Presentation 1 Qulitas at First Sight Mexican specialized auto - - PowerPoint PPT Presentation

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Presentation 1 Qulitas at First Sight Mexican specialized auto - - PowerPoint PPT Presentation

Jan 07, 2024 217 likes •504 views

Corporate 9M 2017 Presentation 1 Qulitas at First Sight Mexican specialized auto insurer with 23 years in the market Market leader in Mexico since 2007 Specialization allows Q to provide best quality service and keep cost under

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Corporate Presentation

9M 2017

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  • Mexican specialized auto insurer with 23 years in the market
  • Market leader in Mexico since 2007
  • Specialization allows Q to provide best quality service and keep cost under control
  • International presence in the USA, Costa Rica and El Salvador

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UNDERWRITING ASSET MANAGEMENT TOTAL BUSINESS

+ =

Revenue MXN 20.6 bn Combined Ratio 98.5% Float MXN 24.4 bn ROI 6.6% Net Income MXN 1.2 bn LTM ROE 17.4%

9M17

  • Strong pricing discipline
  • Variable compensation

(interest alignment)

  • Cost Indicators Program
  • High Tech

(apps/devices/portals)

  • Non traditional sales structure
  • Low fix costs
  • Conservative asset allocation
  • Moderate Risk
  • Mexican Treasuries 28 days as

benchmark

  • Mark-to-market valuation
  • Portfolio composition:

76% Fixed Income 21% Equities

  • Solvency Ratio of 179%
  • Financial Strength

S&P mxAA+ (stable) AM Best B+ (stable)

  • Dividend Policy
  • Over-the-cycle target ROE

18% - 24%

  • Focus on sustainability

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1 Earned Premiums 2 Adjusted Combined Ratio: costs (claims + acquisiton + operation)/ earned premiums

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Quálitas at First Sight

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SLIDE 3

Decentralization

  • Service offices have independent

decision-making

  • Distribution network for costumers’

service

Outstanding Service

  • Top quality service
  • State of the art technology
  • Nationwide network with 398 offices
  • Experienced management team

Specialization

  • Unique Business Model
  • #1 auto insurance company in Mexico

with 32.2% of market share

Cost Control

  • Strict Cost Control Policy
  • Costs Indicators' Program

Focus on service rather than branding Flexibility to meet each client’s needs Interests alignment through variable compensation Identification of opportunity areas in each process

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Business Fundamentals

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Service Offices

  • Owned by specialized entrepeneurs
  • Independent decision-making
  • Compensation to office

representatives links sales with claims costs

Agents

  • Agents are not exclusive
  • Agents look after the interests of

policyholders

Quálitas

  • Call center
  • IT support
  • Product pricing
  • Claims Infrastructure
  • New channels: telephone & internet

4 4

Unique Business Model

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5 5

Network and International Presence

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95% 3% 2%

Written Premiums

183 Service Offices 13,517Agents 4,881 Employees 1,171/402 Claims Officers/Lawyers 215 ODQs

1 Quálitas Development Offices (ODQs) are owned by Quálitas

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9M17 +2 Service Offices +16 ODQs in Mexico

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Q Móvil App Web Service Portals

  • Agents
  • Agencies
  • Suppliers
  • Reforestation
  • Claims Officers and Valuators

Talent Incubator Programs

  • Care for the environment and

natural resources Risk Management

  • Encontrack
  • Mobileye
  • Route and risk hours study
  • Drivers Training

Q Agentes App

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Innovation & Sustainability

  • Employee Training

1 Comprehensive program for employees 2 Driving culture campaign to create awareness of the importance of responsible driving

1 2

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SLIDE 7

7

Million units By type of vehicle

Insured Vehicles

CAGR: 15.8%

Sales & financing of new cars in Mexico, units*

*Source: AMDA, cumulative figures August CAGR: Compound Annual Growth Rate

January - August

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Written Premiums

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Growth QIC 34.6% QES 7.4% QCR 27.5%

Yearly growth by subsidiary in local currency

9M17 9M16

Premiums Segment 3Q17 3Q16 Δ $ Δ % Breakdown 9M17 9M16 Δ $ Δ % Individual 1,839 1,494 345 23.1% 24.7% 5,514 4,458 1,057 23.7% Fleets 1,858 1,440 418 29.0% 25.0% 5,997 4,652 1,344 28.9% Financial Institutions 3,370 4,177 (806) (19.3%) 45.4% 10,861 10,416 445 4.3% Foreign subsidiaries 363 363 1 0.2% 4.9% 1,245 955 289 30.3% Other 1 124 (124) (99.5%) 0.0% 607 477 130 27.3% Total 7,431 7,598 (167) (2.2%) 100.0% 24,224 20,958 3,266 15.6%

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INCOME STATEMENT 2014 2015 2016 9M17 9M16 Δ %/pb Written Premiums

17,340 19,856 30,190 24,224 20,958 15.6%

Earned Premiums

15,356 17,065 23,825 20,624 16,532 24.8%

Acquisition Cost

4,143 4,518 7,257 5,711 4,969 15.0%

Claims Cost

10,674 11,747 14,710 14,038 10,421 34.7%

Operating Expenses

724 803 751 563 573 (1.6%)

Underwritting Result

(185) (3) 1,107 311 570 (45.5%)

Integral Financing Result

1,036 833 826 1,351 784 72.3%

Investment Income

917 693 582 1,116 623 79.1%

Income Taxes

230 266 633 440 419 5.0%

Net Result

624 564 1,301 1,221 935 30.7%

Acquisiton Ratio

23.9% 22.8% 24.1% 23.7% 23.8% (11)

Claims Ratio

69.5% 68.8% 61.7% 68.1% 63.0% 503

Operating Ratio

4.2% 4.0% 2.5% 2.3% 2.7% (41)

Combined Ratio

97.6% 95.6% 88.3% 94.1% 89.6% 451

Without SII effect

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>> In 2016 Q MX began to operate under Solvency II (SII) quantitative models. Due to the adoption of this new methodology, during the first half of 2016 the Company registered a benefit that affected some items of the Income Statement:

Figures in million pesos.

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Financial Highlights

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Theft to the Insurance Industry Fx vs. Costs

Jan-Sep

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Theft in Mexico & Fx vs. Costs

Source: OCRA, INEGI

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Q 17.3% Market 9.7% 7.2% CAGR (%) Market without Q

0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 09 10 11 12 13 14 15 16 1H17

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Cumulative Growth

Base 2009

Market Share Q

Source: INEGI, AMIS; latest available data as of June 2017 *CAGR: Compound Annual Growth Rate

Market Penetration in Mexico

Market Share & Growth Potential

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SLIDE 12

Source: AMIS; latest available data as of June 2017

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Market Share

2009 2010 2011 2012 2013 2014 2015 2016 1H17 Quálitas 18.9 19.6 20.1 21.5 22.5 24.9 25.3 31.5 32.2 G.N.P. 12.8 12.4 11.1 12.3 12.4 12.5 14.3 12.7 12.3 AXA Seguros 18.1 17.4 18.6 18.1 16.5 14.0 12.1 10.9 8.8 ABA 8.5 9.5 8.6 7.5 7.8 7.7 7.0 6.8 8.0 HDI Seguros 1.6 1.7 1.8 1.9 3.7 4.0 5.0 4.9 5.7 Mapfre México 5.8 5.4 5.5 7.4 5.9 6.5 6.3 4.8 3.0 Other 15.5 15.6 15.3 14.3 16.5 16.2 16.8 16.5 14.7 Bank-owned 20.4 20.1 20.8 18.9 18.4 18.3 18.2 16.8 15.3 Total Market 100 100 100 100 100 100 100 100 100

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SLIDE 13

Source: AMIS; June 2017 figures are the latest available 13

Source: AMIS; June 2017 figures are the latest available Figures in million pesos. Q MX figures *During 2012 Q MX recorded a 94 million benefit due to the change in the booking of policy fees and in 2016 a one time benefit of 752 million due to Solvency II adoption

2009 2010 2011 2012* 2013 2014 2015 2016 1H17 Total Total Quálitas (221) (76) 475 903 483 (95) 47 1,103 184 2,804 Quálitas 2,804 G.N.P. (499) (668) (371) (373) (27) (87) (221) (404) (306) (2,956) Other (7,336) ABA (170) (200) 356 411 368 132 (79) 646 270 1,734 Bank-owned 13,134 AXA Seguros (892) 82 (132) 173 (594) (453) (651) (218) 99 (2,588) Total 8,601 HDI Seguros (20) (43) (47) (22) (46) (36) (276) 101 46 (343) Top 5 (1,802) (904) 280 1,092 184 (539) (1,180) 1,228 293 (1,348) Zurich Daños 116 (238) (92) 45 (108) (174) (379) 51 (106) (886) Mapfre México 74 (133) (22) 69 3 (14) (170) (651) (71) (916) Atlas 122 95 146 220 208 105 (6) 123 48 1,060 ANA (23) (3) 6 (2) (2) (43) (30) 33 23 (41) General de Seguros 3 (22) 27 8 3 (33) (277) (92) (28) (411) El Potosi (1) (19) (4) 1 (5) (31) 28 42 20 31 Medium 290 (320) 60 341 99 (191) (834) (494) (114) (1,163) Other (192) (378) (159) 24 (138) (383) (530) (324) 60 (2,021) Bank-owned 476 849 1,590 2,114 2,410 2,089 1,436 1,899 271 13,134 Total Market (1,228) (754) 1,771 3,570 2,555 976 (1,109) 2,310 511 8,601

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Operating Result – Automobile Segment

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SLIDE 14

Source: AMIS; June 2017 figures are the latest available 14

Source: AMIS; June 2017 figures are the latest available Figures in million pesos. Q MX figures

2009 2010 2011 2012 2013 2014 2015 2016 1H17 Total Total Quálitas (220) (75) 475 903 484 (93) 48 1,104 184 2,811 Quálitas 2,811 G.N.P. (2,050) (1,906) (2,112) (2,508) (2,469) (3,405) (3,553) (1,855) (2,003) (21,860) Other (26,833) ABA (106) (150) 482 517 433 70 10 897 337 2,489 Total (24,021) AXA Seguros (3,008) (1,560) (1,906) (1,223) (2,498) (1,951) (2,303) (2,283) (476) (17,208) HDI Seguros (49) (40) (37) (10) 12 (62) (166) 170 (9) (192) Top 5 (5,433) (3,731) (3,099) (2,320) (4,038) (5,441) (5,964) (1,968) (1,966) (33,960) Zurich Daños 19 (437) (109) (165) (485) (420) (742) (305) (280) (2,923) Mapfre México (154) (247) (1) 42 43 (79) (495) 2 (32) (921) Atlas 167 23 223 39 96 (10) (129) (188) (32) 187 ANA (23) (3) 6 (2) (2) (43) (30) 33 23 (41) General de Seguros 66 (5) (126) 37 47 (83) (317) (189) (52) (621) El Potosi 3 (9) (9) (9) 11 (17) 123 10 (10) 93 Medium 78 (678) (16) (58) (291) (651) (1,590) (638) (382) (4,227) Other (1,260) (2,778) 168 (640) 3,054 3,855 2,876 5,493 3,398 14,165 Total Market (6,616) (7,186) (2,947) (3,019) (1,275) (2,237) (4,678) 2,887 1,050 (24,021)

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Operating Result – All Business Lines

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SLIDE 15

Source: AMIS; June 2017 figures are the latest available 15

2009 2010 2011 2012 2013 2014 2015 2016 1H17 Total Total Quálitas 226 392 833 1,254 840 680 619 1,246 699 6,789 Quálitas 6,789 G.N.P. (10) (209) 11 69 356 186 102 188 (58) 636 Other 10,811 ABA 48 316 842 819 845 567 304 592 361 4,695 Bank-owned 20,313 AXA Seguros (372) 333 472 651 44 188 (163) 381 742 2,276 Total 37,913 HDI Seguros 26 12 24 53 113 180 27 175 110 720 Top 5 (82) 845 2,182 2,846 2,198 1,801 889 2,583 1,854 15,115 Zurich Daños 182 (76) 27 230 131 39 (165) 173 (163) 378 Mapfre México 179 (3) 91 187 109 78 (50) (418) (54) 120 Atlas 144 153 151 245 211 143 58 169 94 1,369 ANA 5 14 32 20 19 (16) 21 31 29 156 General de Seguros 115 50 114 207 39 34 (40) 100 164 783 El Potosí 2 (9) 17 20 11 (5) 31 56 34 157 Medium 627 130 433 909 520 274 (144) 110 105 2,963 Other (22) (196) 57 209 56 (197) (301) (207) 121 (479) Bank-owned 1,429 1,701 2,198 2,903 3,237 2,628 2,121 3,103 995 20,313 Total Market 1,952 2,479 4,869 6,866 6,011 4,506 2,566 5,588 3,076 37,913

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Net Result – Automobile Segment

Source: AMIS; June 2017 figures are the latest available Figures in million pesos. Q MX figures

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SLIDE 16

Source: AMIS; June 2017 figures are the latest available 16

2009 2010 2011 2012 2013 2014 2015 2016 1H17 Total Total Quálitas 246 415 835 1,256 841 682 621 1,248 699 6,841 Quálitas 6,841 G.N.P. 1,001 691 701 663 790 223 169 2,126 800 7,164 Other 171,864 ABA 399 303 875 854 796 478 340 807 428 5,282 Total 178,705 AXA Seguros 418 26 413 622 (328) 358 319 860 717 3,405 HDI Seguros 41 41 38 96 174 173 106 241 77 987 Top 5 2,106 1,476 2,861 3,491 2,273 1,915 1,555 5,281 2,721 23,679 Zurich Daños 156 (208) 53 52 (174) (173) (487) (142) (241) (1,165) Mapfre México 114 119 177 198 323 246 (110) 673 146 1,885 Atlas 363 272 285 344 274 237 139 294 225 2,434 ANA 5 14 32 20 19 (16) 21 31 29 156 General de Seguros 375 163 46 431 77 81 282 252 455 2,161 El Potosí 16 14 17 16 10 16 92 37 16 234 Medium 1,029 375 609 1,061 530 391 (63) 1,145 629 6,870 Other 10,096 10,538 13,522 15,530 17,035 19,705 17,028 28,526 17,340 148,156 Total Market 13,232 12,389 16,993 20,082 19,839 22,010 18,519 34,952 20,690 178,705

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Net Result – All Business Lines

Source: AMIS; June 2017 figures are the latest available Figures in million pesos. Q MX figures

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Claims Combined Acquisition Operating

Source: AMIS, latest available figures as of June 2017 *Refers to Mexican Auto Insurance Industry

Q vs. Industry – Cost Ratios

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Reserves Booking Process & Experience

1. Policy sale 2. Car accident 3. Claims attention & initial reserve 4. Budget submission 5. Valuation 6. Payment & reserves adjustments 7. Comprehensive Service Survey 1 2 3 4 5 6 7

3 weeks

Timely & accurate cost booking = Positive adjustment in reserves Less capital requirements

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Investment Portfolio

1 Discounts and Re-discounts are included in the Balance Sheet in the Loans Portfolio item 2 Overnight premiums are included in the Income Statament in the others line

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Strategy 9M17

  • Fixed Income (76% of total portfolio)

Focus on short-term and variable rate bonds

  • Equities (21% of total portfolio)

Focus on small & mid Mexican caps Internal limit of 35%

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1

Invested Assets End 9M17 MXN m Securities 22,925 Overnight

471

Cash and Cash Equivalents 659 Discounts and Re-discounts 427 Total 24,368 Average Invested Assets 22,622 Investments 707 Sale of Investments 614 Valuation of Investments 396

  • Loan Interests

32 Foreign Exchange Rate Fluctuation 26

  • Overnight Premiums

188 Total 1,116 Return on Investments 6.6% Investment Income

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Investment Portfolio

Average Invested Assets, float, MXN bn

CAGR: 22.9%

Return on Investments, %

1 28 – Day Treasury issued by Mexican Federal Government

Mexico’s Interest Rate

Quálitas investment portfolio is continously growing and directly benefits from interest rate’s hikes

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1

Source: Banxico

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Cash & Investments per Share** Dividend Payments**

*CAGR: Compound Annual Growth Rate **Mexican pesos

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$0.30

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Profitability

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*CAGR: Compound Annual Growth Rate **Mexican pesos

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Figures in million pesos

Q LTM ROE

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Profitability

Leverage 4.59 4.84 5.78

5.86

Stockholders' Equity 4,368 4,972 6,077

6,923

15.4% 12.1% 23.5% 17.4% 14 15 16 sep-17

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Dividend Policy

Q aims to maintain a minimum stockholders’ equity of 1.5 times the regulatory capital requirement. Between 50% and 90% of the surplus will be distributed as a dividend, depending on the Company’s capital requirements for future projects.

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Figures in million pesos.

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Solvency Margin

2014 2015 2016 9M17 Target capital (1.5x) 4,569 5,218 4,726 4,786 Excess over target (380) (494) 685 1,463 Dividend payments 225 270

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Analyst Coverage

Institution Analyst E-mail Target Price Recommendation Actinver Enrique Mendoza emendoza@actinver.com.mx 36.0 MXN Buy BBVA Research Rodrigo Ortega r.ortega@bbva.com 34.9 MXN Buy Grupo Bursátil Mexicano Luis Willard lrwillard@gbm.com.mx

  • Interacciones

Martín Hernández mhernandezo@interacciones.com 37.0 MXN Buy Merrill Lynch Ernesto Gabilondo ernesto.gabilondo@baml.com 43.0 MXN Buy Nau Securities Iñigo Vega inigovega@nau-securities.com 34.4 MXN Buy Signum Research Armando Rodríguez armando.rodriguez@signumresearch.com 37.3 MXN Buy Ve por Más José María Flores jfloresb@vepormas.com

  • 24
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Calendar & Contacts

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Calendar IR Contacts

Mariana Fernández T: + 52 55 1555 6103 mfernandez@qualitas.com.mx Mónica Pérez Diez T: + 52 55 1555 6316 monperez@qualitas.com.mx Andreina Incandela T: + 52 55 1555 6104 aincandela@qualitas.com.mx

qinversionistas.qualitas.com.mx October 6 Non-deal Roadshow Confirmed Boston 19 3Q Results Confirmed

  • 20

Webcast Confirmed

  • 30 - 31

Non-deal Roadshow Confirmed London November 1 - 2 Non-deal Roadshow Confirmed Edinburgh & Stockholm 22 Non-deal Roadshow To be confirmed Paris 23 Non-deal Roadshow To be confirmed Frankfurt 24 Latibex Forum Confirmed Madrid

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We invite you to read our Consolidated Annual Report 2016 for more information Scan the QR code

Annual Report 2016

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Notes

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