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 estimates of the company's senior management and may present variations. Good morning, and welcome to the webcast results of the second quarter of 2023 of Grupo SURA. This event is divided into 2. We will begin with a pre-recorded session, presenting the main results, and we will take a good -- close look at the implications. For Grupo SURA, the agreement signed recently with our investment in Grupo Nutresa. This is followed by a live Q&A session. You can begin to send your questions as of now. Today, from Grupo SURA, we are with Gonzalo Perez, CEO of the company; Ricardo Jaramillo, VP of Business Development and Finance; Juan Luis Munera, VP of Corporate Legal Affairs; and from our subsidiaries, we have Juan [Indiscernible], VP of Investment Finance of Suramericana and Carlos Oquendo, VP of Corporate Finance of SURA Asset Management. Here is Gonzalo Perez.

Thank you so much, Carlos, and thank you all. We'd like to begin talking about the implementation of the agreement signed regarding our investment in Grupo Nutresa. As a company, we continue advancing the execution of the transaction, and this is why we want to share with you several developments that have taken place. On June 28, the Board of Directors approves the execution of the transaction. As of this quarter and as we have progress in the different stages of the transaction, the financial statements will start showing their own accounting effects. For this quarter, mainly we'll see 2 effects. We reclassified the investment of Grupo Nutresa from the investments line and associates to noncurrent assets maintained for sale. So as of now, we will stop acknowledging on our financial statements, the equity method of this investment. Also, the record of a deferred tax of COP 618 million, which represents a big impact on the results of this quarter, but it's important to highlight, does not generate a cash flow lease from this period. The figures at the end of June collect this impact, but it's important to mention that ahead, we'll see how the milestones of the transaction will keep affecting our income statements in these periods. Regarding the assumption the transaction will close at 2024, the financial statements will have positive effects that year, and we'll have to pay taxes in 2025. Right then, we can see figures of the operation without all of these effects. 2025 really will be more normalized. Keeping in mind that the transaction, again, if it ends at 2024, 2025, we should have an impact on our cash flow because the corresponding taxes will be paid in 2025. The rest of the financial statements will be normalized. Multipacks reclassification and deferred tax will be related since there is an intention to sell a corporation, we have to reclassify said assets to place unavailable for sale, and this will make us acknowledge the deferred tax with the difference of the accounting and physical value. So we're beginning advancing in the different stages and reporting the market timely. But it's clear that Ricardo Jaramillo will provide us ahead more details about this transaction and that we'll be showing you graphically all of the figures that I've mentioned. Today's presentation, therefore, will consist in 2 parts. One is the result of the quarter as we usually do and file section will deepen on the effects of the transaction for Grupo SURA, providing more details of the value that this generates for the company and shareholders. To show the results of this period, let's begin mentioning that we continue seeing some operating performance of our investments portfolio ending the semester with the growth of consolidated revenue of 32% compared to the year before, reaching COP 19.1 trillion in revenue this semester. This is explained by a great commercial dynamics in Suramericana with double-digit growth in premiums. Also SURA AM showed growth in revenues from commissions leveraged by the dynamics of the labor market and a better return of capital markets compared to the year before. The operating earnings reached $2.6 trillion in semester, up 54% compared to the year report, thanks to the best results -- operational results of our subsidiaries and associates, which grew 3.5%, reflecting the equity method that reached in June COP 1.1 trillion. As we mentioned, the acknowledgment of the deferred tax related to the announcement of the transaction of Nutresa is impacting the net results of the company. But if we eliminate this effect, which is nonrecurrent, the controlling net profit of Grupo SURA, which we call pro forma on the slide, reached COP 1.4 trillion, representing a growth of 46% compared to the first half of 2022 and taking to maximum values, the net profit of the last 12 months even before the pandemic. On Slide 6, you can see the contribution of investments to the controlling net profit in the first semester. Here, we see a powerful or strong portfolio with positive results in the period. Our subsidiaries contributed 42% of the revenue and our associates are contributing 58%. And we have to highlight that the company's financial services represent 84% of our net profit for this period. Likewise, when we look at the variation of the contribution of the companies by sector, financial represent 42% increase Suramericana, SURA Asset Management in Colombia and 32% increase in industrial companies called Grupo Nutresa and Grupo Argos. At subsequent events, we'd like to tell you about the agreement signed by Suramericana with Grupo [Indiscernible] and Grupo [Indiscernible] with the purpose to sell 100% of its operations in Argentina and El Savador, respectively. It's important to mention that both transactions are subject to all of the regulatory approvals, as you are aware. And with these operations, Suramericana makes the reassignment of capital to enhance its presence in the region, focusing on 7 countries where it operates and allowing to invest in the transformation of its digital models to diversify and strengthen its product and services portfolio as well as solutions. It's a clear capital assignment that keeps looking on a long-term basis and enhancing the region in the 7 countries in which Suramericana continues operating. It's also it's evident to say that this has no relation whatsoever with the effects of our transaction with Grupo Nutresa that we've been discussing. Now I'd like to give the floor to Ricardo Jaramillo to deepen on our income statements and on the transaction per se.

Thank you, Gonzalo, and greetings to all of those that join us today. We will begin with the section of Suramericana and begin with a summary of the consolidated results for the first semester. Then we'll look closer at the different segments to see the operating performance of the company. Let's look at premiums issued reached COP 7.6 trillion in the second quarter, up 14%. Here, we want to highlight the double-digit growth, mainly in the segments of Life and Health. For the semester, the company has reached issued premiums of COP 14.6 trillion, up 19% compared to June the year before. The retained premiums closed the quarter at COP 6.2 trillion, up 17%. On the other hand, the indicator of claims ratio shows an increase regarding the same quarter of the year before because the more claims or losses in the business of EPS, and we will see closer the results of the segment ahead as well as more claims ratio in the segment life, which showed more long-term reserves for this particular solution of labor risk. These impacts on claims ratio led this indicator to set at 75.7%. For the semester, the indicator of claims ratio is at 73.7%, up 120 basis points. The technical result ended the semester at COP 664 billion, showing a drop of 11% due to the increase mentioned in claims ratio and an indicator of live commissions because of the growth in the channel of Affinity and promoters in Colombia. The expense ratio for the quarter grew 96 basis points. And for the semester, it grew 12.2%, showing an increase of 62 basis points because of more investments in technology and human talent to enhance the company's operation models. Revenue from investments increased 73% in the first semester compared to the year before. As you can see in the graph, reaching COP 1.6 trillion because of the assets indexed to the inflation in Colombia and the favorable performance of several assets of local fixed rent locals, combined with the valuation of alternative assets. So the idea is to see that we will have better interest rates despite the decrease in the quarterly net profit because of the topics mentioned before, at the end of the semester, and this is something we want to underscore. The net profit of the company is at COP 471 billion, up 82%. All this led the company to register an ROE adjusted in the last 12 months of 12.2% and a tangible capital return of 15.7%. Now let's look at Slide 9. To look in detail the segments. Let's begin with the Life segment. Premiums retained in the quarter reached COP 1.9 trillion, up 15%, driven by the solution of health that shows a better dynamic commercial dynamics in Chile as well as the renewals of accounts reasonable with a higher average premium in Colombia. Also, labor risks grew 21.5% due to the growth of 280 insured parties compared to the second semester of the year before. In the quarter, claims ratio was at 70.2%, increasing compared to the year before because updates in long-term reserves in the ARL, up COP 154 billion. This is because the estimates of the minimum wage for next year and variations of estimates of extra longevity risk. These reserves compensate with the increase in results and investments. So if we exclude the effect of the reserves, the claims ratio of the quarter is at 65%, which is very good for this segment. The industrial result closed in the second quarter with a loss of COP 342 billion, up 53%, mainly because of more claims ratio, as we said before, an increase in the ratio of commissions and the operating expenses ratio because of more contributions to insurers and investments in technology to enhance our operational model. Revenue from investments closed at COP 498 billion, up 36%. This item continues being driven, as we said before, by the inflation in Colombia. However, the inflation pressures in the region have been moderating, dropping 400 basis points in the average inflation in Suramericana, excluding Argentina. So we expect a lower contribution in the results in the next quarters. And this leads to have a net property in the second quarter for this segment at COP 219 billion, up 37%. Now let's look at the segment of Casualty on Slide 10. The premiums issued reach COP 3.2 trillion, up 7% in the second quarter. For this period, there is a higher comparability base because for the second quarter of last year, there was a biannual business mission in Chile, which is not shown this quarter. So if we isolate that effect, the growth of the segment will be at 22%. It's important to highlight that in the quarter, the performance of the solution of mobility, which grew 29.5% explained by the increase in rates as a measure to counteract the increases in costs as well as the performance of the solution of companies, which grew 23%, isolating the biannual businesses that I mentioned. The combined reason in the graph in the middle was set at 110%, so if we exclude Argentina, which because of the hyperinflation is towards the indicator as well as the amortization of intangibles, which are not cash flow. The combined reason of the segment is at 102, dropping 92 basis points compared to the second quarter of the year 2022. This is explained by an improvement in claims ratio of automobiles close to 15 percentage points from 74% to 59% for this quarter. This improvement goes in line with the strategy of profitability and technical management that we implemented since last year in this segment. All this compensated the increase of 129 basis points in the administrative expenses indicator. The revenue for investments grew 40% compared to the second quarter last year, reaching COP 266 billion. This is because of the valuation of assets for the higher share of the classification at reasonable value of the portfolio and a higher contribution of alternative assets. for favorable movements of interest rates. So the net profit grew 158%, reaching COP 99 billion in the second quarter. Let's move to Slide 11 for the segment of Health. This segment shows important challenges, especially in the EPS, which led to a loss during the quarter. First, let's look at the premiums issued in the segment at COP 2.7 trillion, up 23%, mainly by the 23% growth of EPS because of 2 things: an increase in the CPI and increase in the insured population that reaches 5.2 million users, growing 103,000 people compared to the second quarter of '22 as well as the growth of diagnostic aid and IPS, which grew from 26% to 22%, respectively. The most critical point of the segment is claims ratio, which is located 97%, mainly by the EPS that reached an indicator of 103% compared to 99% in the second quarter of 2022. This is because of significant increases in the demand of health services, low and high complexity, which had generated increases in the frequency and severity indexes, leading this indicator to higher levels than those seen in history. It's also important to mention that this is a systemic topic that's happening in every EPS in Colombia, and that is part of the situation of the health sector as a whole. For this, we've had discussions with different government officials, discussing the situation, offering our knowledge and experience to build on what we've reached in the health sector. The indicator of expenses is at 8% maintaining similar levels to those in the previous quarter. Revenue for investments compensated some of the claims ratio at COP 49 billion, increasing COP 34 billion, explained by an active strategy that led to stabilize the financial revenue of the EPS. This leads the segment to end at the end of the quarter -- second quarter with a net loss of COP 84 billion because of the higher claims ratio. And with these results, our outlook changed regarding the EPS at the end of the -- early on in the year, in which we thought that there was a loss of a balance point. But now we expect that this business, in particular, will end if it continues the trend that we've seen in the last quarters that will end with the laws that we -- as we have seen, is compensated by the other segments, Life as well as Casualty. Lastly, on Slide 12, to look at the results of Suramericana, we see the variation of each of the segments for the first semester of the year. Here, we see the Life and Casualty segments contribute to the growth since there is an improvement in claims ratio, better investment returns, while the health segment has an accumulated loss of COP 32 billion because of impacts mentioned. And all this leads to a net growth -- net profit growth of COP 211 billion. And for the end of the year, we expect to meet the budget despite what happened in the EPS throughout this first semester. Now let's look at the next section of the presentation where we look at the results in detail of SURA Asset Management. Firstly, we'd like to show that the company continues a positive trend in the results compared to the year before. It's important to mention that we will present the variations pro forma, assuming that Proteccion would have been consolidated in 2022 to give more clarity on the operating results of the company. First, revenue from permissions, which ended the semester at COP 2.1 trillion, showing a pro forma in cruise, including exchange effects of 4%, which shows the growth of the business of savings and retirements. Thanks to the increases of base -- salary base and AUMs. Also, operating expenses reached COP 1.6 trillion for the semester with an increase of only 2% compared to 2022. If we look at the pro forma variations, excluding exchange effects. This means that the efforts made by the company to automate processes and manage commercial channels have led to increased operating expenses below the growth of revenue from commissions and the average inflation of the countries where SURA AM operates. These variations are affected by the consolidation of Proteccion and the revenue for the reserve were COP 198 billion for the semester, representing a GLA of 7.4% compared to a loss seen last year. These results reflect the positive development of financial markets globally during the first 6 months of the year. Operating profit grew 200% at COP 951 million. This increase, as we said before, is because of the recovery of the reserve, a positive development of revenue from commissions and efficiency and expenses also related to more devaluation of the Colombian peso. This leads then to a net profit in the first semester that reaches COP 494 billion, leaving that the ROE and ROTE adjusted in the last 12 months are set at 8.7% and 26.7%, respectively. Slide 15 shows you in detail the Savings and Retirement segment. Revenue from commissions of the segment reached COP 872 billion for the quarter, increasing pro forma and excluding the effects of the exchange rate at 4%. This is because of the growth of the salary base, 11.6%, excluding the variation of exchange rates, thanks to the growth of the average salary [ and reports ]. On the other hand, when it comes to the net commissions, AUMs, there was a growth of 8% because of increase of the contributions to individual accounts of workers, which increased 10.8% in the period. This is mainly in Mexico. Also, it's important to highlight that items -- AUMs reached COP 586 trillion, up 20% in pesos and 8% in constant tender. Operating expenses of the segment were at COP 485 billion, dropping 7% pro forma, excluding the exchange rate showing the efforts of the company in terms of efficiencies. But when you look at the performing pesos, this line grew 8% because of the effects related to exchange rates between Colombia and the other countries in the region. Revenue from reserves is at COP 99 billion for the second quarter of the year compared to a loss in last year. This better performance is because of the better returns in the countries where SURA AM operates. The operating profit of the segment that closed at COP 500 billion in the second quarter with a pro forma increase of 196% compared to 2022. On Slide 16, we see the Voluntary segment. First, AUMs reached COP 102 trillion, up 33% in pesos at 18% in tender points, mainly explained because of the revenue of insurance mandates as well as the recovery of financial yields. It's important to mention that the industry of investments in Latin America still faces a challenge because there is current restrictive monetary policy and the high collection rates in fixed terms from commercial banks. In the next months, we expect because of the reduction in rates and inflation will normalize a little, and we'll have a similar trend that we've seen in previous years. Revenue from commissions in this segment reached COP 158 billion in the second quarter of the year, dropping 6% pro forma, excluding the effects of the exchange rate. This decrease is because of a decrease of the commission fee because a higher participation of AUMs with lower commission rates as well as the strategies of investment that prioritize assets of lower risk that charge a lower commission rate. On the other hand, the variation of the pro forma figures is set at 8% for the quarter. Operating expenses decreased 3% in pro forma variation excluding the exchange rate effect, showing again the efficiency efforts to mitigate the challenges that I talked about in this segment. So with all of this, the operating profit for the quarter showed a pro forma decrease of 10%, closing the quarter at COP 33 billion, keeping an operating balance. To end this session on the results of SURA Asset Management, I invite you to look at Slide 17, where we can see graphically increased COP 451 billion in the profit for this first semester compared to 2022, thanks to the best performance in segments, mainly the savings and retirement business. Now let's look at the results of Grupo SURA, and this is on Slide 19, where we'll see in detail the equity method. At the end of the second quarter, the equity method closed at COP 508 billion compared with the second quarter of the year before. Bancolombia contributed COP 358 billion with a decrease of 18% versus the second quarter of 2022 because of the increase of the reserves for the quarter. With this, the company closed the quarter with a profit of COP 1.5 trillion, dropping 15% and an ROE for the last 12 months of 17.4%. On the other hand, Grupo Nutresa contributed COP 48 billion, falling 35% for the period. It's important to remember that the contribution to Grupo SURA decreases because we eliminated the dividend that we paid to Grupo Nutresa. The net profit in the quarter decreased 34.5% mainly due to the increase in financial expenses for the high levels of interest rates compared to the year before, closing at COP 140 billion. On the other hand, Grupo Argos for this quarter contributed COP 92 billion, up 251%. This growth is because of the favorable performance of all of its businesses and the beginning of a new platform of with . After going through the different companies on Slide 20, we can see as a result, a portfolio that's powerful and contributes an additional profits of COP 2.1 trillion in the semester in the midst of the deceleration seen, which shows the benefit of the diversification of our investments. Expenses -- management expenses or administration expenses, as you can see, were at COP 85 billion for the first semester, and this is -- has to do with the effects of Nutresa and other offers, the interest of Grupo SURA were COP 305 billion, accumulating the year, which we will begin to see a decrease in the last months. And these results are impacted, as Gonzalo said, because of the deferred tax related to transaction of Nutresa closing the controlling net profit at COP 823 billion. If we exclude the deferred tax, which does not keep in mind the business result, the total net profit is at COP 1.7 trillion, up 64% compared to the first semester the year before. And the controlling net profit would close COP 4 trillion, up 46%. So with this, we end the presentation of the results of the quarter, and now we'll take a closer look at the effects of implementing the agreement for Grupo SURA. Now let's give the floor to Gonzalo, who will start telling us about the main effects for the company.

Thank you, Ricardo. In this section, we will explain the financial implications of the transaction as well as the positive effects for the company and shareholders. Before looking at the financial details, let's quickly look at the flow of the transaction for Grupo SURA. As we mentioned in the call of June 20, we've given -- provided details of the transaction and the terms. And overall, we must remember then that Grupo SURA has 163 million shut stocks of Nutresa, which along with those that we will acquire with the takeover bid will be part of the shares that will be exchanged with IHCGJ. As our final result in a hypothetical setting to exchange 5% and 5% paid in cash, Grupo SURA would receive 171 million shares of Grupo SURA and 48 million of Grupo Argos. Now if we focus on the results for Grupo SURA with this transaction and under this scenario, the total number of outstanding shares will move from COP 579 million to COP 409 million. We're talking about ordinary and preferential. This implies an increase in the share of our shareholders of Grupo SURA in the company. Specifically, the shareholders will increase 1.47x their share, which means that 1 shareholder owned 1 million shares of Grupo SURA. Now we'll have a share of 0.25% instead of 0.17% before the transaction. On this slide, I'd like to show you conceptually the different effects that the transaction would have on the company's figures and how our shareholders will perceive these changes. As we advance in the presentation, Ricardo will provide more details about the projections of the company. With the transaction, the effects can be classified in fact of only once the figures in '23, '24, some '25 in terms of cash flow for paying taxes on a long-term basis that will show structural changes for Grupo SURA. Firstly, and from the viewpoint of the income statement, the company will receive a profit and sale investments because of Nutresa add amount higher than that in fiscal than that registered books. And this, of course, will generate a tax related to the sale of the investment that will be a single time when the transaction takes place. On a long-term basis, we see changes we've liked it on a lower equity method since Nutresa is registered an associate within our income statement. It's also possible that we'll present an increase in financial expenses, and we assume that all the resources necessary for the transaction shall be financed with higher debt, which could affect our total net profit. As to the financial situation, the effect will also be structured. We see a decrease in the asset because of selling Nutresa in exchange to own shares. Also, I highlighted these transactions that will have less outstanding shares. And we will see this ahead. And we will observe a decrease in the total equity, of course, an increase in the debt with an amount that will depend on the results of the takeover bid, the proportion of exchange and cash. When it comes to the effects of cash flow, the debt of Grupo SURA, the company may increase the debt at the moment of making the transaction. And on a long-term basis, we will see a variation in the dividends received, where we will have stopped receiving dividends from Nutresa, but we will see an increase of the share of Grupo Argos, which will logically lead us to receive more dividends from the same Grupo Argos. This will depend on the exchange of the takeover bid. Also, we'll see a variation on the dividends paid due to a lower number of stocks, outstanding stocks and a variation of interest according to the increase of the debt. So all of these effects will lead that the share of our shareholders at Grupo SURA will increase. Also, we mentioned this. In turn, there are figures of profit intrinsic value per share will increase because of the reduction in number of shares -- outstanding shares in a higher proportion. So it's to highlight that with the projections that we have, the company has the capability to keep a good payment of dividends per share, and we will continue advancing towards a higher profitability of our equity to benefit all of our shareholders. So with this introduction, I'd like to give the floor to Ricardo who will provide more details of the different effects of the transaction, and how these will be reflected on the figures of Grupo SURA from here on.

Thank you, Gonzalo. Now that we reviewed all the context of the different impacts in the company, it's time to see how these will be reflected on the figures of Grupo SURA for the next 3 years. On Slide 24, we can see the assumptions that we've used for these estimates. We have 3 types of assumptions. Macro, those related to the transaction and assumptions in the operation of the business. Firstly, the macro assumptions. These figures are estimated with an exchange rate of COP 4,200 per $1, an inflation projected according to economic focuses. And the -- those related to the transaction, the figures assume a takeover bid of 5% exchange and 5% in cash, in which for this scenario of total outstanding shares would decrease 29%. We're also assuming a reduction in the expectation of exchange rates, especially the CPI with a spread of 550 basis points for our debt. And it's important to mention that for these estimates, the resources necessary for the transaction shall be 100% assumed by debt and not necessarily will be the case. On the other hand, in the assumptions related to the operation, the results made by Grupo SURA are in line with the business plans of the subsidiaries. In turn, the projections of expenses of Grupo SURA assume an expenses ratio over dividends received that progressively will decrease and set at 7% by 2025, which is about 150 basis points below the average seen in the last 5 years. With the purpose of comparing total profits before the transaction, let's remember that in the guidance for 2023, we expected a growth of net profit from 10% to 15% compared to the profit of 2022. And lastly, our projections show a growth base as of 2024 of dividends received of the IPC, plus under 50 basis points, which is very much in line with the recent history of our investments. Now let's move to Slide 25, where we see the effects of the transaction . First, I'd like to summarize on the top, this transaction very simply. Grupo SURA will exchange stocks of Grupo Nutresa plus cash per stocks of Grupo SURA and Grupo Argos. Definite amounts will depend on the results of the takeover bid. But for effects of this presentation, as we said in the previous slide, we think that there's a 5% of cash flow and 5% in exchange. This would give us a result that Grupo SURA will receive 171 million stocks of Grupo SURA and 48 million stocks of Grupo Argos. Now let's look at the effects and resources necessary to complete the transaction, which will be made in different moments. And the results as of June, as we saw at the beginning, we've seen several of the effects related to this transaction. This includes the reclassification of Grupo Nutresa in asset available for sale and the recognition or anticipation of the deferred tax. Once the spin-off is made, we will acknowledge within the company's financial statements, the investment in the new portfolio corporation. For the takeover bid, Grupo SURA would need COP 912 billion to acquire the stocks -- 18 million stocks, remember that all the amounts here mentioned are subject to the results of the takeover bid and the amount and the value of the exchange rate. Likewise, Grupo SURA shall increase the asset of investments because of these stocks acquired. Once the different contributions are made to the autonomous equity, we will acknowledge within the financial statements of profit and sale of the stock for about COP 3.9 trillion, and we will recognize that the additional current tax which was already recognized this quarter through the deferred tax. It's important to mention that this effect is accounting and has no impact on cash flow. While the impacts or effects on cash correspond to the payment of taxes as follows: the first part, close to COP 90 billion initially. And a year later, after the exchange, we must make a payment of the rest of the tax of about COP 1 billion, which are related to this deferred tax that we are registering this quarter and that we are accounting anticipating. After the exchange, Grupo SURA will receive 171 million stocks, which, as we've said, we'll make these stocks be no longer outstanding and reduce the total equity of the company, which, in turn, will make the equity per stock increase. Likewise, we will acknowledge a higher dividend of Grupo Argos, while we will stop receiving the dividends of Grupo Nutresa since it's no longer in our portfolio. Now let's look at Slide 26. Let's look at the projections for the profits per share that show the effect of this transaction. In this graph, here, you can see an estimate for '23, '24 and '25. First, the blue line -- the continuous blue line, which corresponds to net profit expected per share, including the effects related to the transaction. In comparison with the gray line, which represents a net profit per share expected before the transaction. Starting with the assumption that transaction will close in 2024. Next year, as in 2023, we'll have only a onetime effect. By 2025, the main effect nonrecurrent, would be in the cash flow because of the payment of the tax but the operating results will be normalized. This means without effects related to the execution of the transaction. By 2023, we expected a net profit per share in a range from COP 3,700 and COP 4,200. However, due to the impact of recognizing the tax and the decrease of the equity method of Nutresa, the profit per share for this year will be set at COP 2,400 and COP 2,700. If we normalize the effect I'm recognizing the tax we would be expecting a net profit per share from COP 3,500 to COP 3,800. By 2024, we expect the net profit per share from COP 4,600 and COP 5,200. However, since the net profit from Nutresa, there is a recognition of the rest of the tax, we would register profits per share of COP 12,700 and COP 14,200 per share. Both are effects, nonrecurrent, which normalized would be in a net profit per share of COP 5,400 to COP 6,000. So at this point, is where we see the positive effects of the transaction, creating more profits per share for our shareholders. As we've mentioned, by 2025, there would be the effect of paying the tax, but we could have financial statements without any nonrecurring effect because of the transaction. For that year, there would be an increase in the net profit per share of about 15% versus what was expected before with amounts of COP 6,300 and COP 7,000 per share. On the lower part of the slide, you can see how the net profit of the company changes after the transaction compared to the initial projection held. By 2025, the net profit of the company is between COP 2.6 trillion and COP 2.9 trillion. All this leads to that the adjusted ROE goes from 11% and 12% as we had in our estimates before the transaction to an ROE from 12% to 13%. So to summarize and to simplify this, the absolute figures of the company decrease, but there is more profitability and better metrics per share. Remember that we're repurchasing somehow stocks at Grupo SURA. So since we have less shots, always the metrics per share improve. It's important to mention that these projections do not assume any special transaction other than the transaction set forth with Grupo Nutresa. [Technical Difficulty] We do not include these investments in capital optimizations, the company would incur in a higher debt in 2024 and '25 to cover the milestones of the transaction. On the right-hand side, you can see that the debt would move from COP 4.1 trillion in '22 to COP 5.5 trillion in 2025, up 24%. This is a scenario that we're setting. So with this, the company would reach net debt levels with healthy dividends, which would not put at risk the cash flow and liquidity of the company. In fact, we are looking at a 5% cash flow 5% exchange always. However, if it's a 10% cash flow, we would still have debt levels that are controllable by Grupo SURA. Lastly, Slide 28. Here, we -- as a company, we are committed to create value for our shareholders, and this transaction, we know will provide benefits. The company will reflect a sound generation of cash flow, which, thanks to the lower dividend paying and the expectation of a decrease the expenses of interest will compensate the higher debt to cover the transaction. And we're here we will have a better path for our shareholders. So as a result of the transaction, our shareholders will see an increase of profit per share of about 15%, an increase in the intrinsic value per share of the company of about 17%. And plus our shareholders will receive an increase of 1.47x in the share of stock over the total of the company because of the lower stocks outstanding stocks that we mentioned. The transaction also will drive the profitability of the company since the lower total net profit will be compensated by a lower equity to reach a return over equity above capital cost, which by 2025 will be 12% to 13%. So although the company may incur more debt to carry out the transaction, we consider that intangible and the net debt indicator of the dividend will be below the maximum historic -- the historical maximum of the company. Lastly, with this transaction, we will keep evolving in every structure of the ownership of the company, focusing our portfolio in financial services with regional industry and channel diversification, as we've done in recent years. Now we invite you to start the Q&A session. Thank you.

Good morning. Can you hear us? Can everybody hear us? Good morning, everyone. We apologize it seems that we had a technical glitch. Let's gather all the questions we've received so far. And again, we've had a technical glitch. The last two, especially with the last two slides. Can we recover? So Ricardo, we -- could you please explain again the ROE per transaction? Could you please talk about that again?

Including the effects related to the transaction compared with the gray line that shows a net line expected before the transaction. So keeping in mind that the transaction will be closed that year compared with 2023, it would show effects only once, but this toward the results. By 2025, the main non-recurrent effect would be in the cash flow due to the payment of a tax, but the operating results would be standardized. This means without being affected because of the transaction made. By 2023, we expected a net profit per share, ranging between COP 3,700 and COP 4,200. But because of the impact and the decrease of Nutresa, the profit of the stocks will be between COP 2,400 and COP 2,700. If we normalize the effect of recognizing the tax, we would expect a net profit per share between COP 3,500 and COP 3,800. By 2024, we expect a net profit per share between COP 4,600 and COP 5,200. However, since the profit from the sale of Nutresa, the recognition of the rest of the tax, we would register profits per share between COP 12,700 and COP 14,200 per share. Both are non-recurring effects, which have normalized, we would be in a net profit per share between COP 5,400 and COP 6,000. So it is here where we start to see the positive effects of the transaction, creating more profits per share for our shareholders. As we've said, by 2025, there is the effect of paying the tax in the cash flow, but we could have financial stance without any effect nonrecurrent because of the transaction. So for that year, we would have an increase in the net profit per share of about 15% versus what was expected before. Well, with values from COP 6,300 to COP 7,000 per share. Now on the bottom of the slide, you can see how the net profit -- total net profit of the company changes. By 2025, the net profit of the company is at COP 2.6 trillion and COP 2.9 trillion. So all this leads that the adjusted ROE moves between 11% and 12% as we had in our estimates before the transaction to our ROE from 12% to 13%. So to summarize and to say it simpler, the absolute figures of the company decreased, but there is an increase in the profitability and improvement of the metrics per share. Remember, we are repurchasing somehow stocks of Grupo SURA. So that's why when we have less stocks, always the metrics will improve. It's important to mention that these projects do not assume any special transaction other than the transaction set forth with Grupo Nutresa. Let's look at Slide 27. On the left side, you can see the dividends received for the next years. But for 2023, the dividends have been decreased and the lower dividend because of the leave of Nutresa along with the higher dividends because the increase in the share of Grupo Argos will be reflected entirely in 2024. We expect that the dividends will remain online with this year. And from there on, we continue seeing a growing path, thanks to the good dynamics of the companies of the portfolio, which allow us to reach levels of dividends received above those historically seen because of the maturity and growth of the companies. This, along with the moderation of expenses related to the transaction and the expectation of a decreased interest rates because of decreased inflation. So this will allow our cash flow to be set at COP 1 billion in next years, which is a significant level, as you can see in the graph that we're talking about the clear -- the light blue line after the line that separates '22 and '23, which represents a relevant liquidity to amortize debt and to compensate our shareholders. For these estimates in which we do not contemplate this investment or capital optimization, the company would have a more debt in '24 and '25 to cover the different milestones of the transaction. As you can see on the right-hand side, the debt would move from COP 4.1 trillion in '22 to COP 5.5 trillion in 2025, increasing 24%. This is in the scenario that we're setting. With this, the company would reach net debt levels over healthy dividends, which would not put at risk the cash flow and liquidity of the company. Indeed, all this presentation has been made in the scenario of 5% cash, 5% exchange. But if we made it in a 10% scenario, cash, we would still be a controllable debt levels, Grupo SURA. Lastly, let's look at Slide 28. To end as a company, we are committed to generate value for our shareholders. And this transaction, we are aware, will bring them benefits. The company will reflect a sound generation of cash, which will -- thanks to lower dividend paid. And the expectation of decreased expenses for interest will compensate the debt that we have to cover the transaction. Likewise, as a result of the transaction, our shareholders will see an increase in the profit per share up 15%, an increase in the intrinsic value per share of the company of about 17%. Also, our shareholders will perceive an increase of 1.47x in the share of a stock over the total of the company because of lower outstanding or less outstanding stocks. The transaction will also drive the profitability of the company because the lower total net profit will be compensated by lower equity, which will allow us to reach a return over equity above capital cost in 2025 between 12% and 13%. So although the company may incur in more debt to carry out the transaction, this debt is handable and controllable. And the indicator of the dividend -- net dividend debt will be below the historical maximum that the company has seen. Lastly, with this transaction, we will keep evolving throughout the ownership structure of the company and focusing our portfolio and financial services with regional diversification per industry and channels as it's been part of our objective in recent years. Now I invite you to look to our live Q&A session. Thank you.

Good morning. Thank you. For joining us, again, we're sorry for the technical glitches we had. So let's start to reply or answer all the questions we've received by e-mail. The first question is Antonio Alaska, and there are other questions that can be joined to this. What is the rationale of selling Argentina and in El Salvador, your operations?

As Suramericana mentioned, which is the holding of the insurance companies in Latin America and made the disinvestments in El Savador and Argentina. The rationale is that we need to focus on the other 7 countries where Suramericana operates. It's to assign capital to countries that very, very large growth opportunities like Mexico, Brazil and other countries. It's important to underscore that Suramericana still in those 7 countries, it's the third or fourth Latin American insurance company, and it needed to focus its capital in the other countries. And among the other questions, is there an opportunity of more disinvestments, it's clear really that those are the 2 disinvestments budgeted. So there will be no other disinvestments made by Suramericana in the insurance sector.

Okay. There are several questions related to cash flow. Gonzalo is saying, what dividend should shareholders expect in terms of dividends received. Do you expect that these will be compensated really with Grupo Argos. And we have another question is, what scenario do you have expenses for interest.

Okay. Thank you all for your questions. Within the projection that we showed at the end of our presentation, we wanted to clarify what we will do in Grupo SURA in the next 3 years, and we were careful to point out that there are some assumptions that we cannot place on stone -- carbon stone because this has a transaction with several milestones. And here, we have a takeover bid. And for us, that 10.1% that Grupo SURA and Grupo Argos should get 5% would come -- would be paid in cash and the other 5% in exchange with stocks of Grupo SURA. So this obviously would vary, if it's 10% cash flow or 10% exchange, and it has a direct impact on the debt, on the interest and of course, on the cash flow. But allow me to simplify how we see cash flow in Grupo SURA. First, from one other questions from Stephanie, we had dividends received from our investments which right now have an impact. So now we have Nutresa's dividends leaving. We have an increase of the dividends of Grupo Argos, and what we expect in the -- from the dividends of each company, Bancolombia, Suramericana, SURA Asset Management and Grupo Argos is that we can maintain the path that we see on Slide 27. That will move from COP 1.7 trillion (sic) [ billion ] to COP 1.6 billion next year and go back to that COP 1.7 billion in 2025. So really this company would get dividend received very similar to the COP 1.7 billion. Now when it comes to expenses that we have from interest, let me connect this to another question. In this scenario, we are increasing the debt related to taxes and related to that 5% of cash with, COP 4.1 billion which is how we will close in 2023 to COP 5.4 billion. We're talking about COP 1.3 billion. Again, it could vary depending on the percentages and that COP 1.3 billion, if compared with the dividends received that we mentioned, which are COP 1.7 billion could be at about 0.8 to 1x dividends received over net debt. This is what you can see on Slide 27, which you can see on the right-hand side. So this also means that we will have more interest for that debt. We already gave you the assumptions, but we also expect that the interest rates will drop, while the inflation in Colombia will reach better levels. Our projection is that in 2023, it will be 13.1% for total debt in 2024, 11.4%. And by 2025, the interest rate will be close to 9.6%. Now with this information and so we have dividend received minus operating expenses, which will be decreased to 7% minus expenses for interest, we have a figure you can see on Slide 26 on the right-hand side graph in which that cash flow is shown. So with these assumptions, we're talking about cash flow of COP 1 billion available for 2 things: to lower the debt; and to pay the dividends to our shareholders. It's very important to keep in mind what we've said. The stocks of Grupo SURA can reduce by 30% approximately. By doing so, we -- and with this operating cash flow, we have the capability to maintain a growth dividend per share related to what we've had in precent years. Obviously, it's a decision of the Board of Directors and the Assembly next year, and we don't know the number exact, but the COP 1 billion that we have in cash flow will allow us to continue paying the increasing dividend and continue the process, again, of deleveraging. We understand that there are many assumptions on the table. Many questions are asked our shareholders or investors. What I want to say is that we want to give you a space through our Investor Relations office. To look at the figures closer, and what our projections are. Because it's very important for all of you to understand the impact that Grupo SURA will have, as we said for the next few years, and how we project the company after the transaction. So I expect that this contributes to what we saw in the presentation. Unfortunately, when we have a cut, it showed that, but including myself, we are here and available for you to look at all the assumptions behind our figures. Let me make 2 comments. Maintaining that COP [ 1.7 trillion ], we already mentioned in the presentation that we reduced 171 million shares in Grupo SURA. So that COP 1.7 trillion now is over 409 shares that we have. And secondly, there is a -- it's a figure that's an increase when it comes to the number of shares -- outstanding shares that we have for Grupo SURA. Second, and it's very important, and Ricardo mentioned this, but we want to underline that our level of depth in the worst scenario, growing at 10.1% if our share 78. In cash, our worse scenario is way below 5x the value of dividends, which is a figure or indicator that we have to take care of. So we are -- even before -- during the pandemic and even before, so these are 2 very important things because we have made exercises in the worst scenarios. And there, as Ricardo said, we foresee that our level of debt will be way below 5x the dividends.

There are several questions regarding the debt that have been answered. Maybe [indiscernible] asks what the mix of resources required between bonds and banking debt.

It's a work front that's quite relevant. And right now, we're working on this. You must understand that right now, we cannot provide details. But what is important is that we're considering. The moments in which -- no, first, the debt profile of Grupo SURA explorations and bonds that we have today, understanding that we have local and international local bonds, and one that's international, that expires in 2026. Grupo SURA also has a bond that expires in 2024. That's quite big. So we were looking at the different options that we are offered by local, international banks as well as local bonds as well as the option of international bonds, which of these 4 options or the mix of these 4 options will allow us to re-profile the debt, keeping in mind the increase of the debt and seeking more efficiencies and that it crosses with the cash flow of the annual billion that I mentioned. So right now, we cannot provide more information of the true mix of the debt that we have. That debt again, really depends on the percentage of the takeover bid. 10% is an exchange and something very different is 0 exchange. While, of course, when we have information, and we can clarify this process, where we're more certain about this process, we will be sharing it in the same order that we've been looking at the milestones of this transaction.

Camila Cardona asks, SURA Asset Management is showing very good expense management.

The efficiency of expenses is the result of work done in the past 3 or 4 years in which investments were made in technology, changing operations and administrative processes. So that efficiency per se is more structural. In addition, we include management within the company. Now we are focused more on each AFP companies. And we have a voluntary non-AFP business. So that way of managing the company has led to have expenses that are much more efficient. But remember, they're structural. When it comes to commercial expenses, you can also say that we've adopted to the different changes brought by the pension reforms, especially in Mexico, there in the reform not only drove a higher contribution rate of the people but also sought a lower commercial development among the authorities. So we had 2,500 salespeople in 2022. And now we only have 1,000. This is also structural because it's the purpose of the regulator in Mexico that seeks that lower commercial activity because it didn't generate any benefit to the subscribers. So again, it's not because of specific issues, but more structural issues, and we hope we can continue developing the company's expenses in the same path.

A question by Andres [indiscernible]. SURA's strength [indiscernible] slide and diversification. Will you invest again in the real estate sector?