are also single-user of the PRI and one of the actions relating market transparency that, as you know, are published on our website. On the right-hand side, you can see more tangible actions in sustainability. We are stressing these 3 on one side area of products. We have adopted our mutual fund offering to Article 8 of SFDR. So we have adapted our funds to sustainability criteria, and we are also working on adapting our pension plan and EPSV offering. Regarding repair, you can see this on the right-hand side of the screen, there is our repair service, vehicle repair service through AutoPresto. We have also received the sustainable workshops certification by Center of Zaragoza, which contributes to confirming that we implement environmental criteria. We also have investments such as Nactiva, that we're stressing here on screen, a company that aims at fostering the development of natural capital to protect the natural resources of the intern region. And I would also say that in our real estate investments, which are over 14% of the total investments on the group, the most relevant have the top certifications, environmental certifications, and we are working on extending them to most of our buildings in such a way that our real estate investments will also be adapted to sustainability criteria. And so we will be able to provide better service to our customers. And just like we have rating agencies, credit rating agencies, we also have sustainability rating agencies and [ obviously ], sustain analytics confirms a good rating, low risk amongst the top companies in the market. I will not talk longer about this because we've already mentioned it on previous occasions. Regarding the share price performance. You know these even better than us have had a good evolution in the first 9 months of the year, especially in the last quarter, 3.1% positive, much better than the previous year. It is true that somewhat below Ibex, but better in the past few weeks and better than EURO STOXX Insurance as a reference index. But it's true. However, you know that, that we like to measure the performance of the share in the long term. And if you look at the 9 months of 2023, we have this 10.18%. You can see on the screen that compares positively with the reference indexes. Regarding dividend payout, you know that we maintain a growing dividend payout policy with a clear commitment towards shareholder remuneration. The most relevant is our stability even through the crisis, not only in the 2008 crisis, but the recent 2020 crisis in 2022, we paid out a dividend of EUR 123.42 million against 2022 results. So an increase of 8.7% versus the previous year. And in the current year, we have increased the dividend by 7.5%. July and October is that you can see on screen with EUR 23.1 million as compared to 21.5% in the previous year. So without further ado, I would like to give the floor to Carlos Gonzalez, CFO, who you know very well and who will explain the evolution of the year in more detail and the main indicators breaking them down by lines of business.

As usual, and as Clara Gomez already said, we will start dissecting the different businesses. We will start with the traditional business. Here, our product diversification and the high retention of our customers has allowed us to maintain an important growth in turnover increases in premiums of 7.6% and recurring premiums, 5.1%, up to EUR 2.087 billion, as you can see a screen, we can hear 77.1% multi-risk and other 12.7%. The technical result drops by 8.9%, where in general insurance, the combined ratio is above 90%, specifically 92.5%. It is true that it's better than the market but a bit below previous periods. And obviously, the behavior of motor and multi-risk what we will develop in more detail later. On the other hand, we continue to see favorable evolution of the technical financial results of life with a growth of almost 30%, and it is very much benefited by the financial results that we will also discuss. Let's start with the breakdown by line of business, multi-risk, EUR 621.1 million premium experiencing strong growth, 7.1%, a bit better than the market, which is at 6.4%. With the growth in premiums in mass lines as a consequence of good customer retention and evolution of the average premium, which has had an impact, albeit partial in the increase of claims costs combined ratio of 92.8%, 1.3% above last year as a consequence of several impacts. Combined, the main impact was the increase of claims costs due to inflation. Additionally, there are other lesser impacts such as weather events, whether claims and key vendor peak events in industrial multi-risk. This impact did not appear in the first half year of last year. But in the second half year, in terms of ratio, we compare favorably with the quarterly ratio this year, 94.4% as I said, with lower weather impact. Last year, if we compare the combined ratio was at 97.6% in the segment quarter. So in the end, the result has dropped by 10%, EUR 42.1 million in this line of business. Now motor, significant growth in premiums like 2% up to EUR 519 million behavior similar to that of the market growing at 5.9% and would have that within a competitive environment with increasing prices. In our case, this is linked to a good customer retention combined ratio is at 96.2%, 3.6 points above 2022. At the beginning of the year, we saw a reduction of mobility due to COVID. It is true, however, that this increase -- well, the main component of this increase was due to the higher costs of claims due to inflation. And in the past few quarters of 2022, we already saw that, and it affects multi-risk and motor, especially the quarterly level, we see a stabilization of the combined ratio compared to the second half year, 97.9%, 97.2% in the previous second quarter. So in the end, the result goes up to EUR 19.1 million, and significant reduction although expected due to this price increase that we were talking about due to inflation. Now other, an increase in earned premiums by 8.2%. In results, we continue to see a good combined ratio well below 90%, specifically, 85% and producing a technical result of EUR 41.5 million. So it is obvious that this line of business is a good stabilizer for the results of the rest of general insurance lines. And now on to Life, we continue to see growth in periodic premiums, around 2% of the activation of single premiums with the products that [indiscernible] has mentioned before, guaranteed interest rate products. And this is so because now with the interest rates that we're seeing in the market, our customers are already again interested in these types of products. In results, the technical financial result improves by 29.1%, up to EUR 143.7 million, an improvement of the technical result, but mainly a significant improvement in the reflection of the financial margin increasing by EUR 20.1 million due to our capacity to reinvest at higher rates in this normalized interest rate environment. As a summary for the traditional business, the increase in turnover is 7.6%, including single premiums and the important improvement of the financial result, which at an aggregated level increases by EUR 26.8 million. Again, related to this new environment of interest rates, this allows us to contain the impact of the reduction of technical margins caused, among other things, by the impacts of inflation on claim costs. Finally, the result is at EUR 201.3 million with an increase of 1.1%. If we look at the total results, this is not impacted by non-ordinary results in a relevant manner. And now we'll analyze the credit insurance business here and premiums reached a volume of EUR 1.7259 billion, a growth of 3.4%, showing a slowdown as compared to previous periods. Here, the good evolution of the turnover of our customers due to inflation effects that we have already been seeing in previous periods is dropping as CPI increases, and we see the slowdown of the economy. There is still downward pressure in renewal prices with an inflow of claims that is still favorable. 7.6% net technical result amounting to EUR 356.8 million due to moderate claims and an improvement in the cost of reinsurance. Now we can have a look at the geographical distribution of income. The income generation rate increases in all geographical areas. But this would drop in orders, but there is more slowdown in the geographical areas where this slowdown is more significant. We can see the slowdown in turnover of 0.4% in Central Europe and Northern Europe. In terms of profitability, the gross combined ratio continues to show a positive performance, 11.2%. The important growth of turnover or income in the past few quarters allows us to maintain a cost ratio, which is lower around 33%, whereas the claims ratio is stable below 38%, 37.4% specifically, still below ratios before COVID is true though that the number of claims increases as the quarters in that. And I would like to say here that we continue with our cautious provisioning criteria described at the end of 2021 and in 2022. And as couldn't be otherwise in this end of quarter. In terms of risk exposure, the growth rate increased by 2.9% and is in line with the reduction of growth rate of premiums, parameters always quite in line. I would like to say in this point, we're maintaining our strict selection criteria and the high quality of our portfolio. As a summary, we'll take a look at the drivers of the year starting by income, still increasing, but the slowdown in the increase of revenue income and the technical result after expenses improves because of the controlling of expenses and claims with a moderate inflow of claims and with a cautious provision in policy regarding reinsurance better result because in 2022, we must remember that there was still negative rundown of the government agreements canceled in 2021 that this year and as is visible, they have any impact anymore. On the other hand, the financial results, we should stress that improved substantially, EUR 22.3 million increase basically as a consequence of the reinvestment of investments that in the traditional business are short-term both fixed income and liquidity deposits and current accounts. This means that the adaptation to new market type is quicker than in traditional business. So in the end, we have that, the ordinary result is at EUR 312.5 million and with this increased 13.3%. And finally, as we said in previous quarters, we will also report separately on the evolution of the funeral business after the incorporation of the Mémora Group, we expect it will continue to provide a high margin and a stable growth. We continue to provide information on the income parameters since 2019 or turnover parameters with an increase both internal and by acquisitions. In the case of the margin EBITDA parameter, you can see that this margin is normally above 25%. And here, the specific data of the quarter end of 2023, show that the margin over EBITDA is conditioned by the impact of inflationary effects on expenses. So this 24.1% over EBITDA is commissioned, both MDs and a lower number of deaths as a consequence of, well, obviously, the deaths that occurred during the COVID period are not taking place at the moment. And there's some abnormality regarding the number of claims coming in or a number of deaths coming in better sets. Here, just to finish with my part of the presentation, I would like to remind you, as we've done before, that regarding Mémora, information that you were seeing at the moment on these figures. We honestly 8 of the 9 months that we're reporting because the month of January cannot be considered within the consolidation scope. As in previous locations, we will now offer you greater detail only about the business, but also the capital evolution and the solvency of the group. On screen, you can see the evolution of own resources that at market value. You know this, incorporating capital gains on equity, not included in the balance sheet for an amount of almost EUR 567 million. So you can see on the line for last exceeds EUR 5 billion, more than EUR 5.4 billion, a growth of 11% as compared to year-end, mainly, of course, due to the positive evolution of fixed income capital gains and the evolution of the markets, which have also caused equity capital gains, net of taxes and accounting estimates is this almost EUR 130 million, as you can see on the screen. But we thought about the evolution of permanent resources that we can show on the right-hand side can only be called extraordinary, multiply times 15 in this century, a consequence mainly of the sustainable of the group through the years and also the retention this due to our upward shareholder remuneration policy that has allowed for the expansion of the group by corporate transactions. In the past 20 years, we've gone from permanent resources of EUR 232 million to more than EUR 5.4 billion. And solvency, we always report on solvency as well. Here, you can see solvency at the close of 2022. In 2021, we had a solvency ratio of 220% increasing at the end of 2022 with a very significant growth, more than 27% of points increase, and you cannot see that on screen, but the solvency of the first half year of 2023, not audited figures, is 226%, so almost 2.3x above the end of the year and all of that incorporating the acquisition of the Mémora Group, which has been entirely financed with own businesses. Our own funds are of top credit quality, 19%, Tier 1. And with the good tolerance margin in the event of adverse situation, you can see on the right-hand side, we would preserve a ratio of around 200% even in adverse years. However, you know that the solvency details are provided in the financial insolvency situation report published in May 2023. And as usual, it is available on the website of the group, not only for GCO, but also for related entities. And with all of that, the truth is that rating agencies acknowledge the robustness of our business model and the excellent operational results, and they do not only come from the A rating for the operating entities of the group, as is the case of A investor. You know that the rating agency that raises for credit is Moody's, and they increased the rating from A2 positive outlet to A1 with stable outlook. And I would stress the strong competitive position of these company position, strong capitalization, low financial leverage and conservative investment portfolio. And finally, on the screen, you can see our investments, managed funds are more than EUR 15 billion, EUR 15.291 billion, increasing by 1.5% as compared to end of 2022. I will not stop to talk about each of the investment items. You know we have a very cautious investment policy, our referenced asset is fixed income, representing more than 50% of our investments with more than EUR 7 billion fixed income and a relevant treasury position. You can see on screen reduction as a consequence of the acquisition of the Mémora Group, so much discussed throughout the presentation. And regarding the type of investments, you can see that we maintain very similar investment, as we've always done. And as we've always shown in our presentations, very diversified with a slight increase in fixed income also inside of the current interest rate situation. We always invest along the lines matching our liabilities. You can see here variable income and the increase is not due to an increase in investment in variable income, but the higher valuation of our variable income investments. And as we've said, the realization of mutual funds in this case from the credit business to reduce volatility in the P&L under international accounting standards, IFRS 9. And this does not change the type of our investments. It is this direct investment in equities with what you can see on the screen. With that, we would finish the presentation. And as on other occasions, we will answer the questions that you have posed. Also due to the volume of questions we have received Patricia Zamora has pulled together all of the questions. I'll try to answer all of them and if any of them remain an ounce you know you can talk to Investor Relations subsequently, and we will answer the questions by the regular means. Thank you very much.

Thank you very much, Clara Gomez and Carlos for your presentation. Now as usual, we will start with the Q&A questions that we have received throughout the presentation that we group by topic. The first group of questions are about the traditional business. This one specifically about motor. The impairment in motor is generalized in the entire sector, but you withstand it better. Do you think you have reached a peak? Or should we expect a worse combined ratio in fit quarters?

Well, motor is one of the most damaged lines of business in terms of profitability in the insurance business in unfavorable macro environment historically, such as now with unfavorable results of inflation, this competitive line of business offers more than others. And in our case, specifically, and I think that's what the question was about. And as we saw in the presentation, the [indiscernible] combined ratio stays stable, and it's 7.9%. It seems that we've reached the peak, and we expect to maintain or improve the ratio all due to the actions we've undertaken in claims reship but also how we focus on the risks and guarantees more affected by inflation. Here, we should always pay attention to our long-term relationship with the customers and maintain retention levels that we usually maintain and we are managing to do this. Here, I'd like to remind you that the combined ratio is calculated on acquired or premiums, not invoice premium. So due to the accounting terms, will the premiums come from tariff adjustments has not been incorporated, but we can foresee, therefore, a positive evolution of the combined ratio. Having said this when inflation stabilizes, and it seems it's stabilizing now we will be able to normalize this combined ratio.

We'll continue also for the CFO with a question on multi-risk. Historically, it has been one of the lines of business that has contributed most both in terms of turnover and results. Could you maybe talk about why this increase in the combined ship?

Well, I started introducing it maybe not in so much because there are several reasons, but multi-risk comparatively is higher than the previous year. It is also true that the claims ratio this year has been marked by the increase of cost due to inflation traditionally. And this maybe is that I have not talked about. multi-risk has been negatively impacted by weather claims, weather-related claims, both due to geographical locations, intensity and distribution over time. In the end, this has added more than 1 point of combined ratios compared to last year. And regarding industrial risk, there's been a higher number of severe claims as compared to the year before. And these 2 reasons are the secondary reasons, but undoubtedly, the main reason and the sectorial challenge for 2022 is managing inflation in the combined ratio of the sector the latest one published is slightly below 96%. I think 95.7%. GCO despite this increase in the combined ratio, we continue with a positive gap, almost 3 points and this is mainly thanks to a series of measures that we have adopted both from the point of view of risk selection and pricing. For example, here, we are adjusting the premium to the new reality of average claim costs. And in that way, we've been able to increase the premiums in a sustained fashion, always protecting our policyholders, but also is also true, and I already said it when I talked about motor that these price increases enter the combined ratio a bit later. And regarding other management activities and this inflationary environment, we should stress the average claim cost. We are managing it through our repair network. They help us contain inflation partially. However, this will end at some point because, of course, part of the cost increase for our partners will end up increasing the average cost of our claims. Our priority is to provide an excellent service to our customers, and we do this through our partners, our collaborators, our repair network, so we need to treat them exclusively as well.