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

This document may contain statements of future disclosures related to Grupo SURA and subsidiaries thereof, made under assumptions and estimations of the senior management of the companies and may present variations. Good morning, and welcome to the financial results of the first quarter of 2023 of Grupo SURA. This event is divided into 2. We'll begin with a pre-recorded session, presenting the main results of the highlights of the quarter. Next, we'll have a live Q&A session. Today, we're joined from Grupo SURA by Gonzalo Perez, CEO of the company; Ricardo Jaramillo, Vice President of Business Development and Finance; Juan Luis Múnera, Vice President of Corporate Legal Affairs; and MarÍamercedes Barrera, Manager of Corporate Citizenship. From our subsidiaries, Juan Fernando Uribe, Vice President of Investment Finance of Suramericana; and Carlos Oquendo, Vice President of Corporate Finance of SURA Asset Management. Here is Gonzalo Perez.

Thank you so much, Carlos. And again, thank you for joining us, and welcome to this call of results of the first quarter of 2023 of Grupo SURA. We end the quarter with total revenue that reached COP 9.6 trillion, up 39% compared to the year before. These results stand out because they still show a great commercial dynamics of Suramericana growing double digits in premiums, while SURA Asset Management also shows growth in revenue from commissions leveraged by the labor market that still has good dynamics and capital markets with better returns compared to the year before. The operating profit reached COP 1.4 trillion, showing a better operational result of our subsidiaries and an increase of 6% in the equity method. In the controlling net profit, this performance of the companies of our portfolio led to a profit in the first quarter of COP 834 billion, which increased 94% and is set as the highest of the history of Grupo SURA. Likewise, the net profit in the past 12 months reached COP 2.7 trillion compared to that of December of COP 2.1 trillion. Regarding the return of equity that we have discussed, and it's a purpose of the company, this return leads us that in the quarter this adjusted ROE reached 11%, and we continue advancing towards our goal of sustainable profitability that we mentioned so much with our ROE that's closer to our capital cost. On this slide, we can see how all the companies of the portfolio are contributing to the net profit. We'd like to highlight that the contribution of each of the companies, which are part of our portfolio, the related companies contribute 57% in which you can see that of Bancolombia, which still reflects great results this first quarter of the year according to the trend of 2022. Subsidiaries contribute 43% of profit generated by the portfolio. In this graph, we'd like to highlight the strength of our portfolio and companies which show positive results during this period as well as the diversification of the net profit from all these companies, which are leaders in their own markets. This can also be evidenced when we look at the variation and the contribution of companies per sector, showing an increase of 115% for financial, SURA, SURA Asset Management and Bancolombia. And 271% for our industrial companies, Grupo Nutresa and Grupo Argos. On the next slide, we see a balanced management of capital. And it's very important. We've been talking about other capitals. But that balanced management of capital is to have a good understanding of the value generated by the company and its goal towards sustainable profitability. That's why we look at the results extensively, looking at social, human, natural and economic capital. As a company, we have to make a good use of the goods of the society and have a positive impact on the capital of it. So here, we can say that our results are sustainable, and we can contribute to the harmonious development society. As in past calls, this time, we'll tell you about our management and one of the capitals which is natural capital. We talked about it before, but we'd like to deepen about this, and we'd like to keep in mind that management of this capital requires a long-term view. And these cannot be analyzed and at the same terms like the financial indicators. We'd like to thank you again for joining us in this call of results. Now let's go to the floor to MarÍamercedes Barrera, our Manager of Corporate Citizenship.

Thank you, Gonzalo. Our management in natural capital can be seen under different dimensions. Our own operation, the assignment of capital, new opportunities and institutionality and knowledge. In the past year, we're advancing the development of our strategy of climate change quantifying our emissions. This gives us more information to structure a responsible strategy towards an economy of zero-net emissions. In addition, the strategy of sustainable investment of our subsidiaries advanced in the past year. It increased the topics 57% for Suramericana, 10% for SURA AM in the past year. There's an increase in the policies and manuals to clearly understand sensitive sectors and a 26% increase of insurance premiums with environmental criteria. In terms of our operation, we still monitor indicators of water, energy and carbon footprint, and we reached an average decrease of 6% a year in our intensity of carbon in the operation. So these are important challenges here that we have like implementing a strategy of decarbonization, continuous improvement of reports of nonfinancial information and implementing new strategies to promote better practices, both environmental, social and of governance of the companies. So now let's give the floor to Ricardo Jaramillo.

Thank you, Mercedes, and a special greeting to everybody that's joining us today. So let's look at the financial statements of Grupo SURA as a manager of investments. Now let's look at the relevant topics to understand the financial results. And for this quarter, I'd like to highlight that we're making changes in the structure of our presentation, making it more graphic and really focused on relevant topics while the quarterly report still complements this information. So we're now presenting results with a vision of investments manager, explaining the performance of the companies of our portfolio and more details on the subsidiaries like Suramericana and SURA Asset Management. And lastly, we'll talk about the consolidation of the results of Grupo SURA, a generation of cash flow as well as our indebtedness development. So for this quarter and in 2023, there are 2 factors that influenced the results of the company and make it difficult to compare it with 2022 since they are high percentage variations. One factor is devaluation. Firstly is the devaluation that we see in the Colombian pesos compared with the currencies in the region where we operate. For instance, as you can see in this graph, when it comes to Mexico and Uruguay, the devaluation of the Colombian peso has been close to 30%. While other -- with other currencies like the Chilean pesos or the Peruvian sol and the dollar, the devaluation has been at 20% and 25%. And this is relevant because of the exposure that Suramericana and SURA Asset Management have and this -- in these regions. For Suramericana, 30% of its premiums come from overseas, while SURA Asset Management, about 80% of revenue of commissions come outside of Colombia. This goes with more growth in the lines of the income statements for these companies. And the second factor that we've mentioned other times is the consolidation of Proteccion. As of the fourth quarter of 2022 also affects the comparability of the numbers since before, you registered the profit proportion to the equity method, but now it's line by line. The revenue of Proteccion and Crecer represent 23% of the revenue of commissions of SURA Asset Management and 26% of total expense of SURA Asset Management at the end of the quarter. So now please, let's look at the next slide where we'll see in detail Suramericana. Before beginning to talk about the results of Suramericana, I'd like to highlight the distribution of the premiums of this company in the region. Firstly, 70% of the revenue of the company come from Colombia, while 30% from the other 8 countries where the company operates. In addition, if you exclude the mandatory business of the ARL and EPS, 50% of the revenue come from the other countries of the region. The other component that we have to keep in mind is the higher devaluation of the Colombian pesos as I said before. And this explains part of the growth and variation of the results of Suramericana. This mainly happens in the segment of casualty, which is more exposed to other countries because of acquisition of our -- the diversification that Suramericana has in terms of segments is still relevant. As you can see on the graph on the right-hand side, here, you can see that there's a balance between casualty, life and health. When it comes to premiums, representing 38%, 27% and 35%, respectively. Particularly if you look at the historical evolution 5 years ago, the composition of these segments was 49% casualty, 27% life and 24% health. So as you can see, the higher growth of the segment of health has gained more share in this diversification of the company today. Now let's look at Slide 11, where you can see the net profit of the quarter and how the company reaches historical heights. Let's begin with the summary of Suramericana consolidated, and then we'll look in detail the different segments that we mentioned before. To look at the complete performance of the company, let's begin with premiums and claims ratio. Here, you can see it on that upper graph. Premiums issued reached COP 7 trillion in the quarter, up 25.7%, which is equivalent to 19.6% in constant currency. Here, you highlight a positive movement of double digit of all 3 segments. Retained premiums earned closed at the -- in the quarter at COP 2.6 trillion, up 27% compared to 2022. When it comes to claims ratio, it slightly drops compared to the same quarter of the year before, at 71.6%, mainly because of deceleration of the inflation of car parts and new vehicles in the region and strategies of the solutions and mobility, particularly automobiles, and a lower claims ratio in the EPS. These 2 factors have been positive and counteract the higher claims ratio we've had in the Life segment that we'll see closer when we look at this segment. The technical result can be seen here. It's COP 405 billion. It remained relatively stable compared to 2022. And it's explained because of the increase in the indicator of commissions of Life through the affinity channel, particularly when it comes to bank insurance, and higher expenses in labor risks to cover long-term obligations in the solution that we'll also see ahead. Administrative expenses were at 12.4% for this quarter, up 19 basis points compared to the same period of the year before. This increase is because of technological investments made to boost smart management initiatives, transformation of operation models and the continuous surge of productivity, initiatives that are still strategic for the company. We'd also like to highlight revenue from investments, which increased 122% compared to the year before, contributing COP 834 billion, thanks to the good performance of assets indexed to inflation and the favorable performance of interest rates for securities, combined with a significant valuation of alternative assets. So with all this, the company reached a net profit and adjusted ROE for these topics that I've mentioned that led the company to reach that profit of COP 318 billion, up 221% and with -- showing the best quarter recorded by Suramericana. So the company showed an ROE adjusted in the past 12 months of 12.8% and a return of tangible capital of 16.4%, which shows us tangibly the recovery of the profitability levels and generation of value of this investment of Suramericana for Grupo SURA. On Slide 12, you can see the performance of the segment of Life where the net profit increased 97%. Let's begin with premiums and claims ratio. Premiums reached COP 2 trillion, up 19.6%, while retained premiums reached COP 1.9 trillion, up 19.7%, driven by the solution of health growing 23.2%, updating rates and tariffs in Chile and the ARL and the perpetual risk business grew 22.9%. The claims ratios was at 65.8%, increasing compared to the year before because of the more reserves on a long-term basis. Right now, we have reserves close to COP 71 billion to cover particularly risks of increasing the minimum wage and extra longevity. When we look at this figure, what we really see is the increase of the minimum wage so far is COP 45 billion and regulatory changes that want to reflect the variations of population risks like extra longevity represent COP 25 billion. Now let's look Industrial results. The Industrial result ended the quarter with a loss at COP 271 billion, up 77% compared to the loss that was seen in the first quarter of the year before. This is because of the claims ratio I talked about and an increase in the ratio of commissions from 21.2% to 23.6%, with more growth, as I've said before, in the first page of Suramericana in the affinity channel. On the other hand, the expenses ratio remained stable. Revenue from investments were quite important, in this case, were COP 540 billion, up 85.7% because of the high inflation rates and valuation of the securities when it comes to several countries of the region. And with all this, we can say that this segment reached a net profit, up 97% and set at COP 291 billion. On Slide 13, we'll talk about Casualty. And here, we'd like to highlight that the claims ratio of this segment is improving. First, let's begin with the premiums issued, which reached COP 2.8 trillion, up 29% in the quarter, 15.7% in constant currency, leveraged by solutions of companies that grew 22.8% in constant currency and solutions in mobility that grew 12.3%, also in constant currency, mainly because of the increase in rates to counteract the higher cost of car parts. In the middle, we'll look at the combined ratio, which is at 111% consolidated. However, we think it's more exact to analyze excluding 2 effects: one, Argentina, which because of the hyperinflation that affects claims ratio but creates more returns of investments, there is a distortion of this indicator. And second, the amortizations of the intangible which there -- which are not cash flow. When you make adjustments, the combined ratio of the casualty is at 103%, improving 150 basis points. Compared to the first quarter of 2022. This is mainly explained by an improved claims ratio of 130 basis points in car solutions in which you see this at 62.2%, it was at 72% before, close to 1,000 basis points in this first quarter and an increase in the indicator of commissions because an adjustment in the expensive permit factor, which compensates against the reserves for production. Looking at revenue from investment, this grew 185% compared to the first quarter of '22, reaching COP 241 billion, because of what I said, higher inflation, more valuations of assets of rent -- fixed income. So without this, the segment reaches a net profit which creates a growth that's very important of 391%, reaching close to COP 50 billion of profit in this first quarter. On Slide 14, we can see the segment of Health and we'd like to emphasize that the net profit in the segment closes on positive grounds. Let's look at the premiums issued of the segment added COP 2.6 trillion, up 24%, which is seen as follows. Remember, we have the business of the EPS of the IPS and [ Ayudas Diagnosticas ]. First, on EPS, we see it grew 27%, reaching 5.2 million users, 119,000 more than the first quarter of '22. On the other hand, the IPS with its services grew 18.4% and [ Ayudas Diagnosticas ] dropped 6.1% because there are less tests related to COVID, which were seen during the first quarter of '22. Now looking at the claims ratio and expenses. Claims ratio closed at 92.2%, improving 120 basis points because of the improvement of the claims ratio of the EPS, up 221 basis points set at 96.6%. That lower claims ratio of the EPS has to do with the UPC in February compared to the rates that were updated in the healthcare network that began in March. On the other hand, a major effort in the segment has been made when it comes to revenue from investments at COP 51 billion, up COP 45 billion compared to the first quarter of the year before, an active strategy of investments with the classification of investments that has favored and established a better financial revenue for the EPS. It's important to clarify that we never -- that before, we didn't classify the ERI and it had a certain volatility here. The second is that it's benefited from the short-term interest rate movements. And as we've said in other segments, there's a persistence of the high inflation rates. So with all this, the net profit of the health segment of the company closed in the quarter with a positive number with COP 65 billion compared to a loss of COP 2 billion the year before. And this is important because only in this segment, the company has a variation close to COP 67 billion in profit. To close the analysis of Suramericana, let's look at Slide 15, where we see that the best performance of the 3 segments during the quarter contributed very significantly to the growth of the net profit close to COP 221 billion. The profit reached COP 219 billion. This is explained by the significant growth and improvement in the claims ratio of some of the solutions and more returns from investments in the setting of high interest rates and inflations. So now let's look at the numbers of SURA Asset Management. On Slide 17, we can first see the distribution of revenue. Before I talk about the results, it's important to highlight this distribution of revenue from commissions, highlighting its diversification. One, 19% of the revenue of commissions of SURA Asset Management comes from Colombia, while 81% comes from other countries. Particularly what you can see in the graph, Mexico and Chile are relevant with shares of 31% each. The higher devaluation of the Colombian pesos compared to these other countries, as we saw early, explains mostly the high variation we've seen on the income statement of SURA Asset Management. Also, it's worth underscoring that we have a mix between the savings and retirement business and [ in Ventures ] SURA of 85-15. Both businesses keep growing, and this mix is at the same percentage. On Slide 18, we'll take a closer look at the figures of SURA Asset Management, highlighting the improvement of the profitability levels of the company. This company began the year with a significant improvement of its results compared to the same quarter the year before. Before going on, I'd like to emphasize that we're giving pro forma variations to try to give you more clarity of the results given the consolidation of Protección since it makes it difficult the comparability and makes the figures of growth on the income statement to be quite high in some cases. So let's begin. Revenue from commissions that ended in the quarter with COP 1.1 trillion, up 75%, which reflects consolidation of Protección and a more -- a higher devaluation of the Colombian pesos. When we look at the pro forma variation, assuming we consolidate Proteccion in 2022, the variation is at 25%. And when you calculate this variation with constant rates, which reflects the operation in each country, the variation is at 5.3%, and this is much more logical for the type of businesses in which we are. This growth is mainly driven by the segment of savings and retirement, which went back to grow, and we'll look at this ahead. This growth is driven by contribution, especially in Mexico, which increased 15.4% from 6.5% to 7.3%. This is in line with the pensional reform that was there before, where the first year we had a lower commission, and after 2023, began to increase the contribution for each of the affiliates which right now are at 7.3% and will reach 15%. So it more than doubles the size of the business when it comes to the AUMs. It's important to look at the revenue for reserves at COP 99 billion, which represents an annual yield of 7.7% compared to a loss that we had in the first quarter the year before. These results show the better performance of the markets in every country, perhaps not in Chile. Particularly, the performance of Colombia was very good with an annual yield of 17% in this quarter. Let's look at operating expenses on the top right-hand side, which reached COP 845 billion in the quarter, with the pro forma variation in constant currencies of 6.4%, where administration expenses grew 4.3% and sales cost, including the DAC grew 15.1%. Due to the possibility that we have to defer the expense for product because of the regulatory restrictions that are given in the industry of pensions or the savings and retirement in Mexico. The operating profit of the company ended the quarter at COP 422 billion, up 278%, showing the best performance of the business in different fronts. And lastly, the net profit and the profitability of ROE and our tangible ROE, which in the first quarter closed at COP 206 billion compared to a loss of COP 47 billion in the first quarter of '22. Because of the better performance that we've discussed, growing revenue, better performance, the reserve, expense control and lower impacts because of the exchange difference, understanding that in 2022, we had a negative figure. On Slide 19, let's look at the segment of savings and retirement. And here, we'd like to underscore that the same topics in the total of the company apply for this segment. First, we'll look at revenue from commissions of the segment that reached COP 904 billion in the quarter, displaying a pro forma increase in constant currency of 7.3%. And this is because of the growth of the salary base of 12.3% in constant currency in the countries that go through flows with an increase of users of 6.2%. On the other hand, when it comes to the segment, the commissions under AUMs mainly in Mexico, growth was seen of 6.7% with a positive development of AUMs in Mexico, an increase of 15.4% in the [ quarter prior ] from 6.5% to 7.3%. It's also worth highlighting AUMs that reached COP 609 trillion, up 25% in pesos and 2.8% in constant currency. When we look at operating expenses of the segment, these were at COP 553 billion with a pro forma growth in constant currency of 1.9% and still show efforts of the company in terms of efficiency, and this growth is because of the possibility of deferring expenses in Mexico. Since administration and sales expenses, excluding the debt, are decreasing, this segment which is required for the reserve is seeing an improvement, a significant drive, and it was set at COP 99 billion for this first quarter, which contrasts with the loss that we saw the year before. And this better performance explained by the better returns in the countries that had positive returns, excluding Chile. The operating profit of the segment closed at COP 506 billion, up pro forma 220%, mainly explained because of the more revenue control of expenses and more deals of the reserve. On Slide 20, let's look at the voluntary segment. Let's begin with the AUMs which reached COP 100 trillion, up 33.4% in pesos and 7.8% in local currencies. This is mainly explained by the growth of the insurance mandates in Colombia, where AUMs managed by Fiduciaria SURA went from COP 625 billion to COP 6.9 trillion with the financial assets back the technical reserves of [indiscernible]. The industry of investments in Latin America in recent months has faced challenges, mainly because of 2 things: a higher level of competition by bank entities which have higher rates and yields; capital leaving countries of the region because of the risk -- the sociopolitical risk perception which has had an impact on AUMs and directly on the revenue from commissions, which reached the first quarter COP 160 billion with a pro forma growth of 9.2%, driven by the devaluation of the pesos. So in constant pesos, it's dropping 6.5%. This drop is mainly due to these factors, the challenging setting of the industry, lower rates of the commission. But while the investment strategies give priority to assets with lower risk, there is a lower rate of commission. Looking at the operating expenses of the segment pro forma in constant rates, these are falling 1.5%, reflecting efforts of efficiency to mitigate this challenge in the business. And with all this, the segment is reaching an operating profit increasing 70% driven by the consolidation of Protección. And pro forma, it's dropping 14. So look at the importance of understanding the comparability of both types of figures. Lastly, the net profit controlling of the segment is at COP 18 billion compared to the loss of the year before. On Slide 21, to end, let's summarize the section of SURA Asset Management. And here, you can see that increase in the profit of COP 253 billion compared to the first quarter of '22 is because of the better performance of the segments that we saw in previous slides, the increase of administrative expenses of the corporate of COP 28 billion, mainly related to the amortization of the PPA of clients of Proteccion after the consolidation, more investments in technology and the devaluation of the Colombian peso. In the segment of others, there are COP 32 billion contributed mainly because of the profit and the exchange rate of the corporate segment in '23 compared to '22. So there, you can see the net profit of the controlling of COP 208 billion. Now let's look at Grupo SURA. We end the analysis of both subsidiaries on Slide 23. We can see the companies related that still reflect very good results. At the end of the first quarter, the equity method closed at COP 575 billion, up 6% with the good result of each. First, Bancolombia contributed COP 420 billion, decreasing 1% versus the first quarter of '22, still has a very positive margin with an efficiency ratio at very good levels. And with all those, the company closed the quarter with a profit of COP 1.7 trillion, dropping 1% and ROE of 17.7%. Nutresa, it contributes in the method COP 94 billion, down 11%. It's important to understand that the contribution to Grupo SURA -- that, that contribution decreases because of the elimination of the dividend that Grupo SURA pays to Grupo Nutresa since it's a shareholder. The revenue of Nutresa were at COP 4.7 trillion, up 35.7% a year with a double-digit growth in different segments and in different regions. It's EBITDA closed at COP 647 billion in the quarter, up 38% and a margin of 13.3%. Lastly, the net profit closed in the quarter at COP 343 billion, up 16%. Our Grupo Argos contributed COP 57 billion, reaching consolidated revenue close to COP 5.7 trillion, up 25% with good growth of its business in different lines, cement, energy, concessions. The EBITDA is COP 1.6 trillion, up 28% with a net profit of the controller of COP 406 billion. On Slide 24, we see, as a summary, the net profit of Grupo SURA really reflects the positive contribution of the different businesses. After seeing each of the companies which are part of the portfolio, we can conclude that despite the challenges we see in 2023 and because of high inflation, high interest rates and economic deceleration, businesses really do show good results. The companies are contributing COP 1.1 trillion to the net profit in the quarter. COP 1 billion to the net profit of the controller, if we adjust Suramericana and SURA Asset Management. The administration expenses were at COP 30 billion for the quarter, remaining very stable versus the year before. And lastly, it's important to keep in mind that the interest of Grupo SURA were that of the debt close to COP 140 billion. The quarter increased 25.5% due to the increased inflation in IBR, which we hope to decrease in the second half of this year. Let's look at Slide 25 and look at the cash flow of the company. I'd like to talk about the dividends, which adds a company that manages investments. And these are fundamental for the cash flow of the company for 2023. After the approvals of the dividends and the assemblies of our investments, it's important to highlight the following. And you can see this on the higher graph. Revenue from dividends are close to COP 1.7 trillion, up 48%. With growth of dividends paid of all of the companies of the portfolio, the growth since 2019 before the pandemic has been 12.6% annual composed. The composition of this can be observed on the right-hand side where Bancolombia this year is contributing close to 49% of dividends, SURA Asset Management 18%, Suramericana 13%, Grupo Argos and Grupo Nutresa 20%. And we look at this on a longer scale of time from '19 to '23, the contribution of different companies to the portfolio of Grupo SURA during that period of time has been by Colombia 38%, SURA Asset Management 28%, Suramericana 15%, Grupo Nutresa 12% and Grupo Argos 7%. Regionally, we estimate that about 60% of the dividends come from Colombia. Mexico still with 11% and Chile and Panama have about 6% in this mix. This also shows that important diversification in the source of dividends of the region. Moving to cash flow. The expected uses for close to COP 1.7 trillion that we will receive during this year can be seen on the graph close to COP 151 billion in operating expenses and taxes for Grupo SURA, close to COP 561 billion in interest, which still show more or higher interest rates. But we believe that for the second half of the year, there is a transition towards lower levels; COP 669 billion in dividends that we will pay during 2023, increasing our remuneration to shareholders. And this leaves about COP 294 billion available for different uses that are in the capital assignment analysis, including the decrease of the [ debt ] possible investments or even the stock repurchase program, which was approved by the assembly and should be regulated by the Board of Directors. Lastly, we'd like to talk about the debt. And towards this, we'd like to say we've reached proper debt levels after the expansion plan we had in previous years. This year, we'll keep the net debt indicator below 3x as we mentioned some months ago. Also, we'd like to emphasize the debt profile in which we feel comfortable since the expirations in the next year -- 3 years are manageable. The cost of the debt showed an increase that was significant by 100 basis points during the past 12 months. We are aware of this increase with the IPC, especially because of the exposure Colombia has. But it's also important to see in the graph that we have an exposure of 44% at fixed rate. We can also see in the lower graph, the trend of this indicator in the past years where, since the pandemic, had a specific impact, but we returned quickly to improvements. So with this, we end our presentation, and now let's begin our live Q&A session. Thank you.

The presentations of MarÍamercedes, Ricardo. And so we'd like to begin with the questions we have several already that were sent by mail. So let's begin with the very first question. Carlos, please read it.

Perfect. We have 2 questions from Andreas and let's try to answer them together. Will you take any actions when it comes to shares SURA Asset Management? Or do you prefer liquid revenue? And could you please talk about the shares? And if this has anything to do with debt?

Okay. Thank you Carlos. And Andreas [sene], for your questions. It's important to highlight that so far. Officially, what we know is the intention of the Board of Grupo Bolivar to execute the exit of its share in SURA Asset Management. Grupo Bolivar has been a shareholder since 2012. To understand the possible exit mechanism, we have to understand the contract. It's published on our website. And the contract, as a first path, which is a direct sale. And it's that Bolivar can sell its shares to a third party, that's one path that can be taken. The second path is something called the contract, an action funded by dividends. So simulating when it comes to a normal loan, a bank loan, Grupo Bolivar could have the chance of shielding the dividends it receives to make the exit. In addition, in that path, there's a possible exchange of shares -- preferential shares of Grupo SURA. Right now, we have not received an official communication from Grupo Bolivar of what it will do, what the path it will take. But we are exploring right now the different scenarios that could take place. When it comes to the debt that we expect for the company, it's important to highlight what I said at the end of the presentation. Now with the current debt, the main indicator that the rating agency looks at is dividends against what we've received, keeping in mind that dividends reserved is at COP 1.7 trillion. And that indicator is at 1.5x. The guidelines, we have said that by the end of the year, it can be at 2.5 and 3x. So this would mean something like the chance of us to have more than COP 900 billion in debt. It doesn't mean that we will have it. But simply that we, as administration to the flexibility depending of the development of the discussions with Bolivar. And to see what path that I just explained is its exit. So to end, officially, right now, we have a communication from the Board. We do not have, one, when it comes to the path that Bolivar will take. We have preliminary discussions with them to understand this. And both parties are willing to have a great ending of a great relationship for 10 years that has been impeccable with Grupo Bolivar.

I'd like to add, as Ricardo said, that the relation with Grupo Bolivar is almost 70 years old, almost the age of our company. So it will be the best for both parties. But something else that I think it's important to add is that, in any case, for us, it's evident, SURA Asset Management is a strategic asset. It's part of our affiliates. And in any condition -- in some cases, we will be acquiring more share of SURA Asset Management, which, again, is a strategic asset for us. So it would be an asset for another asset. .

They're also mentioning related to this, Guar Daniel is also asking about the size of the contingent liability when it comes to Grupo Bolivar leaving SURA Asset Management.

You can see on the contract that there's a calculation formula of the minimum guaranteed return. The first 5 year is a commission of IPC plus 4. And from there on, as you can see the variation of the company, starting with its initial investment. We also have in our financial statements, estimates, which are ours, and we have to underscore that because you could see that in the contract that when we began the process, they sent us their calculation estimate of that value of the minimum guaranteed return. Here, I'd like to clarify that in the formula, there can be differences and it's convenient and proper because it was a contract that was signed 12 years ago that -- so the part of the discussion is to see the different approximations of each company with this calculation, so can reach an agreement of the value. So to end this topic, Daniel. Basically, you can see what we have -- that we have our own estimates. But it doesn't mean that these are Bolivar, so we have to have discussions with them.

Okay. Christian Andrews asks about the development of the economic alliance after the higher interest rates last year. And do you see any deceleration in 2023? Also regarding the financial systems and the dividends? And what are your expectations of interest rates overall for this year?

Yes, Christian, thank you for your question. It's more macroeconomic, here, there are thousands of experts about macroeconomics, but let me give -- let us give you what we see daily here. Definitely, there are a Latin American region where we operate has not stood aside from higher interest rates and restrictive monetary policies, which lead to higher interest rates. And that clearly has led to decreases after the pandemic because right after the pandemic, we saw some increases. But now in Colombia in the first quarter, we see a growth of 3%, which is obviously lower to what we saw in '22. But it's not a bad growth for a setting of inflation and interest rates that we see today. When it comes to impacts on the economy, you mentioned the NPL and banks, we don't want to specifically talk about Bancolombia, but generally in the system, we see results announced by different and banks and issuers. And we do perceive an increase of the cost of credits, which particularly can be felt more in consumption, in retail. And that's the first indicator, which through the decisions made of the -- by the banks to lower the rates of credit cards, can be controlled, but we do see an increase in NPLs. Definitely, it's also important to mention that Bancolombia maintains a good margin level and a good efficiency level that has helped to compensate [ bolt ] points with a higher level of credit to mitigate the impact that we're discussing. So what's our viewpoint or our expectation because of the lower interest rates. We expect that in the second half of the year, we will reach a plateau or peak of increased interest rates. And in the second half of the year, especially in Colombia, we will have lower interest rates. But with our different models, we are being conservative because the speed and the decrease of the interest rate is not as fast as it grew. So we imagine more an interest rate that goes -- that will be paralleled to inflation towards 1 to 2 years then it will reach the 6%. So these are opinions that are entirely of ours. We're not macroeconomic experts. But with this, we can give you an idea of what we see, as assumptions in our operations in different countries.

Julian asks, with a transition team in Mexico with SURA Asset Management, what is the representation with that 13%?

Before answering, I'd like to specifically talk about Mexico's reform. When it comes to the pension system, not only in Latin America but worldwide, there is a challenge that we have to face. And undoubtedly, most of the population, hopefully, all of the population will gain its pension bond and a good composition for retirement. I think that Mexican reform and the different ones that we've seen that reform is headed towards that. The one of Mexico is -- goes from 6.5% to 15% in contribution. So Mexicans can have a better pension in the future. There is a challenge that's clear in every economy that we want to underscore and it's a challenge to formalize economies, especially in Latin America. And that formalization is a virtue, first fiscal relief, but also a compensation of also social securities and especially for health providers. And now I see somebody is asking about the impact of Health in SURA. But this is quite important to you, keep in mind I think that the path of towards formalization is something that all of the economies of Latin America must take that contributes to social security. And this reform of pensions that we see so far, the ones that are consolidated now go towards that path, fortunately. Carlos.

Yes. Thank you, Gonzalo. Julian, look, to answer about Mexico specifically, [indiscernible] is 34% of our revenue, 26% of our operating profit. So in constant conditions that we think it's hard to have in other countries. Mexico should represent more in the future in next year's part of that pie of the results of SURA Asset Management. First, because of that contribution of the employees and employers to savings. So it's like our salary base in Mexico would grow from 6.5% to 15%, but also Mexico charges for AUMs and not for the salary base, and these should grow more in time. Although in the projection, we see that the fee that -- fee that we charge will have an impact. It's really more marginal compared to the first lower of the rate from 0.83 to 0.57 from 2021 to '22. So Mexico should gradually increase its representation in our financial statements.

Also, Carlos, let me take the question and talk about the reform. Our vision is what Gonzalo said, if the reforms are good for the people's pension and the savings of the countries and that boost formalization, they're good for us. Although they hit us initially in revenue like in Mexico, really the system becomes more sustainable. And that's good for us. When it comes to Mexico and El Salvador, and Uruguay, we just closed reforms. There's a lot that said early on with reforms. But in all 3 countries, we've seen good reforms for the system, good for the people, and they end up being good for the countries. Today, we have filed a reform in Colombia and Chile with good and bad things. What's good is that there's a wish of boosting a solidary contributor pillar in voluntary. This is good. And in Colombia, we're quite concerned the decoupling of the labor and pension reform because that pillar, that topic of formality isn't something seen as significant as it is. But -- so based on the experiences that we've had with the reforms in Mexico, Uruguay and El Salvador, we do believe that the reforms have a good effect on the system, and on us. I'd like to add something that's important. Overall, in this company and in our subsidiaries, we talk about knowledge, and this is related to another question that we've received. Knowledge is based -- is what we use to have relations with different institutions with different congresses, governments and other entities. So it's our knowledge and our relation which gives way to contribute not only in health, but also in pensions and really in every scheme because there is something valid there that -- to be kept in mind for all of these reforms.

Julian also asked us when you talk about possible investments, had you considered one specifically? Or do you have some disinvestments in mind?

Julian, let's listen to Ricardo later, but we've mentioned that here, we had 10 years of expansion. And now philosophically, we're really focused on all of these companies and the investments made in these 10 years, we'll manage the point that we wanted when we made the investment. That's what we're headed towards. Nonetheless, as Grupo SURA, we're still looking at different investments that we can make and these investments that will take place, it's a nature of a business like ours. So although it's true, again, our philosophy is to seek today a return above the cost of capital in Grupo SURA and the investments that we have that have gone through a pandemic and have a cycle of maturity. It's also clear that investments, and these investments, at any given time will be analyzed by the companies independently, and by Grupo SURA. Ricardo?

Yes, let me add with regard to this. As investment managers, we have a model of capital assignments. And when there are resources available, simply seeing, we have 3 uses. We have principal sources which are dividends received from different investments, which had 3 uses. One, are investments; second, service of the debt; and third, are the dividends, which is the remuneration to our shareholders. As Gonzalo said, in the past 10 years, what was important was the expansion investments were higher. And this made us increase our debt and have lower growth of dividends to our shareholders. Now we want organic growth. We're looking at the benefits of those investments, looking at the profitabilities. So we're balancing all 3 uses. And keeping that in mind, we have one indicator of debt that is dropping and the we want to keep it dropping. We have dividends that have been significantly growing in past years. We have a discussion about repurchasing stocks. And let me anticipate to another question, and we mentioned this, we have a tool that, we as administration, think that we shouldn't have in our toolbox, it's a program that was boosted for 3 years for COP 300 billion. It should be ruled by the Board, understanding the different conditions of the market, and the big difference there is between preferential and ordinary stocks, and that could be use of efficient capital for us. So we will keep that in mind. But to summarize this, we constantly are looking at the balance that we want between all 3 components: investments, very much connected to management that have to do with the criteria of capital. One, second, the level the proper level of debt that has to do with investments in SURA Asset Management that have to do with what we'll do with Grupo Bolivar; and thirdly and lastly, dividends for shareholders. I think with this, you can have a general idea of the strategy on the use of the company with sources of dividends received.