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

Good morning. You know me, I'm Clara Gomez Bermudez, Risk and Financial Manager at GCO. Before we start with this presentation of results of the third quarter of 2024. In a day, such as today, unfortunately, we, of course, want to convey our condolences and support to all those affected by the cold drop, the torrential rain event and their relatives. In this presentation of results, I have here with me Mr. Carlos Gonzalez, Chief Financial Officer; Nawal Rim, Director of Investor Relations. And as on other occasions, the Director of Investor Relations will group together and combine all of the questions asked, and we will answer them at the end. As usual, we would like to thank you for being here with us in this presentation, which takes place online. And of course, we would like to thank you for your consistent interest in the performance of the share price and the evolution of our business. I would like to remind you, and we always mentioned this that the financial information included in this presentation of results is prepared with our management information, the accounting standards, we all know as IFRS 4. And on a quarterly basis, we report on all necessary international standards IFRS 17, 19 with the impact they have on our financial statements and our results. And we will provide some information at the end of 2024. Before we start with the evolution of the business, we would like to share with you qualitative information that you may have seen already through the relevant event presentation. In today's session, the Board of Directors has been informed of the retirement effective January 1, 2025 of Mr. Juan Closa, General Manager at Occidente after more than 40 years being linked to the group, he's been key in the growth of the traditional business and the unification of the companies under one single entity, the unified brand Occidente. And as both the President Jose Maria Serra and the CEO, Hugo Serra also stated. And along the lines of the streamlining strategy that we are carrying out in the group, Closa will not be replaced. The management Board of Occidente will report to Mr. Hugo Serra and he will carry out his role as top executive of GCO and Occidente. You know additionally, that regarding the topics that we publish a relevant different communication, we do not normally accept questions during the Q&A session. Now starting with the summary of the [indiscernible] following the trend of the year, I think we can say that we've reached a positive behavior in our three strategic pillars of growth, profitability and solvency that we are showing on the screen at the moment, growth that will turnover with 2.9% increase as you are seeing it incorporate all three businesses and positive growth above the rest of the Spanish insurance industry, which you know has decreased somewhat. Better growth than the rest of the year. In the presentation of a few months ago, we addressed a 1.6% growth. And we will see this later in greater detail. But, stressing the growth of the traditional business where recurring premiums grow above 6%. More than satisfactory consolidated results. You can see this on screen, EUR 574.5 million, growing by 9.2% as compared to the previous year, almost EUR 600 million in just nine months. Growth, you'll see this in the three lines of business, in traditional business, in credit, insurance and in funeral business, but also stressing the more than favorable behavior of the traditional business, the growth of which in all lines of business show the excellent recovery of the market versus the inflationary trends that you know started in 2023 that have continued throughout 2024 and that you can see on screen. You can see the combined ratio a bit above 90%, meaning minus 2 points versus the previous year. And a good performance of permanent resources at market value, you very well know our history that you can see at the bottom of the screen on the right-hand side, we will later give you more information on the evolution of permanent resources market value. And therefore, I think we can say that these are results that have not been negatively impacted by the current financial situation, a situation that is mainly impacted by geopolitical tensions in a great proportion due to the war conflicts in Ukraine and the Middle East and also the uncertainty of the economic evolution in all regions in the United States, in China and also impact in Europe. And you can also see that the GDP is growing, it's improving rather in Spain as compared to others. You can see here, 2.9%. This has been reviewed upwards in the latest information of the IMF and with better improvement in Spain than in the rest of the U.S. And you also see continuous drop of inflation in Spain, it's below 2%, but underlying inflation is still a bit higher at around 2.4%. And we must say also that the costs deriving from this inflation still impact the insurance business as we will see later. As on previous occasions, we always give you information on the evolution of financial markets. It is true that the other side of the coin of inflation that we just mentioned is a drop in interest rates due to the measures taken by Central Bank. So you can see these at the bottom of the slide that I'm showing here now, both of sovereign debt -- Spanish sovereign debt, you can see in the 10-year bond is at around 2.9%. And in the rest of sovereign debts that you can also see here, you can see Germany and the United States with a drop or a reduction of spreads as well. I would like to remind you that barely three months ago, we were saying that interest rates were above 3%, 3.2%. Now they are below 3%, and the forecast drops towards the end of the year and also for 2025. Excellent behavior of markets despite world tensions, you can see these better in the United States where the big techs pulled their weight. Also good performance of stock markets in Europe, IBEX, as you can see on screen, increasing by 17.6% very much impacted by the good evolution of the financial sector. As in the presentations, we give you some context looking at what happens in the rest of the Spanish insurance industry, the Spanish insurance sector does not go back to growth figures. It dropped slightly by 1.2% in total premiums. You can see this drop is very much impacted by the evolution of single premiums savings with a drop of 16%. As you may remember, in 2023, there were significant issues of single savings premiums. The drop is a bit less than what we observed during the first half year. And the performance of General Insurance is still very good, 7.8%, stressing motor growing by 8.8%. As you can see on screen, 7.7% from multi-risk and therefore, very positive levels of growth, although slightly lower than the first half of year. Comparing to others, I think we can say that the performance of the group is better in traditional business for two reasons: Lesser impact of single savings premium, you know that, we have less exposure to single premiums. In savings, we prefer the recurring business because we understand it contributes more value, both for us and for our customers. But as we will say later because we believe that in this nine months of the year, the evolution of single savings premiums has not dropped as much as in the rest of the insurance sector, as we'll show you later. And similar thing in non-life as in the rest of the insurance sector. Motor grows at around 9% versus this 8.8% that you can see and the multi-risk, we're growing at 7.5%. And we already mentioned in the previous presentation that this growth of 7.5% is also impacted by another factor, which is that in multi-risk, we are incorporating not only small multi-risks but also exposure to large industrial risks. The portfolio of large industrial risks, we are repositioning it so it has dropped as compared to the previous year, and it observes this 7.8% that you can see on screen, part of these large industrial risks. And talking about how we did. As usual on screen, you can see the summarized P&L. First, income and at the bottom results. In income, I already talked about the growth so I will only give you the important details. The growth, as you can see, is positive with more than EUR 4.5 billion turnover in nine months. To stress, the traditional business with the 6.5% -- 5.6% and recurring premiums with 6.5%. But we're still happy also with single life premiums, a mere 2.9% reduction, which in terms of volume is almost at a draw with the previous year. We came from growth of 29% in the first quarter. But we already said back then that, that situation would correct throughout the year. The parameter that may be less satisfactory, we already mentioned it in previous presentations is the slight drop of the turnover in credit business and credit insurance is 1.8% that we already mentioned. Throughout the presentation, the previous year was impacted by inflation, which has a direct impact on our customer sales. And secondly, less insured sales due to the slowdown of commercial activities. And just like we said in the first half year, we have been seeing a pickup of commercial activities and therefore, a pickup in insured sales of our customers, but it is still early to see this in the figures. I think we can already say that if the macro situation allows it, this will be visible in the year-end figures and mainly during 2025. And finally, you can see at the bottom, the contribution of the funeral business, almost EUR 200 million turnover positive comparison with the previous year. You know that in this year, we are incorporating all nine months of the funeral business, the group of the Memora group took place in February 2023. And at the bottom, you can see results a very summarized information of the results of the group. But what we can do is we can give a very favorable assessment with this almost EUR 575 million, 9.2% growth for these nine months. And very good results in the funeral line of business to digits growth in traditional business. Despite inflation, this 5.4% in credit, which is superior to what we saw in the first half year and a confirmation of the positive trend of the funeral business almost reaching EUR 14 million ordinary result. Going into detail of the different businesses, traditional business grows by two digits, 16%, more than EUR 136 million results, improving the first two elements of the P&L, the technical result and the financial results, both in general insurance and in life. And you know that the combined ratio of general insurance is slightly above 90% with a very good behavior in this exercise this year versus the year before. From a technical point of view, good behavior of the two main lines of business in Motor and in Multi-risk. Actually, Motor improves the technical result, we will see this later in more detail by 15%. The combined ratio is slightly below 96% still, and this allows us to maintain our spread with the rest of the insurance sector. And all of that, and as we said on many previous occasions, despite the cost impact, both in material and [ body ] costs of inflation. But rather than Motor, we should stress the excellent behavior in Multi-risk with a combined ratio of 88.3%, almost 5 points below the year before and maintaining what we observed in the first half year. Regarding the causes for a better technical result, I would stress two mainly. The first one that we already mentioned, but it is the key element that we should stress. This year is cost reduction. We have implemented significant cost reduction measures, which are visible in the results of the group have an impact in the results. And as we already mentioned, the good evolution of acquired premiums, which we knew would incorporate slowly into the box because of the price setting measures we have applied. At the end of September, we knew we had experienced less weather events. And we anticipated this was a contextual thing. It was a matter of the current context in the past 48 hours, as we mentioned at the beginning, we had the tragedy of the cold drop. Carlos Gonzalez will give you more detail about the evolution of this. But I think we can already say that for the end of the year, we had foreseen an increase of claims due to weather events that had not yet happened. So we continue to confirm that the traditional business will continue with a positive trend, but it will probably be a bit lower than experienced until now because of the exceptional circumstances. But at any rate, it will be positive, and it will confirm and consolidate the good functioning of the measures that we have applied in business management. In credit, you can see this on the second line. You can see on screen, we have results with a growth of 5.4%, improving results that we are already very satisfactory in 2023. As I said there has been less sales activity, less commercial activity. We know this has an impact on the income line with a claims ratio, which we could say is almost at pre-pandemic levels. with still very cautious provisioning, and I can already say that we have not had any relevant peak events. So confirmation of the positive trends that we already mentioned on previous presentations in the credit business, and we consider this will continue like this towards the end of the year. I will not stop to talk about the EUR 14 million result of the funeral business that you can see in screen because Carlos Gonzalez will probably give you more detail about that. I will now talk about non-ordinary, barely EUR 2 million negative, which barely have an impact on the P&L. And a comment that is not in the breakdown of the information that we show in the slide about the good performance of financial results. At a consolidated level, it was EUR 170 million, EUR 169 million with a growth of 17%. Of course, due to the good evolution of fixed rates compared to previous years, which on the one hand, allows us to have better financial returns but also allows us to offer good savings products to our customers. We'll give you more detail about this throughout the presentation. So in a nutshell, very good results, very good consolidated and attributed results, EUR 574.5 million consolidated results, EUR 518.4 million attributable results with a growth of 9.2% as compared to the previous year. And even if you already know very well, the diversification of our business, I would like to stop for a second to talk about this slide. We've updated it with the information available in this nine months of the 2024 year. And I think it is important to stop and talk about this because this is one of the key elements that explain the good performance of the Group throughout the years. On the left-hand side, you can see the makeup of the traditional lines of business. You can see how Motor has a weight of 12.4% lower than Multi-risk and Life 14.6% and 19.7%, respectively, but also diversification not only amongst lines of business and products in the traditional business, but also from the geographical point of view with the credit business. It is true that most of our exposure is in Spain and a diversification that we still go for and this is where the funeral business comes from. You can see on the screen, it is already 4.3% in the total business of the group. I will now talk much about the next two slides. It is true that the information about our position as compared to the rest of the insurance sector and the rest of our businesses. We have updated it in the nine months of 2024, we are the fifth largest insurance group in Spain, the first largest funeral business in the Iberian Peninsula and the second largest credit insurance group in the world. As on previous occasions, we always offer you information on sustainability. Truth is that the sustainability project is a long-term project. So not much to say about the information as compared to the information we've given you in previous quarters because in the end, as you very well know, it is all included in the sustainability plan for 2024, 2026. All the information and sustainability, including nonfinancial information, the sustainability document is on the website of the Group has been audited by our auditors, and you have the entire detail of the sustainability master plan for the coming years. So I will not talk too much about this. I do confirm our strong commitment to sustainability and to our social actions that we channel through the foundation. We also usually give information on share price evolution. You know these almost better than ourselves. We've had an excellent performance this year much better than last year. You see these with a growth of almost 30% that you can see at the bottom and better than our reference indexes. But as we've always said, we can see that the share price performance should not be measured based on the short term, this 30%, we need to look at the share price in the long term, and this is why we show you the joint performance from '22 to 2024 with this increase by 11%, which is also better than the rest of preference indexes. Regarding our dividend policy, you already know this. Our dividend policy is very stable with a growing dividend showing the clear commitment of the group vis-a-vis remuneration of our shareholders. And to date, this year, we have increased dividend by 7.5%. July and October 2024 as compared to the previous year. You can see at the bottom of the slide, EUR 24.8 million versus EUR 23.11 million in July and October 2023. And [ charge ] to 2023, this EUR 134.12 million and the two increases of July and October by 7.5%. A dividend per share, which is EUR 1.12. We've almost doubled it in the last 10 years. And as I said before, it confirms the strong commitment of the Group to its shareholders, a commitment that we've been able to maintain throughout the 2008 crisis and with slight modifications in the recent crisis of 2020. And without further ado, as on previous occasions, I pass the floor over to Carlos Gonzalez, CFO of the group, who you know very well, and he will give you more detail about the evolution of the year, the main indicators and a breakdown by lines of business.

Thank you very much, Clara. As usual, traditional business. We'll start here breaking down the behavior of it in each of the lines of business. As to the business, generally speaking in a context of higher turnover, we have retained our customers, maintained a 5.6% increase in written premiums, 6.5% of recurrent premiums stressing here the increase of 9% in Motor and 7.5% in multi-risk, a generalized recovery of the margins with an increase on technical result by 22.5%. In the general insurance business, the combined ratio is at 90.5%, specifically relevant in multi-risk that I will talk about later. And on the other hand, we continue with the positive evolution of the financial technical result of life with a growth of almost 5%. And now divided by lines of business, multi-risk EUR 667.7 million in premiums continues to experience a strong growth of 7.5%, similar to the sector, which is at 7.7%. And here, it is important to stress the growth of premiums in mass lines, almost double digits. And this is as a consequence of a good customer retention and an evolution of the average premium, which has impact in a segment that matter in the cost increase of claims. The combined ratio is at 88.3% as a consequence of a combination of several effects, mainly the adaptation of prices to the increase of costs due to inflation, which is already slowing down. Improving productivity that we can see in 1.4% reduction of the cost ratio. And until September end, there had not been any relevant weather events, climate events as compared to the previous year to this date. This is very important if we compare separate quarters with 88.9% this quarter. So with all of these, the result has increased notably by 75.5% and going up to almost EUR 74 million. Motor with an important increase of its turnover up to 9% and more than EUR 560 million turnover. This compares to what the sector is doing. It's growing at 8.8%, a favorable comparison. There is a competitive environment with prices going up in these inner case, it goes together with a good customer retention. The combined ratio is at 95.9%, slightly below that of 2023. And of note, the improvement of efficiency ratios with a drop of 2.8 points as compared to last year. And it is also true that here, we continue to detect increases of claims ratios due to inflation effects that we are dragging from 2023 in 2024. So the result of the line increases by almost 15%, up to EUR 22 million. As to other, 7.3% increase in turnover, excellent combined ratio in a sustained manner at 85% in this quarter and [ 85.5% ] with high and stable technical result levels that are at around EUR 43.5 million, as you can see on screen so a steady increase as Life continues to increase in premiums to 50% single premiums as compared to the strong activities of last year have dropped slightly by almost 3% as we saw is the case in the sector and Clara already mentioned it. We do not have such a specific gravity in this type of business. As to results, technical financial result improved by 4.8%, going up to EUR 150.7 million. And here, we can see an improvement of the technical result and the improvement in the contribution of the financial margin due to our current capacity to reinvest at higher rates. So for the traditional business, as a summary for the traditional business due to the increase of vision premiums, the improvement of productivity reduction of expenses around EUR 21 million reduction of expenses and an improvement of 1.3% points in the cost ratio and the relative improvement in claims ratio due to the lack of notable weather events, climate events to the closing date. It allows us to improve our figures, an important growth of 16%, which aided by the contribution of EUR 6.7 million of the nonordinary results coming basically from realized investments. We added a total result of EUR 240.1 million. So an increase of 21.3%. In credit business, Earned Premiums reached a volume of EUR 1.709 billion with a reduction of the slowdown rate that we saw on previous quarters. This is very positive. We are at a drop of barely 1% with favorable perspectives for future quarters. We can see a deceleration of the economy in some European countries, together with the control of inflation effect reduces the good pace of the turnover of some of our customers. At any rate. Additionally, we should add that there is some downward pressure in renewals, but it is also true that this pressure, this downward pressure in renewals is becoming less and less important. So in the end, we are seeing an inflow of claims, which is favorable -- at a favorable level. And this means that our customers in renewal negotiations make us be a bit more flexible. Regarding the technical result, it is EUR 470.9 million, certain reduction as compared to last year due to the normalization of claims ratio which is still below pre-pandemic levels, as has been said before as well. In terms of geographical distribution of our premium, the drop in income that we saw before is very homogeneous. I don't need to stress any geographical area in particular. Regarding the gross combined ratio, good evolution, 74.3%, as you can see on screen, the claims ratio is below 49% -- [ 29.4% ]. So still below pre-COVID ratios were around 45%. The number of claims is increasing, but these have not yet reached pre-pandemic levels over the year now closed. We insist on this, we continue with our cautious provisioning policies already described at the end of 2021, in 2022 and also year-end 2023. So no changes here. As to risk exposure increased by 4%, we are maintaining our strict selection criteria. Diversification of risks by countries and sectors and maintaining the excellent quality of our portfolio. So as a summary, I'd like to go through the drivers of the period. Income drops due to the slowdown in the turnover of our policyholders. However, this pace has been moderately tamed and this may continue in the future. The technical result before reinsurance drops because of the normalization of the business with a moderate increase of the inflow of claims maintaining our cautious provisioning policy. As I said before, regarding reinsurance result improves as a consequence of our 2-point retention up to 35% retention. And on the other hand, the financial result also improved substantially by more than EUR 35 million. And therefore, with all these, the ordinary result is at EUR 329.4 million with a growth of 5.4%. At any rate, the nonrecurrent result here is negative, impacted by non-organic losses. And taking this into account, the total business results would amount to EUR 323 million, so still with some growth as compared to 2023. Finally, we also always give you separate information of the Funeral business, we are seeing a stable and high margin impact of Memora, with a pro forma growth, total income of almost [ EUR 200 million, almost 6% pro forma due to tariff increases to adapted -- to cost inflation and also the acquisition of smaller entities. The technical result in this business is almost EUR 30 million with a margin over EBITDA of 23.9%, similar to that of the previous year, which takes into account the impact of the cost structure due to inflation. So that would be all for me. You want to continue, Clara?

Thank you very much. We will then continue with the information that we normally provide you with regarding on resources, we always show them not a cost value but also incorporating permanent resources at market value, so incorporating capital gains that are not included in the balance sheet, so that will be real estate capital gains. You can see here this EUR 574 million. It is a very good evolution of permanent resources at market value above EUR 6.5 billion with a growth of 13.3%. As you can see on screen as compared to year-end 2023 due to two aspects, mainly the essential one is the good performance of the consolidated results of the Group. You can see it here with the EUR 574.5 million, but also the good evolution of the market that leads to the capital gains that you can see on screen with these EUR 258 million. So you see the evolution of permanent resources but market value that we show is more than satisfactory. From the beginning of the century, we've been evolving from the EUR 332 million that you can see at the top. This is a figure from before beginning of the century. And with this graphic evolution, you can see very graphically on the screen with these EUR 6.5 billion that you can see at the bottom. As usual, we always bring information on the solvency position of the Group. This is one of our pillars, 232%. As you can see, this is information from end of 2023. So we cannot give you any more details than what we offered on previous occasions. And all of the information about this, you have it in the financial information and so we'll see a report that is published on our website, and it has been explained in previous presentations, and it is acknowledged by our rating agencies. Our credit rating agencies -- with this A1 from Moody's for operating entities of the credit business. In the end, what they acknowledge the most important thing for them is the good evolution of the good business model that we have. And as we've said in previous occasions, we can see this in the good results of the group. And of course, the solid capitalization and the high return on capital. And finally, we always like to show you a slide on investments, managed funds increased above EUR 16.756 billion that you can see on screen specifically with a growth of 9.1% as compared to year-end. I will not stop to talk about each of the lines, but I would like to confirm that we continue with our conservative investment policy. We match assets to liabilities. Our main asset is fixed income with over EUR 8 billion investment in fixed income due to greater investments in fixed income, thanks to the good evolution of interest rates, but also the good evolution of the market. So in equity, you can see an increase of 12.7%, not because we've made more investments in this area. But as a consequence of the good evolution of the market, good market performance and also a strong treasury position that you see is above EUR 2 billion. You can see on screen, the increase of real estate investments, 8.1%, not so much an increase in investments. But as you know, we have acquired a property in Madrid in Mendez Alvaro 31, where we have all of our teams in Madrid, and it is a key building and it's modern, it's functional and it is adapted to all of our sustainability trends. With this, we will finish the presentation. As on previous occasions, we will now answer the questions imposed throughout the presentation. I would like to thank you again for your interest. I know we've received many questions. Nawal Rim has tried to group them all together. We will try to answer them all, knowing that if any are left unanswered, you can address the Investor Relations department afterwards, and we will give you answers through the use of channels. Thank you very much.

Thank you very much Clara Gomez, Carlos Gonzalez for your presentation. We will start with the Q&A questions that we've received throughout the presentation. And that, as you know, we try to group by topic. We will start with the traditional business, Carlos, Motor, we have the following questions. We still see a growth of 9% in earned premiums. How long do we have this double digit growth? For how much longer? We are 97.1% in this quarter. What is it due to? And what are the prospects for the fourth quarter?

I think to foresee the invoicing trend, the turnover trend, it's important to know what is happening in Motor. As you've seen in the turnover in Motor, the sector is growing by almost 9%, 8.8%. And this is so because the average cost of claims still has important increases due to inflation. Different from other lines of business where inflation is more controlled, more at the level of general inflation. Motor continues to show impact, not only because of the cost of repairing vehicles but also the increase in the scales of bodily damage. The sector continues to operate technical losses, I think 101% June figures is at the latest that we have. And so it is to be expected that prices will continue to go up. And in our specific case, we follow the trend of the sector with increases in turnover of around 9%, almost double digit as we heard in the question but we have a positive gap that we normally maintain with the sector, and we expect to maintain in the future as well. Regarding the second question, it is true that in this isolated quarter, we've been above the usual, I think 97.1% combined ratio, stagnant. And the third quarter of the year normally behaves more poorly than other quarters. Last year, it was almost 98%. And this is so because it includes the summer months with travel, holidays and therefore, we have this clear seasonality in all quarters -- in all years, sorry. Having said this, we expect to finish the year with similar profitability levels. We continue to manage the cost pressure in claims, and we continue to adjust our tariff rates but always taking care of our long-term relationship with our customers. And more specifically, about these need to maintain our relationship with customers long term. Our churn rate is at historically low levels -- our lapse rates, sorry, which is allowing us to maintain the number of policyholders and policies.

For multi-risk, we have also received several questions, Carlos. Summarized in the fact that we continue with a low combined ratio, 88.3% this year. what trend can we see for future quarters? And additionally -- and after a cold drop that has taken place or continues to take place.

There are several questions as to whether we can give you information about the expected impacts. We are still below 90% in combined ratio. We have improved the ratio substantially, almost 5 points, and we are at 88.3%. And there are several things to say here, several factors, both related to the context and those related to our own management and cost efficiency. I think it is important to focus on these last pair of factors -- many factors deriving from management and cost efficiency are the ones that will stay in the future that are structural and that give us this competitive edge. And here, I would stress as the increase in earned premiums of almost 7%, which starts to show the rate increases that we started in 2023, then a careful risk selection industrial lines, especially where we focused on improving these products. This products will be for now and the future our General Financial Director and Risk Director mentioned it. And also I mentioned some figures, EUR 21 million savings, generally speaking of the traditional business and additionally, we expect to -- in 2025 see this in a more obvious fashion because we will have a complete cycle. In terms of the context, we can still see a favorable behavior of weather events, climate events as compared to September 2023. It is true that until End of September, we had not had a strong impact from climate events -- climatic events. Normally in the final quarters, we experienced more climatic events. The clearest example is that of the current cold drop in Spain. And about this, I would like to again extend our condolences to those affected and their relatives. We have opened up a phone line devoted to covering all of the needs of our policyholders and economically speaking as to the prior economic impact, it's still early to do a first assessment because the contract is still taking place at the moment. And it is relevant here to mention the support of the sector in the insurance compensation consortium, which covers damages for a great proportion of the cold drop, floods, extraordinary floods, rivers overflowing and other things that have indeed taken place during this climate event. It is true that there are other events such as hail that are not covered by the consortium. We have a second layer for natural catastrophe, we have an excellent format or a special format of loss compensation. So even after the consortium, we would have a transfer to our reinsurance panel. Having said all this, however, as we already stressed, it's still early to analyze the direct impacts and at any rate, our Financial and Risk Management Officer. It will not overshadow the good results we've been having.

Carlos, now credit insurance. Varied questions on income. What do we expect in terms of net profit and financials? There are questions, Carlos, about the inflow of claims and our expectation for 2024, even 2025.

We will start with income and then profitability as to income, we're experiencing that premiums do not drop as much as in previous quarters. This trend of improving income will continue to be positive over the coming months. You know that we are in a favorable economic environment, uncertain also. With mixed behaviors by region, we have a significant concentration of our exposure in Europe and the forecasts we have for 2025 of growth slightly above, if we have correctly, 25%. And we will have a direct impact on premiums as to risk appetite level. We continue to be cautious with the strict selection of risks as per our underwriting policy. As to profitability levels, combined ratio, 73.4%, still below pre-pandemic levels. And this is so because the inflow of claims will continue to be a bit below 2019. We continue to see that claims ratio levels are normalizing. And the thing here will be to see how fast they're going to normalize. We cannot guarantee this, but we believe that we would consolidate prep-pandemic levels during 2025. But at any rate, we expect a very positive 2025. If this is the way things go down. As to the good ordinary results of September, in the end, the important level of results, however, result is a consequence of the good technical result and at any rate, the growth by 5.4% that takes place and the ordinary result happens mainly for two reasons. On the one hand, an improvement of reinsurance with better retention of business that increases by 2%, up to 35% of transfer. We already mentioned this. And the improvement of the financial result of profit as a consequence basically of the increase of interest rates. The average interest rate of our investments in fixed income, where we've used the maturities of the portfolio to reinvest at attractive rates. And on the other hand, the replacement of [indiscernible] in our portfolio for direct investment in equity, we received dividends directly, and these dividends are having a positive impact in the P&L directly, both for this year and for future years. I think that summarizing forecast, we expect a profitability in the level of premiums in credit business towards the end of the year at a similar level of what we are seeing at the moment and continuing with the normalization of results for 2025.