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

Good morning. Welcome to the call of results of the third quarter of 2022 of Grupo SURA. This space consists of 2 parts. First, we have a pre-recorded section showing the main results of the company followed by a live Q&A session. [Operator Instructions]. Today, we are joined from Grupo SURA by Gonzalo Perez, the company's CEO; Ricardo Jaramillo, VP of Business Development and Finance; Juan Luis Múnera, VP of Corporate Legal Affairs, and from our subsidiaries, we have Juan Fernando Uribe, VP of Finance and Investments of Suramericana and Carlos Oquendo, Financial VP of SURA Asset Management. Let's give the floor to Gonzalo Perez.

Thank you, Carlos, and welcome, everyone, to this call of results of the third quarter 2022 of Grupo SURA. Let me begin by saying that we have a positive development of the group and its investments with a total revenue in the last 12 months of COP 28.9 billion (sic) [ trillion ], a record high of the company, and an annual growth of 14.8% since 2015. It's important to say that we're adding COP 4.1 billion (sic) [ trillion ] of revenue as of September 2022 compared to September 2021. This net profit of the controller during these 12 months is also increasing to COP 1.8 billion (sic) [ trillion ] with a record high again and 25.3% higher than the net profit of 2021. The company continues making efficiencies that are reflected in a ratio set at 42%, improving 30 basis points compared to the prior year quarter, but more than 1.5 basis points compared to the year before in the first quarter, which represents more than COP 300 billion direct and savings in the income statement. And with this, we advanced towards our goal to reach out an adjusted ROE above the capital cost for 2024 and an adjusted ROE at 9% in the last 12 months, meeting our goals. Now let's talk about the highlights in the third quarter. Let's talk about the tax reform project. Today, we continue evaluating the possible impacts from this reform, which according to our preliminary analysis, do not have a relevant impact. The main changes that could have on the minimum tax rate up to 15% for the domestic corporations, another one for occasional earnings, which are for corporations from 10% to 15%, the ICA tax is no longer a tax discount also a surcharge of financial institutions and insurers of 5% more until 2027. Insurers have a stability contract, which is a low impact when it comes to Protección, which managed its annuities through the self-insurance. This moves on to becoming an insurer for the -- what we call the minimum wage strip law and there, we have a benefit of the mutuality moving from its self-insurance to insurance. So we have a spin-off process to create an insurer that will operate annuities and the provisional insurance. Again, this will help us with the minimum wage strip law and the mutuality saving a good part of self-insurance for Protección. Also, we'd like to mention the EPS, the claims ratio of the EPS shows significant increases from 94% in 2019 to 100% to September this year. In the first quarter, it was 102% driving some pressure on the results of the company and obviously, the results of Suramericana. These increases are precisely because, first, the transfers of more people to the EPS which gives way to higher claims ratio to the ones we've seen traditionally. And secondly, the higher claims ratio that gives way, which does not go hand in hand with an adjustment of the capitation. Now let's talk as well of what has been relevant in this quarter, and it has to do with the accounting policy. Let me give you some background. The company has been giving the contracts for minority shareholders of contracts derived implicitly of the financial statements and IFRS, according to the advice received back then. In the last quarter, we carried out analysis of the contracts considering, among others, analysis of consultants and advisers on international standards and of other local international issuers and the publication of the IASB Interpretation Committee, which especially made a revision on September 2022 that starts to show future standard changes to recognize the agreements of noncontrolled shares, which is the case that we're reviewing. Now let's look at the determination and the accounting treatment of the financial statements. Separate financial statements have no changes, and are the basis for the issuance of the debt to distribute dividends and all of the cash flow analysis. Regarding the consolidated financial statements, the same -- the following accounting treatment is given for the options in which Grupo SURA has a possibility to liquidate the contract of equity instruments, we will use the hedge method at reasonable value, that is there is no impact on the financial statements. For the options of exit of cash liquidable in which there is an option to pay equity instruments at the discretion of the minority shareholder, we will use the liability methodology measured at the present value of the period. So this is a remediation reflecting the participation of the noncontroller and the equity of the company. This reexpression of the consolidated financial statements is as follows: We reclassified the noncontrolling equity to the liability. Second, to update the liability regarding the recent value. Third, the record of the difference between the first and second is a reduction of the equity of the controller. Fourth, there is no effect on the comprehensive income statement, which is important. Fifth, the liability we classified does not create interest and goes to the dividends according to the distribution made by each company, and the share of each shareholder, which is important. Six, this accounting is really far away from the economic reality because when the value of the company, with minority shareholders is there -- is increased. It implies that the liability to recognize that higher value for the minority shareholder against the equity of the controller, does not give away for the controller having a negative impact of the equity, but that's it. So now let's talk about the balanced management of capital. We've said that this company works with human capital, natural capital, economic capital. And today, we'll talk about social capital. We can see that the results of the company are not only financial. Very -- and this is important because it's a sustainability. The result of an integral balanced management is sustainability. Remember, we have already addressed this topic in previous calls about the natural human capital. But today, we'll talk about social capital. And let's talk about briefly the results of the S&P Sustainability Corporate evaluation. This allowed us to identify the challenges to improve our management in each of the capitals that we have mentioned. Everything has to do with challenges in corporate management, Board of Directors, seniority and everything has to do with the 533 companies evaluated. I'd like to mention briefly that these challenges of corporate governance is due to the different changes made by our Board of Directors this year, which you are fully aware of. The challenges in decarbonization has to do with measurement of the print that is underway and also the definition of the restriction of investment in companies related to coal and oil. Also, we have maintained and improved our performance in the aspects evaluated in each dimension. And we're still leaders in financial inclusion, risks and management of crisis and business FX, attraction and retention of human talent and in corporate citizenship. Now let's talk about social capital and how we can see that. We participate and seek to enhance human institutional networks based on acting standards and understanding share to create and build trust and to find common goals. We enhanced this capital through the active participation in initiatives to really build the collective trust among the different actors of society beyond the trust towards our company, and this is very important. It's like how we all start to build trust among us how we participate in society. We provide information. We make space for dialogue and we build knowledge of the surroundings and the people here are determining to generate shared understanding and to build the trust that we've mentioned. Also, we add to the proposals that we have been developing in different regions that aim towards this goal. Some examples of social capital management. We made an invitation of concern with others -- thinking with others. 1,600 proposals in '21, '22. and we connect to get to know and drive initiatives of people and organizations in different regions of the Colombia and Latin America, access to financial services with product solutions and services of SURA to reach new regions. To also focus on inclusion and diversity for different segments to have access to those products and financial services that are top quality and accessible and according to their needs and to create well-being consultation with stakeholders. This is very important to be -- lose to stakeholders. So we have channels to consult with our stakeholders to get to know their needs and expectations to live a bit the region to value how much they build our trust our company and to understand that we are there to build trust. We identify material matters for our management. And we expanded our understanding of our role when it comes to building our [indiscernible] development that have to do with the goals of our strategy in Grupo SURA. We developed conversations and train others. We have to say that Colombia -- [indiscernible] Colombia was a collaborative platform that was very important and never seen before, the DIP project and which supported this information, which is so common today, and we have digital tools based on behavioral science. 30 internal and external conversation discussions in several countries -- cities of the country good journalistic practices also with Fundación [indiscernible] and Fundación [indiscernible]. The brands that we promoted in the past year, trading in good practices election coverage and fighting this information about more than 10,000 journalists. This is our social capital, and we will continue growing or social capital as a vehicle to build society harmoniously. Thank you. And now let's give the floor to Ricardo Jaramillo, who will talk about the company's financial results.

Thank you, Gonzalo, and hello to everyone that joins us today. As Gonzalo mentioned in this part of the presentation, it's traditional to give details on the different figures of the financial statements of Grupo SURA and its main investments. So let's look at Slide 11. There, we'll see the consolidated income statement of Grupo SURA. First, we'd like to highlight here is that the net profit, as mentioned before, grew 35% so far this year. And this shows the good operating dynamics and the positive performance, particularly regarding premiums and the equity method that we'll see ahead. The company had revenue of COP 22.3 billion (sic) [ trillion ] as of September 22. This means COP 4 billion (sic) [ trillion ] more than the year before in the first 9 months of the year. That is 22%. It's also important, as we've seen before, to look in detail the different types of revenue that Grupo SURA have. First, the main revenue or the premiums issued which are growing, as you can see, 23% with the figure as of September 22, reaching close to COP 19.5 billion (sic) [ trillion ]. On the other hand, we have the revenue from commissions, which dropped 1%. As we have said in other times, it was expected, and it's very much related to the reduction of the savings for the retirement of SURA Asset Management in Mexico and something also the impact of voluntary pensions because of the volatility recently seen in the markets, especially in Colombia. The other main revenue is revenue from investments, which, as you can see, dropped 2%, reaching COP 1.2 billion (sic) [ trillion ]. And that item, where we see it closely for both companies, we have to separate, which is the revenue for Suramericana, which has positive and that SURA Asset Management, which has had a negative effect because of the valuation and the volatility of international markets. It's important to keep in mind the equity method. The equity method remember, brings our share in the profits of the 3 associates. Bancolombia, Grupo Nutresa and Grupo Argos and it's reaching 1.5 -- almost COP 1.6 billion (sic) [ trillion ] in the first 9 months of the year with a growth of almost 60% and this drives us positively when it comes to our revenues and our profits. Now let's move to costs and expenses. And as we've done this another time, it's important to separate claims ratio that we'll see in detail in Suramericana and operating expenses. In short, I'd say that the claims ratio has had a major increase mainly in casualty and health. In casualty, because of the solution of cars that we'll see ahead and it helps in the EPS. A good news is that we've controlled a lot of the claims ratio related to COVID. And as we can see, it's growing 26% in the first 9 months of the year. Operating expenses have been growing 17%, and it's best to see them in each of the operations. And I'd say that it's an operating expense that's growing according to the growth of the business or driven by the growth of the business. However, in some companies, we see that the control of expenses, which we have since the pandemic began continues and that this administrative expenses is really in accordance as Gonzalo mentioned, with the reduction of the indicator of expense over revenue. So with this, we reached an operating profit that's reaching COP 2.4 billion (sic) [ trillion ], a growth versus the year before, COP 456 billion, a growth of 24%, which shows us that we still have more revenues than expenses. That means we're continuing this process to improve the margin of the company, which is quite important. Now let's look the financial result, which has increased 77% due to 2 things: one, the increase of interest that affected the debt of the 3 companies, and that's widely known by all of you. And on the other hand, other exchange differences, mainly because the year before, remember, SURA Asset Management had a positive revenue and difference of exchange because of resources held in dollars in Chile. So we have a net profit of COP 1.458 billion (sic) [ trillion ],up 30% and a profit, as I've mentioned in the beginning of the controller of COP 1.4 trillion growing 35%. And -- so in brief, if we have to talk about 4 points that we can summarize in the consolidated income statement of Grupo SURA this quarter, we talked about the good growth of premiums, the good growth in the equity method regarding revenue. Our claims ratio affected mainly because of cars and the health segment and expenses related to the growth of the business and controlled by administrative and the increase of interest paid by the debt. Now let's look closely at the consolidated income statement of Suramericana. That has to do with insurance trends at risk. I'd like to highlight first that this year has shown a positive recovery in the results of the company after 2 complicated years that we have mentioned a lot with all the impacts related to the COVID, the company at all times has had a positive growth in its 3 segments with the premiums, so it showed here, there you can see that as of September, it reached COP 19.1 billion (sic) [ trillion ] in premiums issued up 24% in the 3 segments that we'll see ahead in detail. There's some difference between the premiums issued and those retained. You can see the retained premiums are growing 22%. And here, we'd like to highlight that the fact that there's an inflation requires more or an adjustment of the constitution of reserves and also some multi-annual policies that have been held in countries that create the need of making reserves in some times of the year. So this, we reached retained premiums of COP 15.8 billion (sic) [ trillion ], up 22%. It's very important in this company to understand everything has to do with claims ratio. And with that, on the higher right-hand side graph, you can see the development of claims ratio. Right now as of September, it's at 73%, and it gathers several effects. First, what we mentioned before that the claims ratio related to COVID has normalized. You can see in blue that we still have some claims ratio related to the higher cost of automobiles and more severity and the cost of car parts, which still has an impact, especially for the casualty segment. We've also seen, as Gonzalo mentioned in the introduction, increased the claims ratio of the EPS that we'll see in the health segment. And something that's very important to keep in mind in the quarters ahead is the blend that we've had with the different segments. Clearly, the health segment has been growing at major rates and the claims ratio and the structure of the business upheld is higher than the other segments. So there's an increase or impact also on that mix or blend. Within this claims ratio, we have to mention a very relevant figure of about COP 274 billion, which is a reserve that we anticipate for the expectations of the increased minimum wage. This has been reserved already. The company has handled these types of reserves, orthodoxy. So right now, with the expectations that we can have where we have that reserved. So this is the part that has to do with the claims ratio. Net commissions that we see are growing 27%, and it's related to the growth of the premiums, but it's also related to a higher drive in the affinity channel, which is the channel of the insurance banking that has a very positive dynamics during the year. So you can see the increase in these commissions. The technical result of the company, as we can see, is reaching COP 1 billion (sic) [ trillion ] dropping 16%. Operating expenses are growing 18%, which is a lower expense, again, compared to the growth of revenues, even the growth of the retained premiums. It has -- as we've said before, some relation with the investments that are necessary to update the operation model of the company, the technology. But clearly, it's impacted because of the growth and several variable expenses that are related to the growth of premiums. The industrial result, we can see is negative COP 1.3 billion -- COP 1.4 billion (sic) [ trillion ], and this is compensated with the revenue from investments of COP 1.4 billion (sic) [ trillion ]. That's mainly related to several good profitabilities in Colombia related to the higher inflation and how the accounting is made of the Life portfolio, mainly accounting it at maturity. The performance of revenues from investments that can be observed -- can be seen in the lower graph. On the other hand, we have expenses from interest that increases because of the increased interest rates close to COP 51 billion and compensated somehow with a lower payment of taxes of COP 31 billion. So this ends with the first 9 months of the company with a profit of COP 240 billion. Moving on to Slide 14, we can see the Life segment in detail, which is leveraged by the good dynamics of the perpetual risk and voluntary health. In the quarter, we reached premiums of almost COP 2 billion (sic) [ trillion ] -- COP 1.9 trillion, growing 16.9%, again, leveraged by the workers' compensation, which grew 26.9%. So now the insured reached 5.1 million, and it's also important with the voluntary help. When we look at the other graph, the claims ratio shows a down trend, mainly this is related to the recovery of the COVID. And now the segments start to show claims ratio more in line with what the company has had normally. However, that steep at the end is related to the anticipation of a possible increase of the minimum wage next year and the reserve for the solutions of this segment, yes. When we look at the administrative expenses and net commissions, it's important to mention that the commissions increased through especially the channel of affinity and the channel of promoters because of the positive dynamics that we can see with the growth of the premiums. And when it comes to expenses, there are about 50 basis points related to more investments for the transformation of the operational model of the company. When it comes to revenue from investments, here you can see it grew close to 23%. And this leads us to see that this segment as a whole begins to recover with levels of profit much more in line with what we had pre-pandemic. So right now, in the first 9 months, we have accumulated reaching a net profit of COP 352 billion. Slide 15 shows us in detail the main figures of the casualty segment. First, I'd like to highlight the good growth of the premiums, growing 30.9%, reaching [ COP 53 billion ], very much driven by the solution of companies which reached and grew 34% and mobility grew 18%. Mobility is a solution that we've been mentioning in prior quarters and has had several adjustments in the rate. Remember, Suramericana in all the countries of the region, about 2 million plates. So it's quite relevant in this segment, whatever happens with the premiums and with the claims ratio. Let's look at the claims ratio. And here, we could see an increase that we have seen close to 52% in the third quarter of '21 until today, an indicator close to 57%. And that increase about 280 basis points is related to higher claims ratio and autos, which again has been corrected, managing the rate, and it takes time to adjust. This then leads -- so that the combined reason the company has an increase close to 500 basis points and that we see a decrease in the company's technical result, which in the third quarter is at COP 144 billion. However, we also see an important impact close to COP 227 [ billion ] in the financial results, which is helping the net profit, and we see a net profit accumulated of COP 82 billion, almost COP 83 billion with very good growth compared to the year before. Now let's look at Slide 16, where you can see in detail the Health segment. The Health segment is important to remind you that it has the EPS and the providers. The IPS and Ayudas Diagnosticas. So what's -- why do we have this separation? Because this year, since we don't have COVID diagnosticas or Ayudas Diagnosticas IPS has had less growth, and that lower growth obviously has compensated that the EPS has had the same dynamics, as we've said, with very good growth. The growth of the premiums is still close to 6.4%, this is total segment, and it's reaching COP 2.2 billion in the quarter. When we look at the claims ratio, these have had an increase, especially in the last quarter. And this is what Gonzalo explained before, we've seen that the EPS, the claim s ratio has increased almost 100%. And although the COVID has dropped, or decreased. We've had a non-adequate update of the [ periods ], and we've also had a higher number of affiliates, which generally, as we've said other times, are new affiliates that come with a higher claims ratio and [indiscernible]. So this has made the company to have a major claims ratio -- the EPS. And although the expenses, we have the effort -- to make an effort to make the indicator of expenses very controlled. We can see that the net profit of this year is negative at the -- for the EPS. On Slide 17, we see a summary of the net profit of Suramericana and the trend that's shown in the last quarters. We see that the company overcoming the pandemic has had a major climb in its net profit, which in this quarter, you can see is at 23% negative. And while on the one side, we have COP 44 billion loss in the quarter of the IPS, higher claims ratio, COP 127 billion from the reserve related to the increased minimum wage, COP 39 billion from reserve of taxes, rulings of previous years. And all this adds up to COP 210 billion. And if compared with the negative 23, we would be in a month excluding the 3 effects of COP 180 billion. In the variation and the lower part, basically, I'd like to summarize that both Life and Casualty are recovering the company's profit level. We still have challenges in Health. Obviously, the increase in interest that we mentioned to end with 240,000 mentioned. Now let's look at SURA Asset Management. And first, I'd like to highlight is that the net profit of the company has been affected because of the reduction in commissions, because of Mexico that we have mentioned so many times, and the effects also of the volatility in the capital markets, which have affected the company's reserves. Nonetheless, these efforts and these lower level of commissions have been controlled, mitigated by major efforts made to control expenses. Here, I'd like to clarify that for this company, given that most of its operations are overseas, it's very important, although we see here the figures, the variations in Colombian pesos and sometimes, we refer to the local currency, growth in local currency. So sometimes we give the figures in local currency, too. Let's look at the consolidated income statement. Let's look at the revenue from commissions that reached COP 1.9 billion, dropping 4% in pesos and in local currency, close to 8%. This will be explained in detail, both in savings for retirement and in the voluntary business. But it's within the budget that we held. Second, revenue for reserves have had a major effect during the first 9 months of the year. Here, we see a difference of COP 270 billion compared to the year before, which is very relevant for the company's figures. Remember, this is not cash flow. This is simply accounting the valuation of the investments of that reserve and the equity method, which gathers 49% that we have in Protección have several topics. First, the reserve of Protección, which is important. Second, a lower level of AUMs in voluntary pensions and both in AUMs and rate related to the volatility that we have right now in Colombia that some clients have retired their AUMs or migrated to others for lower commissions. Also, it's important to include the reserve of savings of the self-insurance that the company had that Gonzalo mentioned, which is underway to be created as an insurer. So all this to end with operating revenues of COP 1.8 billion, dropping 18%. But if we exclude the impact of the reserve, would be dropping really 7.9%. Operating expenses. So you can see that they're quite controlled. They're growing 3%. And we can see in local currency, they're dropping 1% online with what we had in the budget to counteract that low fees that we had in Mexico to reach an operating profit of COP 454 billion, in the accumulated of these first 9 months and a net profit of COP 146 billion. We can see on the lower graph how the EBITDA shows a recovery which after the drop of the commission or the fee in Mexico starts to go up the curve, and we see that excluding the reserve, it reaches in the quarter, almost COP 318 billion. When we look at the EBITDA consolidated of the company in the year, it reaches almost COP 680 billion, dropping 36%. On Slide 20, you can see in detail the savings for retirement business. Firstly, I'd like to show that the salary base has been having a major recovery in the region, especially related to inflation to improvements in the productivity and the employment in different countries. This salary base and the efforts in productivity that we've had have managed to compensate the lower revenues from commissions, especially in Mexico and the negative yields on the reserve. When you look at the AUMs, these reached COP 506 billion, up in pesos 8.7%, but it is a decrease of 2% in local currency. And when we look at revenues from commissions, these are growing -- no, these are decreasing 3.9%, which should be separated in 2 types of the systems that we have charging by flow, which again is driven by the salary base in countries like Chile and Colombia, and it's growing 11.5% and the 18% growth in charges from AUMs, mainly explained because of what we talked about so many times with the Mexico business. Operating expenses practically are at the same level of the year before, COP 308 billion, COP 310 billion showing an increase when we look at this indicator, but more related to a lower revenue than a higher expense. This is, again, in line with the efforts made in expenses. Then when you look at the local currency, it's even dropping at 6.7%. The accumulated profit then for this segment reached COP 390 billion. Now let's look at Slide 21, where we see the business of investments of SURA and Investment Management. Here, it's important to highlight that there is a positive trend of the profitability because of the commercial strategies. AUMs reached COP 83 billion, up 14.6%, in local currency, 2.8%, which we think it's very important to consider the -- it's considering the volatility of the region and the world in terms of capital markets, those COP 83 billion are seen from the net flow viewpoint, which is positive COP 294 billion this third quarter. And again, is quite positive understanding the situation of today's dynamics. When we look at the lower graph, revenue from commissions, this item has been growing sustainably, 5% from COP 105 billion to COP 110 billion, and we'd like to highlight here that the operating profit and net profit of these segments maintains that growth line that we've seen with the profit seen of the last 12 months reaching COP 48 billion, which we consider as quite significant, up 183%. Now let's move to Page 22, where we see the development or the trend of the profit of SURA Asset Management. Here, simply, I'd like to highlight that you can see the dotted line without reserve for the recovery of Mexico, how it drops. And then as we have more AUM, the business has been growing and starts to have a major growth, the salary base and the AUMs. And in the variation and on the bottom, clearly, you can see the impact of the net profit of this company -- or this segment, sorry, which is related to the reserve effect that subtracts about COP 300 billion. Now let's move to Slide 24, where we see the development of the equity method. And we would like to highlight the good dynamics and the 3 associates Bancolombia, Grupo Argos and Grupo Nutresa, we're reaching in the quarter COP 520 billion, mainly driven by the growth of 94% in Bancolombia, 32% in Grupo Argos and 51% in Grupo Nutresa to reach that COP 1.6 billion, COP 1.5 billion, which has added a lot of this diversified portfolio. And lastly, on Slide 25, you can see the variation of the net profit of Grupo SURA as consolidated. And we'd like to highlight several net profits and an ROE that's above the expectations that we gave the market the year before. Let's begin with a net profit of COP 1.1 trillion in the year before in 2021. Suramericana is adding COP 236 billion. We see the subtract of SURA AM, as we've mentioned, which contributes to the equity method and some items of Grupo SURA that subtract COP 231 billion. We have 2 items that -- of the interest of the debt of COP 87 billion and under the investment valuation for COP 72 billion that it has to do with the portfolio of SURA Venture Capital, which has had a valuation and market prices with a major impact in the value of the portfolio. So this ends with a profit of COP 1.4 billion. When we compare these results with the projections that we had for 2022, it's important to see that the net profit of the controlling had expectations close to 10%, 15%. But now it's 35%. And from the profitability viewpoint, we see how the adjusted ROE, we had in a range of 8%, and now it's at 9%. And this has to do with what Gonzalo said about the generation of value or of profitability or an adjusted ROE above the cost of the equity of our shareholders. So with this, we end the presentation of our figures. And I invite you now for the Q&A session.

Thank you so much for joining us. And now let's give way to answer the questions that you have sent us through the platform. So here with Ricardo Jaramillo and my colleagues, let's begin with the questions. Thank you, Gonzalo. There is a question from Julian Ausique. Could you please give us more explanation especially regarding the separate financial income statements. With discussions held. So what is the main reason for having these separate financial income statements.

In the event of a penalization, what you have is an obligation, which is equal to the asset of the company in the financial segment. So these 2 values cross at 0 and what's called the net hedge. And this is how we have been working in previous months, accounting in previous months. from the migration to the IFRS as recommended by adviser, especially it's because the obligation is equal to the asset of the company. When it comes to in practical terms, when it comes to [indiscernible], we can exercise [indiscernible]. What we would do to 2021 is to buy 18.8% of the company. I write down the asset, the obligation, it's the same value because it's commercial value. So the impact is zero. Why isn't it the same in some contracts of the consolidated income statements because the consolidated income statement, what we do is to bring all the accounts 100% of the accounts. Suramericana and SURA AM of the affiliates. And at the end, I have an item called minority term, which is where we take out the participation. So what you get to see here is that what was called before equity of controllers -- of noncontrollers turns into a liability of noncontrollers, but basically, it's a liability that has the same remuneration held before with no effect -- impact on the ERI. It's basically a dividend. This is why the accounting of the separate and consolidated income statement is given, again, when it comes to separate income statements -- it's really how we handled this in the past. And that the separate is important because it clearly reflects particular figures of Grupo SURA. Separate and cash flow really allow us to make internal analysis of the debt capacity that we've had -- we can have, et cetera. So Julian, that's why the accounting is different in both types of income statements. Next question is from [Indiscernible] And other persons connected. Last week, we heard about the proposal for the tax report in Chile. What's your opinion about it. Before letting Carlos Oquendo talk about this with his knowledge, we'd like to highlight something not only for the pension reforms, but all possible reforms. Part of our work is always to provide knowledge, to talk with institutions and governments and provide our knowledge. So what we've done is based on knowledge, we have the contact with the government to see what's better for society, what is best for Chile, and in pensions and to share this with different governments. So based on this, we can make the best decisions for our country. And so what's your role here as a company for that decision? So we have ongoing the conversations in Colombia and every country. Regarding any legislative reform, our knowledge really contributes to that. And I think it's worth saying that this has been recognized by government. Carlos, could you give us more details of what we're doing with the pension reporting in Chile?

Thank you, Gonzalo, and good morning to everyone. When it comes to SURA Asset Management, we are pleased with the reforms. Indeed, for many years, we have been participating -- and we have been consulted in different forums, especially in Chile. This is not new for us. So we could say that we have been preparing for a long time for this. For this specific reform, there are aspects that we believe will improve the system and others which will -- which generate doubts. But the most important decision that will have an impact positively on the system is what was approved 5 months ago when it comes to the universal approval. There was a good decision made by the government of Chile. So from that viewpoint, we have some advantages, competitive advantages with the system. First, we already have companies like [indiscernible], which according to what is being said, would be able to create other companies that would also manage the funds -- pension funds. On the one hand side, that's an advantage for us. On the other hand, the target-date funds which are also established in the reform. We already handle these types of funds in Mexico. We already have the experience managing these types of funds. We have managed this for the system. So we also believe it's positive and that we already have a good experience in that. When it comes to the increase of the contribution rate or the savings rate, that's something good also for the system to have a gradual contribution that 6% made by business people would be quite positive for us that gradual [indiscernible] the solidary pillar of 30% of that 6% would be for solidary pillars also for us something positive within the system. And there are a series of doubts that we have to manage, especially with regards to individual accounts. The management of these individual accounts would move to the hands of a public entity. And that's something to see which public entity would handle this. We would still manage 10.5% of what is managed for AUMs, what would happen with the 6%, would be notional and not individual. So these conversations are underway, and we'll see what stems from the Senate. We still participate in the conversations. We -- as part of our profitability, we still seek to have a voice in these reforms based on our experience. And the bottom line, whatever is good for the system overall, should be good for us as well as a company, and that's our aim.