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

This document may contain statements of future evaluations related to Grupo SURA and its subsidiaries thereof, which may have been made under assumptions and estimates of the company's management and may show variations. Good morning, everyone, and thank you for joining us for the presentation of results of the second quarter of Grupo SURA. Today, the conference will be divided in 2. First, we'll have a section with a video that shows the results given by Ricardo and Gonzalo; and second, we'll have a Q&A session. Right now, we are joined by Gonzalo Perez, the President of Grupo SURA; Ricardo Jaramillo, VP of Development of Business and Finance; Juan Luis Munera, the VP of Legal Affairs; Juan Fernando Uribe, the VP of Investments and Finance of Suramericana; and Carlos Oquendo, the VP of Corporate Finance of SURA Asset Management. Thank you. Let's give the floor to Gonzalo Perez.

Thank you, Daniel, and to you as well, thank you for joining us to provide this report of quarterly results as of June 2022 of Grupo SURA. As we did in the prior event, every quarter, the idea is to start talking about each of our capitals. Sustainability really is only achieved when you manage stock capital, economic capital, natural capital and human capital jointly complexly as we say technically. Last time, we talked about natural capital. And in this opportunity, we'd like to briefly talk about human capital. Human capital in our management is understood much more than work -- the work made by our 33,000 employees. For us, human capital management involves providing skills and knowledge to the entire community, to all of our stakeholders. So both employees and our suppliers and our distributors and society at large, have that commitment to provide human capital for the harmonious growth of society, which is part of our strategic goals. Hence, to talk about other than natural capital, we as employees or suppliers or distributors have trained more than 33,000 Colombians, for instance, in behavioral sciences with which these tools make -- can help make better decisions, more important and, struggle against disinformation. So more than 1,700 educational agents have been trained in skills. In artists, we've trained more than 300 journalists so that they can make true independent journalism and to form a community. So with the management of human capital, we are above that management of just employees and suppliers that we've had for many years to provide them more information than just pay them, obviously, for their services. The idea is to train our suppliers, and everything has to do with global compact as well as our distributors. Acknowledgments received so far are important, yes, but it's more important the management that we have to make. And obviously, for us, acknowledgments are just a clear sign of the fact that we are on the right track. We have been acknowledged as one of the 5 best places to work in Colombia. We have been acknowledged by Standard & Poor's with a very high level of long-term compensation for our employees. We have been acknowledged 100% as a company where the freedom of association, for instance, is deeply respected. All of this is part of management and human capital. That's fundamental, not only for the development of the company, but for the development of all the countries and societies where we operate. So that management of capital, along with what we mentioned with natural capital, we're always talking about economic capital fundamentally in our day-to-day activities and in these calls of results. And next time, clearly, we'll be talking about stock capital. It's very important to remind you that our strategic goals has to do with the harmonious goal of society and to provide a result of higher economic levels and a complete management of the capitals. On the other hand, to talk about the economic results of Grupo SURA per se, we have to begin by mentioning something that's perhaps something we've repeated, but it's still very positive for the company. The revenue of the company, which are those added by the premiums and commissions fundamentally of SURA Asset Management and Suramericana, are revenues that still have a growth of double digit. But why are revenues important? The companies are build, and when you build companies based on the acceptance and trust given by the people, the companies in each of the countries where we operate, we're reaching COP 27.6 trillion in the last 12 months of revenue in this company. We're talking about a 14.5% growth added from 2015 to date. And this date even means for what we've gone so far this semester, COP 2.7 trillion of new revenue for the company and a figure of above COP 14 trillion per semester, which has to do with COP 12 trillion in premiums and COP 2 million other in commissions. So with this first aspect, we still have the trust of the people of the companies. These companies are still growing at double digit, more than 24% growth in revenues in this semester. And that's the first result we'd like to share with you. The second result is this -- is important, and it's the clear result of the company's profit. The result of the company's profit, again, we're looking at the last 12 months. And we're reaching COP 1.77 trillion in net profit of the company in the last 12 months, up, which is also a double digit, 23%. And that's quite important. That net profit is also reflected in the semester that has been very important regarding profits. It's historical really for the company, more than COP 900 billion in net profit of the holding and [ COP 14,200 billion ] in total profit of the company. These profits are fundamentally consistent of the good results that we've had, first, of Suramericana, which we'll see ahead has confirmed its rating. And it's already in a recovery track quarter-after-quarter and the good results of the equity method of Bancolombia and Grupo Nutresa and Grupo Argos and results of SURA AM, which have been affected clearly by what has happened in the semester with the AUMs of SURA Asset Management, and again, the commissions that we had foreseen reduced in Mexico. So it's very important, again, to clarify that we've had a semester and really the 12 last historical months in profit of Grupo SURA. And that in general terms, all the companies in which we have investments have had a good performance in the revenues. Management of expenses is something that we'd like to highlight as well, a management that -- Ricardo Jaramillo will be giving you details, but clearly for us is a track towards efficiency. And from there, we have a goal that we have shared with you already for several years, and it's to reach a return above capital cost. With that, we -- as we have mentioned before, we're seeking, by 2024, good result, and we're a bit faster than what we expected. And that's our clear goal within the economic goals that we insist. We indispensably need the trust of every person, companies, in every country, the 11 countries where the subsidiaries or investments of Grupo SURA are, that higher return of the capital cost is something that we'll be discussing quarter-after-quarter in our calls because it's a clear objective of efficiency and revenue. It's also worth highlighting and it's very important for the -- for our industry, which is the financial industry that for the fourth time I've said so far, it's fundamental to have trust. And Moody's and Standard & Poor's ratified the ratings of SURA Asset Management as that -- as well as that of Suramericana in the issuance of bonds. When it comes to SURA Asset Management, they asked to have robust economic structures in the company, that's that leadership that SURA Asset Management has in Latin America besides capability of distribution and expense management. So -- and that's something that Moody's highlights to ratify its rating of SURA Asset Management. It's very important moments like these for these companies -- for these countries in general. When it comes to Suramericana, Standard & Poor's ratified it with a AAA rating of its bonds. And this rating is, among others, highlighting several conditions. The first one is its leadership in Colombia and in Latin America. The second condition, which is important, it's geographic dispersion and risk dispersion. Here, we've been mentioning step-by-step that it's very important as Grupo SURA to have the dispersion that it has. This is a risk management that's made that -- in which every period can be compensating the results of the companies with others of some countries with others, industries with others. It also highlights in this case Standard & Poor's in Suramericana as in SURA Asset Management. The management made by Suramericana and its solvency margin is another of the conditions that Standard & Poor's acknowledges. And also, we believe that it's been evident with all the management made in the pandemic, the risk management made by Suramericana. So we can say that these are the points worth highlighting that Moody's and Standard & Poor's kept in mind to rate SURA Asset Management and Suramericana. Lastly, before I give the floor to Ricardo Jaramillo, I'd like to share with you several acknowledgments. These acknowledgments, the fact that Grupo SURA and Ibero-America by Merco, including Italy, Spain, 14 countries has been acknowledged among the best 100 companies with the best reputation in Ibero-America and ranking 57th. And it's an acknowledgment that [ towards ] not to stay there, but to highlight because it's Ibero-America, it's the impact on many countries in addition. And that same acknowledgment of Merco, Suramericana ranks second in Ibero-America after its colleagues of MAPFRE as the second insurer with the best reputation in Ibero-America among thousands of insurance companies. That's important to have that recognition for these companies. And the last recognition was given last week from ANDI, which recognized Suramericana, particularly SURA Colombia. And in general, Suramericana as one of the company's leader in innovation. So all of this seeing comprehensively makes us think that the company is still on the right track of sustainability. And we continue, fortunately, with positive historical results above the ones we've seen before. Again, thank you, and I'll see you ahead in the Q&A session -- in the live Q&A session. And let's give the floor to Ricardo Jaramillo, who will talk about these income statements. Thank you.

Thank you, Gonzalo, and greetings to all of those connected to this call today. For us, it's very satisfactory to show the results of Grupo SURA during the first semester of the year, which exceeds the expectations of what we have been projecting at the beginning of the year. I'd like to begin by highlighting that in the quarter, we have higher revenue of the company's history, showing a positive development of the businesses that we'll see in detail ahead despite the impacts of claims ratio that we will show you in the next slides as well. So let's begin, please, on Slide 9, showing the consolidated income statement, focusing first on revenue. Operating revenue of Grupo SURA in the first semester reached COP 14.4 trillion, up 24%. And we'd like to highlight really the figure, which is a new growth of revenue of COP 2.8 trillion in the semester. This is mainly focused or driven by the premiums issued and premiums obviously retained that you can see reaching COP 10.7 trillion and a growth of 27%. And also in the equity method, we'd like to highlight the equity method because it reached COP 1 billion in the first semester. That is COP 398 billion more than the year before. On the other hand, revenue from commissions is practically at the same level of the year before. This is something we'll see ahead. The costs will be seen in Asset Management. And revenue from investments grew 10%, which is positive. But we also have to understand the dynamic shown in Suramericana and SURA Asset Management that we'll see in these slides. When we move on to look at the expenses and costs, we see that the company reached COP 12.3 trillion in costs. This is important to highlight here because we have a growth of 22%. That is 200 basis points of growth below the revenue, which means that we're still in the margin increase process and in the company's [ profit realization ]. It's also fundamental to separate the retained claims ratio and the operating expenses. In claims ratio, these are growing 25% that we'll explain ahead. And operating costs gather variable expenses and administrative expenses, which grew 18%, meaning 600 basis points less than the growth of revenue, which ratifies our efficiency and optimization of the business spread that we have in the different geographies because it's important to highlight that these growths that we have in revenues are growths that we see overall in the different geographies where the company is operating. So this shows that the operating profit of the company reached COP 1.681 trillion, up 40%. Then it's important also to shed light on the fact that the financial result has a growth of 65%, which is not positive, but it's a result of 2 topics mainly: one, the increased interest rates that you all know of; and two, several impacts on exchange differences in some geographies, mainly for SURA Asset Management. So this allowed us to reach a net profit in the semester of COP 1,044 billion and a net profit of the holding of COP 987 billion. In both graphs, we can see the trend -- the good trend of revenue and net profit. And it really ratifies what we've said in previous years and previous calls the importance of using the business spreads that has -- of the company to gain efficiencies, scales and improve margins and the processes of [ profit realization ]. Now let's move to look at Suramericana, particularly Slide 11, which is the company's consolidated income statement. And I'd like to begin by saying that the company displayed a very positive recovery of the results compared with the last 5 quarters, which were mainly affected by the pandemic. Premiums, beginning by the first line, premiums issued continued growing very positively throughout the pandemic. We've seen double-digit growth. And here, we're seeing a growth of 26% of those issued and 24% of those not -- those retained, which is fundamentally given in different segments of the company and countries. When it comes to claims ratio, I'd like to look at the top right graph that you can see on the slide to look at the 3 main effects. One, we have the COVID, which we see that, that COVID reflects -- reflected the gray bar on the graph. And there, you can see how right now it's more depreciable or the impact of COVID is lower in the numbers of Suramericana. However, it's also important, as we've said before, the relevance that today we have the claims ratio in automobiles mainly because of the more frequency and severity and the cost of car parts. And that's the blue part of the bars, which has impacted particularly in the segment of general. And when we look at this segment, we'll see an increase of claims ratio. We've seen also in previous calls that we've been adjusting the rate, which is -- it takes months, and we still seek to maintain that margin. But step by step, we have the movement of all the [ mass ] of 1.9 vehicles that Suramericana has in the entire region. Another important point to understand the claims ratio is the segment mix. The segment of health has grown in the last 4 years much more than life and general. And this lead us today, it has more -- it drives more in the Health segment, especially because it's influenced by the pandemic. To highlight and to give a clear message about claims ratio, a high claims ratio is not bad per se. It's a track that we have so that the client can perceive the value of its insurance and pursue the value of the premium that is being paid day after day. Obviously, you can add this control or the efficiency of costs and expenses to maintain the profitability expected. But claims ratio per se is not something that should be seen negative. When we look at the different items of expenses of the company, we see commissions or others that here, particularly have to do with expenses of several -- or miscellaneous of insurance, and they're really related to the growth of the business. And they're closer to the growth of premiums. This is different to the operating expenses that have more to do with 13%, it has to do with investments and having to do with the last 2 years in which expense was very controlled. But still, we look at operating expenses growing 13%, which is practically doubled or exactly doubled to what we see in that new focus on efficiency to have better operating models to continue with the company's profit realization. The technical result of the company dropped 8%. It remains at a level close to COP 752 billion That is COP 68 billion less than the year before. The industrial result is at COP 774 billion. And here, it is important to complement this with revenue from investments, which is clearly the part in which -- which is financial, that supports the reserves. The company has shown during this pandemic that it has a good level of reserve that's been able, let's say, to navigate the storm of the pandemic with several claims ratio close to COP 3 trillion. And this has been, thanks to the level of reserves that the company has had. These reserves are reflected in a portfolio mainly invested in Colombia. And you know that because of the increased inflation and increased interest rates, there has been an increase of the profitability of the portfolio. And the certificates are mainly accounted to maturity, And we see then that the company on the lower right graph, the company reached in the second quarter a level quite high when it comes to revenue from investments. So all of these explanations lead us to see that the company reached a profit of COP 263 billion. The first semester of 2021 was practically in 0. This means or reaffirms what we've mentioned that the company has had a very significant recovery in its process to reach again the expected profits. Let's move to Slide 12 to see in detail the segment of Life. Here, we have to reinforce the good growth of premiums, a lower [indiscernible] claims ratio, specifically because of COVID, and a good financial revenue. These 3 components have helped the profit of the company. When we look at the first part, the growth of premiums, these reached a level of COP 1.8 trillion, up 17%, very much driven by the ARL or workers' compensation, which grows about 24%, with almost 4.8 million affiliates. And in Health, grew 15% and has good dynamics, even a good renovation. When we look at the claims ratio, we'd like to highlight that it's already reaching a segment of prepandemic levels. And we can see that in the second quarter of 2021, we moved from 68.2% to, today, 64% of claims ratio. So this segment is much more normalized. When we look at the administrative expenses and net commissions, it's important to highlight the following: first, administrative expenses have a small increase when we look at the percentage of premiums. However, this is important to remind that investments are made in technology. So this is an increase, but it's not worse under any viewpoint. And second, net commissions, which show an increase. This is more related to a change in the mix. Understanding that this segment is quite heavy in the affinity channel and that the insurance banking. And that while those channels increased their share in the mix, they can increase the commissions. So all of this along to the revenue from investments that are growing in the segment to 92.5% and reached about COP 367 billion are the reasons to reach such a profit, which, as you can see in the lower right-hand side graph, reached COP 160 billion. Let's move on to Slide 13 where you can see the General segment. It also -- you can see it has a good dynamics in the growth of premiums. However, there are big impacts in claims ratio. So let's look at the premiums issued, which reached COP 3 trillion, up 39.7%. This growth is quite influenced by the multiannual policies, especially in Chile. And without that impact, you could say looking really at the growth of the rest of the business, the solutions and mobility and of companies, without that impact, it would be growing 23%. When we look at the claims ratio, we can see what we said that there's an impact on the restrictions of the logistic chains, increased inflation, higher cost of car parts, and this has had an impact on the claims ratio. We can see this in 600 basis points since the second quarter of '21 to the second quarter of '22. Particularly the car solution, it has increased because of the other solutions of General, which have levels even better than those, years before, in claims ratio. This impact is showing that the combined reason has increased from 105 to 111 and that the technical result is decreasing 27.5%. However, when we look at the higher revenue from investments, which is growing 149%, we can see that the impact on the bottom line of the net profit is not that significant as the technical result and that the net profit reached COP 36 billion, down 9.4%. Let's move on to Slide 14. Here, we can see in detail the segment of Health. This segment is fundamental to understand that the growth of the premiums shown regarding the EPS or HMO. And also since we're not going through critical months of the pandemic, the other companies of this segment like the diagnostics or the IPS have significant decreases. But let's focus on the EPS. It's reaching the last year, a figure of 752,000 new affiliates. This is the eighth city of the country, so we have a reference in size, and means that on average, each of these affiliates comes with about 10 new services a year. We're talking about that, we're adding to the company close to 7 million new services a year for these new affiliates, not including that already the total figure affiliates is reaching 5 million. So this is important because it's part of this particular time of the company related to that movement of affiliates from other EPSs that are moving to the EPS [ through that ]. When we look at retained claims ratios, these are focused also on the new affiliates, which normally reach the system when they change their EPS to have more retention service. And we're moving from 91% to 94%. When it comes to operating expenses, we see an improvement in the indicator related to the efforts of efficiency maintained but obviously at a higher scale of the company in terms of services provided. And on the other hand then, understanding that in this segment, we don't have very high reserves and there aren't many revenues from investments. There isn't much help the other segment since the revenue from investments. So this makes us have a profit from COP 24 billion in the second quarter of '21 to a profit of COP 15 billion in the second quarter of '22. On Page 15, we can see a summary of the development of the net profit of Suramericana. We said that the company moved through 5 quarters in difficulties because of the pandemic. But how in the last 3 quarters, it's been showing a positive trend, which I would say is because of the growth of the premiums, a positive claims ratio with a lower COVID claims ratio and an impact on the mix of -- from Health, lower expenses as a percentage of premiums because of the efficiency control and obviously a better revenue from investments. These 5 points are the ones that we could use to summarize the results of the company in this first semester. On the other hand, we see the variation of profit and how the segment of Life is contributing the most to the recovery. General upwards some, Health is subtracting a little. But in general, I'd say that the recovery and the positive news here is mainly because Life is going back to prepandemic levels. On Slide 16, you can see how all of this that I've mentioned is seeing compared to the projections that we've made at the beginning of the year of the company. First, we can see the premiums issued are growing much more than expected. The claims ratio is a bit higher than the rank that we projected, from 70 to 71. However, we're not worried because we believe that, that trend, as we've showed, will set us again in the rank of expectations. Administration expenses as a percentage of premiums is very much in line with that rank that I mentioned. And lastly, the ROE adjusted is basically the ROE of the company, return of the intangibles so that effects the cash flow, but instead the reflection of investments made in acquisitions in the past. Understanding that we have the capital invested from the equity viewpoint, and it's at a level of 7.1%. It's low still for the company because we're looking at the last 12 months. But if we took the first semester and it clearly, will be at a level much higher and that path to generate value above the capital cost like in Suramericana. Let's move to the section of SURA Asset Management, and let's look at Slide 18 to see the consolidated income statement. It's important to highlight the results of this company. This semester were impacted by the performance of the markets, the decreased commissions in Mexico, which were budgeted and the exchange difference. Let's look at the main lines of the income statement. First, we have commissions that reached COP 1.2 trillion, up 5%. Then we can look at the reserve, which had an important impact, we are looking at a decrease of COP 150 billion. And in the equity method, which gathers Protección and several companies, mainly in Chile. So we're also seeing an impact of close to COP 93 billion. Particularly with Protección, we also see an effect on the capital markets, specifically regarding the reserve, a bit more lower in fringe benefits and also in the voluntary pensions with regards to the AUMs leaving and also the provisions related to the provisional insurance that we've mentioned in other times. So to end with operating revenues of COP 1.17 trillion, down 16%. How have we compensated the decrease of 16% in the operations? With an insurance margin that's growing 53% and in excess of controlling our expenses, that's growing 3% or close to [ 1.3 ] in local currency. So this gives us that the operating earnings has decreased 40%. But if we excluded the impact of the reserve, it will be decreasing close to 17%. In the financial results, we mentioned also the exchange difference. And these are the accounts or the money that we have in dollars in Chile. And because of the volatility with the Chilean peso, there has been an impact. So we reached a net profit in the company of COP 43 billion, that is COP 262 billion less than the profit displayed the year before, decreasing 86%. In the graph, we can see the growth or development of the voluntary business, which has been locked in the recent months because of the leave of AUMs or movements of clients towards more conservative assets, which generally have a less commission -- a lower commission. However, it reaches 16% of the revenue from commissions. As to the EBITDA of the company, excluding the reserve because of the capital markets, it's reaching COP 298 billion, which is similar to what we've discussed in prior quarters. On Slide 19, we see the savings segment business for retirement. And it's important to highlight the results affected by the commission rates of Mexico from 83 basis points to 57 basis points. And we can understand here that this will happen throughout the year. And then the other hand, the yield of the reserves. Total AUMs reached COP 489 billion, up 1.9%, and this gathers several components. First, the positive net flow close to COP 5.6 trillion. The contribution of clients, which particularly in the countries where we charge per flow, has had a good development on salary base, growing 18.6%, some negative yields of some funds and also a positive drive for 600,000 new affiliates in Peru after we have gained them in past years. So all of this total leads to COP 489 trillion. When it comes to revenue from commissions, as we've shown in on other events, we separate them from those related to AUMs, particularly in Mexico. And here, we see a decrease of 22% and those are related to flow, which as we said in other countries, mainly Chile, Colombia, Peru, is something mixed. So they're growing 5.8%, again, driven by the recovery of employment and a recovery of that salary base. It's important to highlight that the AUMs, the yields have maintained a high alpha of 66% of those AUMs in the last 12 months, which is quite positive, understanding of the turbulence that the capital markets have had. In operating expenses, we see a growth as a percentage of the revenue, but it's influenced by the reserve. Here, it's important to basically highlight that the expenses now are decreasing versus the year before. And this leads us to a net profit decreasing 55% despite the impacts and the efforts for efficiency. The impacts of the reserve have been considerable, and we see that reduction in the profit of the segment. On Slide 20, we can see details of Inversiones SURA and in Asset Management. Everything has to do with the voluntary business of the company. Here, we see the efforts to develop the business plan and to mitigate the impact on the markets for the funds and for the clients. Total AUMs reached COP 77 trillion, up 8.7% from about 2.1 trillion (sic) [ 2.1 million ] of clients. And when we see the net commercial flow, this variable is important since we see that in the last 12 months, there is a net positive flow of COP 2.5 trillion. And it's important in the midst of so much uncertainty and volatility of different variables where clients seek products with less risk, and these have generally less commissions. And this is reflected in some revenues from commissions that practically are at the same level for the reasons that I've mentioned before. But as we have more AUMs and we also have a high -- some impact on the insurance margin, we can see that this, along with the efficiencies that we have been seeing or the control of expenses on the operations, will allow us to have a profit that rises, a profit that in the quarter reached close to COP 23 billion. And when we look at the semester accumulated, reaches COP 39 billion. On Slide 21, we can see graphically what we've manifested so far with regards to the net profit of SURA Asset Management. So in the second quarter, we have a bit of an improvement compared to the first quarter. But the clear explanation is in the very bottom where we can see that the operational business, some contribute, some profit, specifically commissions minus expenses regarding the impact of reserve. And we see the impact of reserve on the other hand minus COP 220 billion and the exchange difference to reach COP 43 billion. So this has to do that -- despite the volatile circumstances that we're living, we still have good profitability and dynamics. On Slide 22, we see a comparison of the results of the company versus the projections we've made by the market. So let's begin with AUMs that have a growth below the projected. We projected our -- from 10% to 12%, but they're at 1. And this is influenced by the topics we already mentioned. The devaluation of the markets globally have an impact here. And obviously, the net flow received from the mandatory business and voluntary business is a bit lower. Revenue from commissions is decreasing also more than we had projected. We projected 2% to 5%. This is related to the topic of the commission of Mexico and of Peru and also some impact and the lower impact that we see in the segment of Inversiones SURA and Asset Management, which we explained. The operating margin is also below the rank, mainly because of the reserve that I already discussed. And this ends with a tangible capital return adjusted of 14%, which is 600 basis points below the minimum point of the rank projected. We expect that the second semester, these figures can change a little of the trend and to be closer to these projections. Right now, we're not changing these projections, but it's fundamental to see again how it works and how it develops with regards to the reserve, especially in the businesses and also the exchange rates that can have an impact on the results in the following months. So with this, I invite you to look at the section of the consolidated results of Grupo SURA. We already saw Suramericana. We already saw SURA Asset Management. Now let's look at what's related to the equity method, especially when it comes from the associates. And let's look at Slide 24. Here, we can highlight the results mainly of Bancolombia, Grupo SURA and Grupo Argos, which are quite positive. We see a growth of 23%. When we look at the equity method of the second quarter versus the second quarter of '21, we see a growth in the semester of 71 -- 61.3%. And we see that the variations contributing by different companies are positive, reaching COP 1 billion (sic) [ COP 1 trillion ] that I mentioned at the beginning. This particularly, when it comes to Bancolombia, you've seen that the bank has shown good dynamics, an improvement, a control of expenses, cost of credits at low levels, below those seen in prior years. So the bank is having a very, very good performance. Also, it's important to highlight that 37% of the growth of the profit of Grupo Nutresa is very influenced by the positive growth of 32% of the sales of the company. So this leads us to enhance through the equity method that COP 1 billion (sic) [ COP 1 trillion ] that we've seen in the lower line. So to end, let's look at Slide 25, and it's the contribution of each of the parties and the net profit of Grupo SURA. We began the year before with COP 672 billion, Suramericana added COP 264 billion, SURA AM subtracted COP 262 billion regarding the reserve, and the equity method is adding COP 497 billion. Different topics of the exchange impact, administrative expense, interest and others in Grupo SURA subtract COP 127 billion to reach that COP 44 billion (sic) [ COP 1,044 billion ]. As we've said, it's a very important figure when compared with the company's history. When we compare this with the projections made by the market, we see a growth above the rank projected from 10% to 15%. And this ratifies what we said at the beginning of having an execution so far this portfolio, above expectations. And we're headed also towards an adjusted ROE of 9.3%, which is even above the rank, projected up 8% and 9%. So we expect this positive trend that we've seen in the first semester can continue in the next months, as we've mentioned, in each of the companies. So now we end the presentation of financial results, and I'd like to give the floor to Gonzalo Perez, our President.

Thanks again, Ricardo. Before we begin the Q&A session, we'd like to share something that will be disclosed in our financial statements now in June. Grupo SURA, as you are aware, has entered agreements with strategic partners in the past. And the company now, by the request of its Board of Directors, is reviewing the best practices to show the financial statements according to those agreements. So we'd like to give you some background. The agreements include, as natural, provisions of the corporate governance, periods of [indiscernible], mechanisms of [ leaves ] and general clauses usually used because of -- company is not listed. We have structured and executed, with experts, in financial, legal, accounting and tax matters, local and international, and the subscription or signing of these agreements were disclosed to the market with our highlights to the regulator, to the Financial Superintendence of Colombia and to EY, our controller in the past 7 years. These agreements are with Munich Re as a partner of Suramericana with a percentage of 18.87% signed in 2001 with Grupo Bolivar as a partner of SURA Asset Management with the percentage of stock share of 9.74% entered in 2011 with CDPQ, a partner of SURA AM, with a stock share percentage of 6.68% entered in 2019. The international accounting standards should now present any specific guidelines regarding the accounting of the operations over minority interests. These interests are shown on the income statements and the balance of the company's, as you have seen during all these years. And as part of the process of the IRFS (sic) [ IFRS ] in Colombia, the agreements enforced were analyzed with different external advisers. And despite this, at the request of the Board, they are being reviewed, and we will proceed to acknowledge and disclose the changes when necessary. To date, we'd also like to highlight that Grupo SURA has not been notified of any of its partners wanting to be out of these agreements that we have mentioned. Now let's give way to the Q&A session.

We will begin the Q&A session. How the topics are being evaluated?

Thank you, Mauricio, for participating in this call. Firstly, obviously, our teams are analyzing the different impacts on the different businesses of SURA with regard to our shareholders since this is a proposal made before Congress and we do not have the definite remarks of this. So it's -- we have to be cautious giving you an opinion. But we are convinced that, that proposal, given the need of a structural reform of the government, also has to keep in mind the growth of the economy, which we all have to seek. And this is clear. However, we have to look at the different items of each of the players of the economy. Particularly, we're looking the impacts -- the companies of the financial portfolio, the shareholders we have. We believe it's fundamental not to hurt the capital market, which, in Colombia, has been impacted in past years. And dividends also can have a significant impact, the appetite of investments -- of investors for stocks. So right now, we're not giving our opinion of what can happen with Grupo SURA. We also have to look at the topics of the occasional earnings when it comes to the deferred assets. But as we've done in the past, the idea is to just be part of the discussions based on our knowledge, driving everything that has to do with our sector, with the knowledge that we have, again, acknowledging that the country needs a structural reform, yes. But it needs to have a continuous growth to seek equitable conditions and sustainable -- sustainability.

I'd like to complement 2 things. First, yes, knowledge is important. We are related to the government based on our knowledge -- are transparently, technically. And that's what we can provide for the tax reform and for what happened when it comes to health and pensions. This is something that we've done before with our own studies. And again, our relationship or ties with the government are basically based by our knowledge. And we have to seek what's best for the country. But when it comes to the tax reform, we have tax stability agreement with Life, General. I don't know, Juan, do you have the exact data of those agreements, which protect us?

Yes, we have agreements signed in 2009 of Life and General when we had -- the -- we had some commitments if we create a new employment. And we are still covered and have the effects of those agreements. And we expect until 2029, we are covered by these agreements.

Next question from [indiscernible], why -- do we still have combined reasons above 100? And we have other questions that have to do with the value of premiums.

Before that, Juan, I would like to answer to the combined reasons, the history of combined reasons when it comes to the topic in 2000 -- in the '90s and today, but here, fundamentally. To answer you, particularly, and I think that we saw in Ricardo's presentation, first, we have to separate the Life -- the companies of life and nonlife, those that create reserves for a long-term basis and not. And Ricardo already said this, the automobile business, especially because of the logistics chain and the impact that this chain has had in spare parts has increased the claims ratio. And this makes us adjust premiums. There's a comment about that. This takes time, but it's a natural phenomenon to these companies. And it's important to acknowledge. Also strategically, we have to walk and look at higher claims ratio based on efficiency. That's why we systematically have been working on the company's efficiencies. And that work should help us have a higher return based on capital cost. So we have the automobile business because -- which we know that we have to be working on. I think it's been a year in the different countries that we -- where we operate that we've been adjusting the rates when it comes to automobiles to have the combined reason that's prudent in this type of business. I'd like to highlight what Ricardo Jaramillo said. When we have good reserves, that's part of the soundness of the companies. When we have good reserves, we have good financial yields. When it comes to claims ratio, we have also good reserves.

I would like to complement your comment. As you said, the combined reason is an indicator. And what we have a relation of claims ratio, how we cover them, retain them with commissions and expenses. So I'd like to say, of those that are retained, automobile is 40%. It has a bigger share within the automobile segment. And the costs of the high claims ratio have been explained. And they are being served -- making a review of the rates and even looking at the commissions, and obviously, seeking the efficiencies to have the lower expenses possible. In this case, also, we are leaving away some of the auto businesses if these are not prudent. So the idea here is to have a good adjustment of rates in time if -- when we are capable.

It's natural in companies of insurance. We must say that throughout the history of insurance companies.

Next question, Daniel Guardiola.

What about [indiscernible] question? He says -- he talked about fidelization. Fidelization is -- One of the biggest reason of our double-digit growth is fidelization. And we -- and in Latin America, penetration has been high. So you can say that we are the fourth insurance company of Latin America. The first 3 are for Brazil. So we are above Mexicans and Chile and so there is fidelity and growth. And as you can see, at a double digit and for many years now and [ fidelization ] -- fidelity, more the prices because of the added value, that's why we're doing well.

And Gonzalo, let's tell a story here with Dominican Republic. When people start to realize what SURA was in Dominican Republic, not because it was the cheapest, because it wasn't, but because we paid the claims ratio faster, and that's when everything changed, everything shift. When we have to meet our promise, we meet our promises faster, that's it.

Juan. You're right.

The next question of Daniel is, could you tell us what's the size of the potential liabilities that you have compared -- with regards to the agreements that you have with Grupo Bolivar, CDPQ and Munich RE?

Thank you, Daniel. Firstly, I'd like to emphasize that these types of agreements and companies that are listed are common agreements. They are made by shareholders with strategic partners, which establish the governance, minimum permanence, possible exit mechanisms. So here, we'd like to clarify -- many of those are interested of the conditions of these agreements. So what's behind each of these agreements, when tomorrow any of these investors, because of the conditions, wants to leave, there are ways of negotiating or determining the value of these companies. When it comes to Grupo Bolivar, it's 9.70% (sic) [ 9.74% ] of Grupo -- of Asset Management and we place this -- these figures. So everybody can interpret this as they wish to calculate this. It's a formula that's basically in which you can guarantee that in the first years, you collected a CPI plus 4. And after year 5, you begin a variation connected to the equity variation. So if the company does well, Grupo Bolivar does well. If the company does poorly, so does Grupo Bolivar. So it moves according to the development of the company. When it comes to Munich Re, we're talking about 18.87% of Suramericana. It's an agreement signed in 2001, a strategic partner, the main insurer of the world and big -- a big strength for Suramericana for the past 20 years. And they have a possibility to leave, understanding that the company is private. And they would leave when an independent appraiser would say that it's time to leave. It's something standard. There are many companies in the world that have signed these types of agreements. All the strategic shareholders that invest minority percentages have these types of agreements. So we're talking about 18.87% of Suramericana. We cannot give you a value because it's simply is the value of Suramericana 20 years ago or 20 years from now. And when it comes to the CDQS (sic) [ CDPQ ], we're talking about them leaving with an independent third party in 2029. Remember, we started -- we entered in 2019. They have a 10-year period minimum, remain stay. And by then, we have to look at the value of the company, which -- what is fundamental to understand is that we've always said that the day we have to buy any of these shares either by liability or cash flow, whatever, when it comes to assets, the company will keep it. So when we look at the impact of -- noneconomic impact, where nonaccounting, the company will generate a dividend, and the debt would generate an interest, and the difference will be the interest of the debt versus the return of the investment when it comes to dividends. So this just to clarify to what Gonzalo just said. Here, we have a standard mechanism of corporations with strategic partners, which, as Gonzalo said, have never raised their hand to leave the company, simply because of the request of the Board, we are trying to look at these agreements, and we can deepen, in case you consider it's important at any details of any of the clauses or articles of these agreements.