Grupo de Inversiones Suramericana S.A. (GRUPOSURA) Earnings Call Transcript & Summary

Good morning, and thank you for joining us in the call of results of the first quarter of 2022 Grupo SURA. The event will be divided in two. We'll begin with a pre-recorded session, showing the main results of the company followed by a live Q&A session. Today, we're joined by Gonzalo Perez, CEO of Grupo SURA; Ricardo Jaramillo, Business Development and Finance VP; Juan Luis Munera, Corporate Affairs VP. And from our subsidiaries, we have Juan Fernando Uribe, Finance and Investments VP Suramericana and Carlos Oquendo, Corporate Finance VP of SURA Asset Management. Gonzalo, the floor is yours.

Thank you, Carlos. And to all of you, again, our -- thanks for joining us in this results of Grupo SURA for the first quarter of 2022. And we should begin by saying that Grupo SURA is obtaining the highest net profit in the history of the company in these last 12 months. Mainly really due to the trust that the persons and the companies have in the products and services and solutions of the companies in which we make investments. The last 12 months, indeed, we have income revenue of COP 26 trillion. And with the net profit, as we said, is historical in these 12 months, we've seen that as of 2015, there is an annual growth aggregate that reaches 14.3% shows that we are reaching that sustainable profitability with a return above the economic capital. Sustainable profitability, as we have mentioned in our previous calls, is our goal, and that sustainability before having a return above the capital cost that we've mentioned also seeks other capital, social capital, natural capital and human capital. And that's how we will reach sustainability that Grupo SURA, which is clearly for everyone, the main goal of the company. On the other hand, in this quarter, we're reaching COP 6.9 trillion in the company's revenue, up 25.1% compared to the year before the first quarter of the year before. And we reached a net profit of the company of the holding, COP 429 billion in the quarter. And in the last 12 months of COP 1.64 trillion. That's the path -- these are the results that are above expectations and that we've been sharing in the past -- cause of results. Here, we start to see the ROE that we've been seeking. And we're reaching an ROE in the last 12 months, 55% return over capital. As you can see in the graphs, you can constantly see that increase of total revenue. We'd like to highlight a lot total revenue. We've mentioned this several times. While people and companies start to prefer our products, solutions and services of our subsidiaries will always have a business in which we can work, and we'll have an opportunity to grow. And we'll have a critical mass that shows us the returns and efficiencies. So the main goal here is the acceptance of people and companies for the products of our companies. I think that here, there's a topic that we should underscore in the results of the last 2 years really with the pandemic over the companies in which we invest. Along with this performance, we've also been able to have dividends that are above those that we obtained in the pre-COVID stage. Also here, we're reaching record highs, a record of COP 1.1 trillion in dividends, which have allowed us to have an approval from the assembly of a 30% increase of dividends for of our shareholders, which means a higher remuneration for them. And it's we've been clear that our clients are our shareholders and investors, and we must remunerate these clients and investors. That COP 1.1 trillion even is affected because of the last quarter of the year before. This is affected by dividends that we had in 2020 by the results of 2020 of the company is today, if we standardize those dividends as of April, we're talking about COP 1.3 trillion of revenue for the company in dividends, which also allow us to continue our path of deleveraging. We'll have a cash flow above COP 250 billion this year. And this item, as I mentioned, will allow us to continue the deleveraging path, but also in necessary cases to make new investments for the company. Lastly, before I give the floor to Ricardo Jaramillo, we'd like to mention that we're going to continue tracking in each of our results of other capitals. Sustainability really is something that we only achieve if we balance the capitals that we mentioned initially, economic, also social and human capital. Today, we'd like to provide you some guidelines of what we're doing with regards to natural capital. First, the climate risk management, which has undoubtedly been prevalent in managing the capital overall. And when we talk about natural capital, -- this company focuses on climate change management, which in companies that we have apparently isn't very relevant. But since we're companies of investments of reserves, we can have their very important management, there's an indicator that we're going to continue seeking. There you can see the indicator of many premiums we're receiving for managing climate change, meaning responding to improve our carbon footprint. Also, we have investments there. We're seeking criteria to baselines that will allow us month after month, year after year to overcome our -- or exceed the commitment that we have with natural capital. On the other hand, recently, we approved a sustainable investment policy according to the best practices that we have been using day-to-day. And there we present ASG risks seeking which are the most critical and how we can -- how more relevantly, even more than just exposing or presenting goals, but really managing each of our corporations and investments to manage these critical risks to be very active with this natural capital. We have huge challenges, yes, firstly, to measure the carbon footprint of this financing. Here, we're looking baselines. This is gradual because of the portfolios of the company because at SURA Asset Management and in Suramericana with the premiums and the revenue received it's not right away that we can really seek how to improve the decarbonization of our portfolios, but we do see criterion baselines to know that we are making progress and that we are constantly referencing with the best practices of the market, together we can reach a better planet for mankind and, obviously, the company's sustainability. So the management of all the capital is part of our strategic goal. You are well aware that we have as our first goal, profitability above capital costs, our second clear objective that's concurrent is how to create our harmonic value for society and to do so, we have to be inclusive in our -- with our 4 capitals. The truth, thanks so much for the trust that you still have in this company. That trust has seen in the results and the results drive us to think that we're in the 2022 and surely, it will be much better than what we have been expecting. And here, we will be meeting our profitability above the capital cost. Thank you. And now let's give the floor to Ricardo Jaramillo, our Business Development and Investments VP.

Thank you, Gonzalo, and greetings to all of you that join us today. I invite you to first look at the consolidated income statement of Grupo SURA. And here I would like to highlight that the net profit had a significant recovery in the company, mainly due to two things: One, the good recovery of Suramericana; and second, the equity method that comes from investments that are related, specifically Bancolombia and Nutresa, which provided good results this quarter. Now let's look at the operating revenue. Those of the company in the first quarter consolidated reached COP 6.9 trillion, meaning COP 1.4 billion more than in the quarter first quarter of 2021. This is up 25% and ratifies the sound dynamics of growth we've had in prior quarters. When we look at the main lines of revenue, we can see that good dynamics. First, premiums issued, which is the insurance business, up 21%. As for our revenue from commissions, the quarter was not that good. We grew 2%, and we'll explain this when we look at SURA Asset Management ahead. We had some impact of revenue from investments. We have to separate Suramericana where we have invested reserves and the reserves of SURA AM and I'll give you details of both companies with an impact of COP 251 billion negative compared to the first quarter of the year before. And in the equity method that we've mentioned, which grew 127%, reaching COP 543 billion, a record high numbers of Grupo SURA in this item. Moving on to expenses and operating costs. These costs grew 22%. And here, we'd like to highlight the difference between the growth of revenue and of cost, which we've been seeing in an ongoing trend in the last quarters and shows us a recovery in the company's margin. And those expenses and customers be separated. First, we have claims ratio, which has an important growth of 25%. That claims ratio will be seen in detail, which is basically explained by the reduction to claims ratio related to COVID, which shows results in Suramericana. However, we do have an increase, especially in the solution of mobility of cars, in which the restrictions of the logistics change, we see an inflation of spare parts of cars, which has an impact. When we look at operating expenses, these grew 18%, and we have to explain that part of those expenses are related to the business per se, the insurance business, which is growing 21% premiums and there are expenses that are necessarily variable and are growing related to that number. And it's also important to say that we have a process of having very controlled expenses, and we have to start again, to make investments in businesses and in technology. And that's why we have that 18% growth in those expenses. So the net operating profit reached COP 771 billion, up 54%. The financial result had an impact because of the exchange difference, especially the position of liquidity of dollars that we have in SURA Asset Management in Chile. So there, we have an exchange difference that has an impact, but we do believe that it's more accounting effect than on a long-term basis. And all this to end with the net profit, as I said before, COP 442 million billion and a net profit of the holding of COP 429 billion, up 121%, which can be seen with this positive trend that we've shown in the profits in the last quarters on the right hand side, lower graph. Now let's look at the next section, which is Suramericana. Here, we'd like to make a change the press -- the information, and we basically want to look at the companies. And at the end, we have some full parts of Grupo SURA and understand the result that we showed of our profits. So let's move to Suramericana. Here, we could summarize this with a good commercial dynamics and premiums. Claims ratio is received that's maintained with similar levels of pre-COVID, but increased by cars and expenses that are a bit higher than those in terms of growth because of the delay of investments and financial yields, which, because it's a portfolio mainly focused in Colombia has a positive dynamics because of interest rates and inflation. So that's a big summary of Suramericana, which ends up with a profit of COP 104 billion. So now let's look at closer at the consolidated income statement. Here, we talk about in premiums issued of COP 5.5 trillion, meaning practically COP 1 billion more than the first quarter of the year before, up 21%, which is reflected with premiums retained of COP 4.9 trillion and a growth of 23%. Let's look at claims ratio. This reached COP 3.5 trillion, up 25%. We can see on the higher right graph, the claims ratio curve and its performance in the past quarters, which is reaching 71.6%. That claims ratio is impacted by, first, the reduction in the claims ratio because of COVID. With COVID, we had COP 164 billion. However, this is 61% less than in the first quarter of '21 and 11% less than in the fourth quarter of '21. This claims ratio, because of COVID, represents approximately 3.3% of the total claims ratio of the company, which, sometimes at the peak of the pandemic, was even 10 or higher. So here, we can see a reduction, which has been, let's say, in this case, negatively compensated because of the increase in the solution and mobility, both because of the severity of the losses as well as the frequency. And when it comes to severity, this is connected, obviously, to what we've mentioned also in previous calls because restrictions and logistics and has a direct impact on the cost of spare parts. And this is reflected on the claims ratio of Suramericana, but we have to say that there is a positive reaction related to an adjustment and an update of rates that compensate that claims ratio. With regards to operating expenses, we show a growth of 13% and reaching COP 738 billion. And behind that 13%, there are two things: First, we're comparing an expense of the first quarter of this year with an expense of the first quarter of '21 that had a reserve that we had to make in December 2020 for topics related to the pandemic that were not manifested with the same critical level that's projected. So it allowed the first quarter of '21 to return that reserve. So we're comparing 1 quarter with another quarter reduced in terms of that provision. And on the other hand, we have an investment in technology because it's important for the company to have the business development close to COP 19 billion. So with this, we reached an industrial result negative COP 330 billion, up -- however, up 34%. It's necessary then to look at the component of revenue from investments, which we mentioned initially, which reached COP 376 billion, which can be seen in the graph, lower right. And we see how, from the very first quarter of '21, the yield -- accumulated yield, or annualized, of that portfolio has been increased in line with the increase of the inflation and interest rates, and it's reaching now a little close to 9.5%, which allow us then to reach a profit before taxes of COP 131 billion in Suramericana and a net profit of COP 104 billion with a positive variation, understanding that the first quarter of the year before, the company had a negative profit. Let's move on to segments to each of the segments, and I invite you to the next slide to look at the segment of Life. The segment of Life continues growing with premiums. We see a growth in the quarter of 16.7%, reaching COP 1.6 trillion in premiums, mainly driven by the solutions of health, which we can see it's growing about 22%, mainly in Colombia, El Salvador and Chile and the Professional Risk segment, which is growing 18%, reaching 4.2 million members. So this shows the good commercial dynamics that we have there. But when we look at the retained losses, there we can see an increase of COP 76 billion. However, underlying where we can see on the higher graph of annualized claims ratio in the last 12 months, we see a reduction and then we move from [ COP 65 billion ]. Now it's lower, as I mentioned, because of the lower claims ratio related to COVID. On the very bottom, we see administrative expenses of net commissions, which have had a small increase because of the more investments in technologies and particularly when it comes to commissions, it's related to the blends of channels. But these are healthy levels. And along with the revenue from investments, we have a growth of COP 101 billion in net profit. retaking this segment, which you know is quite important for the company and its path to return to positive profit levels. In this case, we're ending the quarter with a profit of COP 148 billion. Let's move to Slide 13 and talk about the segment of Casualty. This segment keeps a good growth in premiums. We can see a growth close to 16%, reaching COP 2.2 billion in premiums, and it's driven mainly because of the solutions related to mobility. I mean, cars, both in the mandatory, which is so what, which is growing 31% as a voluntary, which is the solutions -- traditional car solution, 30%. This has a rate -- this is because of the rate update and the volume and growth of cars in the region. When we look at losses in the upper right-hand side of the page, you can see increases in claims ratio, close to COP 184 billion versus the first quarter of the year before. And this has to do because of the increase to cars related to the supply chain. However, this shows a close ratio of 55%, which for the entire segment is not a bad level. However, when we look especially the claims ratio of cars, we see about 71% versus a level of normality, which would be at 60%, meaning that when we aim to update the rate which normally is something to take a year, we expect little by little to go back to those levels related to 60% in claims ratio. With these premiums is we're reaching a combined reason, which is growing -- decreasing a little from 108% to 109.5%. And you can see that's practically the same number in absolute value. It's also important to understand that this segment is collecting here impacts from COVID in Mexico, Panama and Brazil. These impacts are close to COP 14 billion as how these companies are accounted within the company's accounting process. So you could add it to the profit of COP 14 billion to understand exactly the segment and its profit recovery. On Slide 14, you can see closely the Health segment. And here, I'd like to initially remind you it consists of the EPS -- IPS and Diagnostic Aids. Why is this important? Because we're growing a lot with the EPS and Diagnostic Aids. And the IPS because of the reduction of COVID cases has had a decrease. So how do you see this in figures. First, you see premiums issued significantly growing at 27%, reaching COP 2.1 trillion in the quarter, and it's COP 452 billion, more premiums, very driven again because of the [ BAs ], which we see the members in the quarter reached -- the new members in the quarter reached 360,000, meaning 5.1 million clients insured. When we look at the claims ratio on the upper right-hand side of the graph, you see that the claims ratio grew 29%, meaning COP 442 billion. Here, you can see that the figure is very similar in terms of the increase of premiums and claims loss. And this is reflected because of the operating expenses that keep the same expense versus revenue ratio. And also the net profit, which here is see negative. But again, it has an impact because with the Diagnostic Aids and the IPS had a positive result during the pandemic because the activity that they had to support the entire customer service process. On Slide 15, I invite you to look at a summary of Suramericana from the viewpoint of profit. On the very top, you can see the progress of the company's profit in the last 8 quarters. Here, you can see at very difficult quarters in terms of probably because of the pandemic. But also in the last 2 quarters, we see a recovery, which now shows us COP 104 billion. When it comes to the variation of different segments, we see also something that shows that we're coming from the first quarter of minus 11% in 2021, and we talk about a recovery of Life, a positive contribution of Casualty of COP 24 billion impact of interest paid because of the debt because of the increased interest rate. It allows us to reach the COP 104 billion that we mentioned. When we compare these results with the projections that we've made in the prior calls, we see that the growth is even above the growth that we've talked about for the company, for the premiums, and that the claims ratio is a bit higher. It's mainly because of the cars that I explained that we are in the process of increasing the ROE to reach normal levels to create value. Right now, we have an adjusted ROE close to 4.3%, a tangible ROI close to 5.5%, which, again, we hope that rises to the projection levels that we talked about in prior calls. Now let's move to the section of SURA Asset Management. To understand these results, I think it's important to separate this in two, the operative component and one related to the impact that there are macroeconomic variables and the yields of international markets. In the operations, we see a decrease in the savings business for the -- very expected because of Mexico, which has been compensated with a major effort made in operation expenses. When it comes to international markets, we have an impact on the reserve and because of the exchange difference and a position in dollars that we see in Chile and a revaluation close to 7% in the Chilean pesos. So really, the bottom line here, we see the company is showing a loss of COP 47 billion. So let's begin with revenue. Revenue from commissions shows a decrease of 2%, and that's separated in two items. Savings for retirement, which decreased 3% and it's mainly driven by Mexico that I told you and the voluntary business, both Inversiones SURA and Inversiones management has a positive growth, not as much as in prior quarters, up 6.2%. When it comes to revenues for reserves, we see a reduction of COP 100 billion or a loss in the quarter of COP 81 billion related, again, because of the impact of international markets, which also had an impact in the equity method, which comes from Proteccion, which had an impact on the reserve of Proteccion and because of the reserve made for the provisional insurance, which we need to make. So with this, we end with operating revenue in the quarter close to COP 528 billion, down 20%, which has been mitigated in a certain way by the control of expenses, which grew 4%, but in local currency, is practically growing 0 and reaches an operating profit of COP 97 billion and a net profit, which after the financial results. And with the exchange difference impact reached a negative COP 47 billion. In the graph, you can see the evolution of revenue from commissions and how at the end, there's an impact because of the Mexico case. However, I'd like to highlight here how the revenue from the voluntary business Inversiones SURA and Investment Management had been consistently gained share in the mix of revenue from commissions, which has been the strategy we've had to build that voluntary business. On the other hand, on the bottom, we see EBITDA, which clearly is affected by the reduction of the commission in Mexico. And there, you can see the EBITDA on the blue line with a line that shows the EBITDA without reserve to see it more normalized reaching a level of COP 252 billion. Slide 18. Here, you can see the business of savings for retirement. And it's important to highlight how the main business of the company had an impact because of operating topics because of the international markets related to reserve and the exchange difference related to Chile. AUMs of this segment grew 1.5%. And this is important to mention because we reached the growth, even keeping in mind that with the retirements of Chile and Peru of about COP 7 trillion, we could keep a growth that was positive. When we look at revenue from commissions, here, you can see two colors, which are separated in the countries where we charge per flow and those for AUMs, which is basically Mexico and a percentage in Peru. But it's mainly Mexico. And there, you can see the decrease, which of 3% of an all separated in a decrease of 17.6% for what we charge in AUMs in Mexico and a positive growth of 10.4% in other countries, very driven because of a salary base that comes with the economic recovery of the different countries and with the inflation levels that we see in the region. Operating expenses as a percentage of revenue because of the reduction has been increasing a bit. However, I'd like to highlight that when we see the per percentage of growth of 3.8%, which, again, we see it in local currency, it's practically in 0. And the net profit of the segment is dropping from COP 213 billion to COP 101 billion. Slide 19 shows us details related to the business of Inversiones SURA and Investment Management. Everything has to do with the voluntary component. So here, we see the enhancement of the value offer. You can -- we also -- we developed the products, understanding the needs of the clients. Right now, for instance, we're looking towards lower-risk products that can bring lower commissions, and that can be included in the numbers of the segment. However, AUMs are doing well growing 4.9% sic [ 5.9% ], reaching COP 75.4 trillion in this segment. And we'd like to highlight also show on the net flow graphic that we had in the quarter that despite the volatility and in the international markets with the Ukraine war, we have a positive net flow in the quarter, growing COP 79 billion. On the bottom, we see revenue from commissions and how these are related to these two segments and reached COP 100 billion in the quarter, which we think is a very important figure. That's reflected in the operating profit, which shows some recovery versus previous quarters, and it's similar to the operating profit of the first quarter of '21. We already reached 2 million clients in this segment, which for us is a very important achievement in this voluntary business development process. Let's look at Slide 20, which shows us what we talked about the impacts of the net profit of SURA Asset Management in this first quarter. On the top, you can see how the company had a loss of COP 47 billion, which is understood much better when we look at the lower graph, which shows a comparison in the first quarter of '21 with a profit of COP 116 billion. The first component related to the operation that shows the decrease of commissions, mainly related because of reduction of fee, which is in line with the projections that we saw with a decrease in the year of commissions between 2% and 5%. On the other hand, there is an effect on the reserve, which is significant, a negative COP 98 billion, which is dropping considerably the profit showing the reserve that you can see on the reserve line that you saw on SURA Asset Management and in Proteccion. And we also have the impact that we mentioned difference of exchange because of the liquidity in dollars that we have in Chile, up COP 62 billion to reach that 47% that we mentioned, meaning without keeping in mind those two impacts, volatility of capital markets and the revaluation of Chile pesos, practically, would be at the same operating profit level of the first quarter of the year before. Let's look at the last section of the presentation where we see Grupo SURA consolidated understanding that we saw Suramericana and SURA Asset Management. So now let's look at the equity method that comes from these, which shows -- let's look at Slide 22, where we see a very positive growth of the fourth quarter of 2020, first of '21 and how it begins to grow to a level that now is at COP 543 billion, up 126%, which we think it's important to explain in this table. First, Bancolombia contributes COP 424 billion of those COP 543 million, up 219%, mainly because of the good results that the bank has -- understanding that there is a good growth of accounts receivable, a growth of the margin also of net interest, a controlled credit cost, which allows the bank to go towards the projected profitability level in the market. Grupo Argos, we see a growth of 112%, contributing COP 16 billion. Grupo Nutresa has a growth of 29%, contributing COP 105 billion in our equity method. And lastly, Proteccion, which has a decrease of COP 32 billion, mainly because of 2 things. First, the reserve that I mentioned in the section of Sura Asset Management; and second, because the provision of the provisional insurance that was also manifested before and that because of the macroeconomic variables, especially inflation, has had a significant variation this quarter. So with this, we end the equity method, again, with the growth versus the first quarter of '21 of 126%. Lastly, let's look at Slide 23, which shows the variation of the profit of Grupo SURA and how each one of the parties has contributed to that growth of COP 230 billion versus the first quarter of '21. We began the first quarter of '21 with a profit close to COP 211 million. Suramericana provides COP 115 million with that -- in that variation, which is in line with the company's recovery. SURA Asset Management is subtracting [ 162 ], again, because the factors that do not have to do with the business operations. We're adding COP 325 billion because of the equity method. And components related to Grupo SURA, we are subtracting COP 48 billion -- million because of the administration expenses and interest related to the increase of interest rates, one, and the item of others, we have an impact because of several valuations made of companies SURA Ventures, which right now are listed and have some volatility because of volatility of international markets. So to reach that profit that we mentioned COP 442 billion in the quarter, which when we look at 12 months before, gives us our ROE adjusted in Grupo SURA close or above 9%, which is in line with the projections that we have for this year. So with this, we end the presentation and now we begin our Q&A session.

Good morning. [Operator Instructions] So let's begin. Initially, Stephanie asked, I'd like to understand the investments regarding the reserves and SURA Asset Management of Life of Suramericana because of the performance of the reserve.

Okay. Stephanie, look, the reserve essentially is divided into fixed income, 50%; variable income, 35%; alternatives, 10% and 5% in others, especially [ cash ]. When we look through currencies or regions about 37% is overseas and the remaining percentage is local. However, we have to say that this depends on the possibilities given by each of the regulators. And as we've seen in different countries, there are different funds that allowed these investments. So what do we see? We're trying especially what the regulation allows us in each country to increase investments in alternatives. In the past 6 months, about $1 billion have been made in alternative investments to compensate the increased rates -- interest rates and the impact that this has on fixed income. On the other hand, it's worth underlining that SURA Asset Management, both in Mexico and in Chile, Peru and Colombia, especially in Peru and Colombia and Chile in the past 12 months, is creating Alpha. In Chile, with Fundacion, which is the largest fund in Peru, with the 3 funds creating Alpha above the competition in Colombia and four of the 6 funds of the AFPs and severance payments. And in Mexico, where we've been a bit more complicated. However, for the last -- past year, we had a recognition of Morningstar with the platinum or silver rating with the best performance. Our viewpoint of the funds is long term. So we're trying to do everything on a long-term basis. Obviously, these are situations that we've seen in the past. The yields of the funds is still good or very good. But obviously, this particular situation, the reserve that we have represented in the same proportion, legally in the funds that we're managing, has suffered with the movements of the market. Also, you were asking about what's happened in April and May? We have seen the impairment of our investments in the months and in April so far of May. However, the trend has been similar despite the change of the performance of the currency, which has implied a positive effect for SURA Asset Management. But specifically for the reserve, April and May have continued a negative trend because of the movements of the market. Perfect. With regards to Suramericana, I'd like to give you context the total portfolio of the company as of March is $4.4 billion. Of that total portfolio, we have in Colombia, 77%. And of that, 77%, Life represents $2.26 billion. That's our largest portfolio. This portfolio -- for a long time, we've been managing with assets and liability management, understanding the company's liability, which is mainly indexed to inflation. Therefore, we seek papers that meet that minimum investment that we have to guarantee. And by doing so, with the [indiscernible] cost, we manage to have the paper until it matures and avoid short-term volatilities because we want to preserve the asset to cover the liability. This represents today's 75% of the Life portfolio, which is [ index Life ]. And again, it gives us a very good stability within the company's results. When it comes to the daily business, we need -- with the new resources that we receive in the company, we are looking for better rates is what gives us better support ahead. Our expectations in the future is to continue with the strategy. It's very important to understand that the liability since it goes hand in hand with inflation, it's reevaluating. So we have to cover disposition with the asset. That's the position that we have in Suramericana.

Perfect. Daniel Guardiola is asking in SURA Asset Management. In the quarter, the commissions in Mexico dropped 57 basis points. What is this impact have in the ROE you have in this country? And what are you doing to compensate better -- for better revenues?

Look, the calculations that we have the ROE regarding the reduction of [indiscernible] shows us a ROE in numbers of about 23% to 16%, 17%. Since in Mexico, we charge over AUM. We have to understand the market how the AUMs have been growing. There are several initiatives. When it comes to operating expenses for several years, we've been working for more efficiencies, but specifically after the reform, with the chance with the expenses for acquisitions, we seek efficiencies and the regulator wants to find lower commercial dynamics. In October, November last year, we had 2,000 commercial advisers, and we hope to end 2022 with 500 commercial advisers. However, we're also waiting to end with $1 million more with the AFORE's business and contributions made by the system to the companies that have the best services and yields, which, this year for SURA, will be $500 million of funds related or assigned which were not assigned at all. So on that side, we also expect to compensate that decrease of their ROE and we hope next -- as of next year, with contribution, which are moving from 6.5% to 15% in a transition period that the private sector will assume. We will manage an have an ROE of the AFORE that will recover to levels pre-reform and pre lower fee. Even Carlos, it's important to understand that more than to recover them to keep the efficiency that we're seeking with all of the AFORE of SURA Asset Management. Keeping that higher efficiency to multiply our revenue, for instance, in Mexico, 2.5-fold with lower margins, yes, but in terms of consolidated figures, undoubtedly, that ROE will be better. So that efficiency in the future multiplied by 2.5 the revenue, which is related to the reform in Mexico will be significant for SURA Asset Management. And there was a question also on future, will those efficiency levels will be important to maintain the margins and returns above the capital cost that we seek.

Daniel Guardiola is also asking about the main regulatory asks that we have in the mandatory segments in every country.

Let me begin. Look, we are watching out carefully what's happening in Chile. There are different interpretations of what was really settled in that text. But also, everybody is talking about an additional reform that will be in the constitution. And for that, the government has begun public discussions in which the fundamental topic and most accepted by citizens is that the savings by pension funds are at citizens. And based on this, the discussions were begun with the people. So we'll -- we're carefully seeing what are the also those discussions. Remember, in this business, we look at things on a long-term basis. And when it comes to the pensions and the well-being won't change really. In Peru, we are watching out a new retirement. We hope to see the impact that this will have on the AUMs that we should give to the savings, but in Peru, we only charge 12% of the interest comes from AUM. So we don't expect an impact on revenue this year, but we are keeping a good eye on a possible additional reform there. On a short-term basis, we don't see one because of the -- but there is political uncertainty there. And then in Colombia, we're also keeping an eye on what will happen with the elections. There are different positions within the programs of each candidate. And what's mentioned the most is the chance that the pillar or the lower salaries will be managed by [indiscernible], leaving the AFPs with a niche of workers with a higher salary, 3 or 4 minimum wages. So we're keeping a good eye -- close eye on these reforms and how the AFP companies would develop. That's an overall, Gonzalo, would you like to add something?

In Mexico we're feeling the impact of the lower commissions. Although there is an increase of the percentage of the contributions made by employers and employees, and that has helped us compensate. Sorry, Carlos. The question is very valid. Firstly, we are a long-term company. We've been 75 years in operation. And clearly, we have to be technically in line with our surroundings. We want to be valid spokespersons with any government based on knowledge. I think with 30 years of experience handling, managing these assets and knowing the populations the mathematics behind this and the financial exercise. I think we have the knowledge that will create value for any government. And the purpose -- the idea is to talk with governments to seek the best for the population. And as Carlos said, to begin, to play as asset managers and pension managers a major role. But also, you know better than us, knowing that we have infinite opportunities, as Carlos mentioned, but we'd want to highlight them. We have an active population -- economically active population. Today is negative, but while we formalize the economy, it's a population that will grow. And in that sense, shows more sustainability for the system and clearly, an exercise of efficiency sought in every operation. And given the efficiency plus economically active populations and more formality, I think we are a clear solution to the retirement programs that Latin America needs. So I think that our knowledge will be the base for our conversations with different governments. I'd like to add with regards to Mexico in the previous question and the reserve, how it's how it's located. Indeed, the reform has reduced the reserve for the companies. And what the regulator has said is that it would go from 0.50 to 0.40. So we will have a reserve that will set in that range.

Daniel Guardiola has another question. When it comes to the consolidated Grupo SURA, you talked about 9.6% adjustment. Could you tell us about more of the reconciliation there?

Daniel. Thank you for your question. Firstly, since 2018, we determined the methodology to look at the profitability of the company and how in the future that path would progress. And back then, we made several adjustments that would help us to give a more precise show of the profitabilities of each asset that we had. And beyond that, some parts of Grupo SURA, there are four effects: First, we see or we use a reserve that's normalized. Why? Because you've seen throughout this presentation, the reserve is volatile in our results. So really at the bottom line, we have a long-term portfolio. So we use a normalized reserve for that calculation. Second, when it comes to the migration to IFRS, the investment in associates Bancolombia, Nutresa and Grupo Argos was accounted at the market value. This means that in our books, the values of those associated companies when the ROE of Bancolombia is measured compared with the accounting ROE if we didn't make the adjustment, it would be very close to the market value. So what we do is to place it more comparable like, for instance, with the bank's examples. So that's when it comes to the valuations when we go towards IFRS third. We are guaranteeing that both the net profit and the invested equity in the companies related to our cross structure ownership. We look at the industrial results, the profit and the profitability. And fourth, given the expansion that we had in the last decade, we are returning the impact because of amortizations because we have the capital investment invested, but we are returning the amortization to understand each business and what they provide. So Daniel, we're looking at we use those four items to reach this number, which, again, you can have different positions and we respect that. What we're saying is that we think that what's important is to understand under the same baseline, the long-term trend -- uptrend. So that's the answer to that 9.6%, which we can look closer if you want to look at specific figures.