Qualitas Controladora SAB de CV

BMV:Q

Earnings Call Transcript 2020-Q1

[Operator]

Good morning, and welcome to the Quálitas first quarter results webcast. Quálitas team will review first quarter financial performance, impacts of COVID-19, a general overview of the insurance sector, prospective on the business, among other relevant topics and answer any questions that you may have. If you have trouble visualizing the presentation, you can also find this document in the Quálitas IR website. If you continue with such trouble, please contact Violeta Ruiz. Her contact information is being currently displayed.

Information discussed on today's call may include forward-looking statements regarding the company's results and prospectives, which are subject to risks and uncertainties. Actual results may differ materially from what is discussed here today. The company cautions to not place undue reliance on these forward-looking statements. Quálitas undertakes no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

I'd now like to turn the call over to your host, Quálitas' CEO, Jose Antonio Correa.

[Jose Correa Etchegaray, executive]

Good morning, everyone, and thank you for joining us today. In this occasion, and before discussing business specifics, I would like to take a few moments to remember Wilfrido Castillo Sanchez-Mejorada, who, as you all know, passed away a few weeks ago. Wilfrido was one of Quálitas founders, a great leader and an extraordinary man who was instrumental in the development, growth and success of the company. It is a great loss, but be certain that his legacy will prevail along with countless memories and his great example. Many of you had the privilege of knowing him. Thus, I'll ask that you briefly take a moment in his memory.

Thank you, all. And now Bernardo will take over to discuss our first quarter results. Bernardo, please.

[Bernardo Salas, executive]

Thank you, Jose Antonio, and good morning, everyone. We acknowledge we're living challenging times across the world and certainly here in Mexico. We truly hope you and the ones you care for are healthy, and together, we see better times soon.

It is during times of uncertainty and volatility that we must maintain a close and ongoing communications with our key stakeholders, including our investors and analysts to share and discuss business situation along with the actions we're taking to overcome this unprecedented crisis. I would, therefore, start by sharing our -- first quarter results, along with key drivers and highlights, and then Jose Antonio will discuss the impact of the COVID-19, the economic crisis and plans being implemented to ensure Quálitas not only gets through the crisis but comes out well positioned for the future. At the end of the call, as always, we will leave some time for question and answers.

As we started 2020, we were motivated by our strong performance last year, setting new records across all key metrics and delivering a profit that was well ahead of expectations. Today, I am glad to share that once again, we proved our ability to create value even in a challenging environment, posting a very strong first quarter, both top and bottom line. JFM results were ahead of expectations despite early signs of economic slowdown and equity market downturn. It is important to note that the quarterly shape we anticipated for 2020 did consider a stronger first quarter and a stronger first half due to inertia we carried from last year, this top line result on the same period a year ago and the fact that some of the price decreases we have taken will be fully reflected by the late second quarter.

During the first quarter, our written premiums grew 14.5% versus same period year ago, which was driven by an 8.8% growth through our traditional segment and a recovery of 22% through our financial institutions channel, despite new car sales decrease. Earned premiums grew 16.2% in the quarter. This is the highest top line growth rate since early 2017.

Premiums growth resulted from an increase of the number of insured units, ending the quarter with 4.3 million, which represents around 99,000 more vehicles or 2.3% growth versus December 2019. I would like to highlight that as we look at the auto insurance industry, during 2019, auto market premiums were up 5%. And considering that new car sales were down 8% and pricing was stable, we can imply that up to then, car insurance penetration was increasing, which is great news for the industry overall and certainly for Quálitas.

Underwriting results for the first quarter reached MXN 1,817 million, up 90% versus same period year ago. These results were driven by the lower loss ratio in a decade already reflecting the early effect of COVID-19 on the March loss ratio, which helped the quarterly average. In addition to this, we maintained a stable below-industry average operating and acquisition cost with 5.9% and 22.4% ratio, respectively. I will expand on this later on.

The comprehensive financial income for the quarter was MXN 59 million, which is lower to our expectations and 91% below year ago. It is important to remind that the end of -- that at the end of 2019, our investment portfolio was [ 15% ], 86% fixed income and 14% equity, reflecting the outcome of our decision towards a more conservative approach, considering that about 3 years ago, we held over 24% of equity.

While the global equity market collapse did impact us, the fact that we maintain a positive yield reassures Quálitas is a reliable company that provides stability despite headwind. By the end of the first quarter, we had approximately MXN 32,000 million in investment, up 8.3% versus last year, which should continue benefiting our business from what is a still attractive rate in Mexico and what we hope will be a broader recovery of our investments happening.

The resulting net income for the quarter stands at MXN 1,440 million, up 20.4% or MXN 244 million versus what we reported in first quarter 2019. This quarterly profit is the second highest ever, and it happens in a time of global turmoil, a reason we celebrate it even more.

The cumulative income per share stands at MXN 13.1 that compares to MXN 12.6 last quarter. All in all, our net margin for the period was 15%, that compares against the 14.3% reported in the first quarter 2019. This results in a 12-month return on equity of 43.8%, well above our updated mid- and long-term goal.

As I mentioned earlier, these results partially reflect the impacts of COVID-19 situation, that is and will continue to affect our business directly and indirectly. Therefore, before moving into the P&L specifics, I would like to give you some color on the landscape and relevant matters impacting auto insurance industry and thus our results.

First, as you are well aware, new car sales in Mexico have been falling for almost 3 consecutive years now. In the first quarter, they were down 10.9%, affected by the March decline of 25.5%. Earlier in the year, we have shared our expectations of 2020 being the year where we saw new car sales stabilize. However, given the circumstances and while impossible to predict, we should assume a double-digit decline, which will impact our top line for the balance of the year.

Second, on car theft. I'm happy to share that we continue to see a positive trend during this first quarter of the year. The industry reported a 16% decrease, and for Quálitas, this reduction was higher, with robberies down 19.3%. Finally, during this quarter, Mexico Central Bank followed the global trend and decreased the benchmark interest rates in 15 basis points. It closed the quarter at 6.5%. These reductions were consistent to our expectations, and we continue to assess adjustment to our investment portfolio to maximize profitability.

I'll now go back to the financials for the detail in our top key -- our top line and key cost metrics. Regarding the written premiums, and as I said before, we had a growth of 14.5% in the quarter. Growth was broad-based with all business lines above same period a year ago. We're noting a low comparable base during the first quarter of 2019, where we had a 7.3% contraction of our top line. Our traditional segment, which incorporates individual policies and fleets, increased 8.8%. Our financial institutions business, which are new car sales sold through credit, was up 23%.

Let me elaborate on the latter. As you may recall, during early 2019, we decided to adjust prices on the financial institution channel, prioritizing value over volume, which led to a very soft start, down 26% during that first quarter, but recovered along the year with a second half of 2019 up 8%. JFM quarter is consistent to that trend that we were seeing towards the end of last year. Financial institutions currently make up for approximately 1/3 of our premium.

Regarding our annual and multi-annual policies, our portfolio continues to reflect the actions we have taken over the past month. By the end of the quarter, our portfolio had a mix of 78.4% annual and 21.6% multi-annual policies, slightly up versus last year, but significantly below historic average.

Moving now to cost. We continued to honor one of the main foundations of this company, which is cost control. In JFM, our combined ratio was 80.2%, the lowest one since Quálitas was founded. The adjusted combined ratio, which is the ratio that meets international standards, ended the quarter in 80.6%, that gets us to a very strong underwriting margin of 19.4%.

The results above were propelled by a loss ratio of 51.9% for the quarter that compares to 60.9% of the last year. This loss ratio was driven by a decrease in robberies in the quarter and important reduction of claims during the second half of March, when quarantine measures were put in place resulting into a significant reduction of vehicles on the road.

It is also worth to recognize the impact of our continuous effort in risk prevention and operational efficiency. We illustrate Quálitas recovery of stolen units was 52.5%, up from last year and 7.5 percentage points higher than the industry average, explained by the efforts of the combination of technology, expertise and dedicated people.

Moving to acquisition ratio. We closed the quarter at 22.4%, basically in line with last year's, an increase of 23 basis points versus first quarter of 2019, led the growth of underwriting through financial institutions, which carry a higher acquisition cost.

Finally, on operating ratio, we closed at 5.9% for the quarter, an increase of 178 basis points when compared to same period a year ago. Most of the increase is explained by the employee profit sharing, which is linked to the business performance and the $185 million onetime benefit we had last year. If we were to exclude this effect, operating expenses would have been $25 million below year ago.

It is important to highlight that Quálitas has built a model in which most of its costs are variable and linked to business performance, mainly premium and loss ratio. During 2019, our fixed cost spending, which includes salaries and benefits, was in the range of 4% to 6%, well below most industry.

Now we will review the capital requirements and the consolidated solvency margin. The regulatory capital requirement totaled MXN 2.7 billion at the end of the first quarter. As always, we will continue to apply our internal policy of having 1.5x the regulatory capital requirements for any unexpected situation. By the end of the quarter, the solvency margin was MXN 11.5 billion that represents a percentage of solvency margin of 5.26%, (sic) [ 526% ] which is the highest ever.

As a result of the 2019 results and the solid financial position of the company, the General Shareholders' Meeting held this past Monday, April 20, approved a dividend payment of MXN 1.7 per share that equals MXN 722 million, and a share buyback fund of MXN 1,400 million.

Let me reassure everyone, as demonstrated by this quarter's solvency margin position, that Quálitas has and will continue to manage a conservative position on its use of cash to guarantee not only its obligations but also capitalize opportunities with an interesting financial return, if they were to come.

Moving on to our stock performance. During this first quarter, our stock was not exception and was hit by market volatility. It closed at a low point of MXN 60.9, down 23%, but still 28% ahead of the same period year ago. It has recovered since, and just yesterday, it closed at MXN 76.89 which is just shy of our 2019 close. In terms of stock liquidity, the daily average traded amount during the quarter was USD 2.8 million, which represents 3x the average of the same period in 2019.

Regarding our cumulative financial ratio, earnings per share stands at MXN 13.1, which reflects a 93% increase year-over-year. Price to earnings stands at 4.6, well below other public insurance companies and our book value stands now at 1.7.

And now one of the biggest highlights, as I'm very pleased to inform you that on April 8, Standard & Poor's announced the final rebalance of the Standard & Poor's IPC Index, in which Quálitas was added effective April 27. This sums years of work and efforts that we're increasing the market value and our stock liquidity. We celebrate the news, thanking all of you who have supported us to make this possible. I'm confident this will boost the exposure of the company, reaching new investors, funds and fueling future growth.

Before I hand it over to Jose Antonio, let me share that in our never-ending journey of continuous improvement and becoming a world-class organization, just a few days ago, Alejandro Elizondo joined Quálitas as Chief Investment Officer. Alejandro has more than 20 years of portfolio management experience, having led the investments groups in major insurance companies in Mexico in recent years. Alejandro, together with the investment committee, will be leading our investment portfolio and team. While still -- it will still be a bumpy road ahead, but it is this challenging times that brings the best of us.

Jose Antonio will now take us to discuss about the future and actions we're taking.

[Jose Correa Etchegaray, executive]

Thank you, Bernardo. As you have mentioned, we are living challenging times, unprecedented series of events that will impact every individual and corporation across the world and certainly in the countries that we operate. But as the saying goes, every crisis has with it a solution, an expiration date and a teaching for your life, and this will be no exception.

It was on March 11 that the coronavirus health problem was declared a pandemic. Since then, we have seen lots of uncertainty and volatility around the globe. Oil prices have fallen to historically low level, markets had their worst performance in decade, the peso depreciated close to 25% against the dollar, rating agencies downgrade the sovereign rating as well as PEMEX. And analysts expect the Mexico's GDP to decrease between 2% and 8% this year. All of this will represent important headwinds for most industries across the country.

Our industry, in particular, our company, while not exempted, is better positioned to face some of the biggest concerns of this crisis. And let me explain a few of them. On liquidity and access to cash, Quálitas have 0 debt and reserve that more than covered liability. As noted by Bernardo, at the end of the first quarter, our solvency margin is MXN 11.5 billion, highest number ever, which means we have MXN 9.4 billion of cash above capital requirement.

One of the other major concerns of this crisis is collections. And in our business, we also faced a lower risk of uncollectible or bad debt, since the policy that is not paid in the agreed timing, usually 14 days, is canceled eliminating as well as the liability.

The quarantine implies less vehicles on the road so fewer accidents and claims. We have already seen claims reduce between 40% and 50%, and this will certainly be reflected on our second quarter cost ratio. This crisis comes at the time in which Quálitas is at its best. We are coming out of a record year and posting an outstanding first quarter. We are stronger than ever from a financial market and organizational point of view. And our actions over the past couple of years have also reduced our exposure, such as the case of our multi-annual versus annual policy, which went from 55% in 2015 down to 21% last year and the reduction of our equity portfolio from 24% to 13%.

Now despite the mentioned strengths, we recognize that we will be directly impacted by the following key factors. First, due to the economic slowdown and the operational restrictions, we expect new car sales to fall drastically during the year, which will affect our top line, especially through our financial institutions channel. In addition, we expect budget constraints for some of our clients and policyholders that will impact our underwriting as well.

Second, the Mexican peso depreciation will affect our total cost around the quarter, mostly related to spare parts. It's important and possibly most likely increase proportionate to devaluation. And third, history shows that not only in Mexico, but across the world, economic crisis leads to unemployment, which results in security erosion. In our case, we could see an increase of cars and truck robberies that could shiv the positive trend over the past 15 months.

Finally, the decrease of the benchmark interest rate currently at 6% and already 175 basis points below last year, will have an impact in the yield of our fixed income. But you know us, and you know we are not standing still. We have moved quickly and aggressively taken actions towards mitigating some of the above-mentioned impact.

I will summarize on 5 concise elements. One, take care of our people so they can take care of business. We took all the necessary precautions to protect our employees from being exposed to the virus. And in parallel, we also executed our business continuity plans to secure operation without any interruption. As long as there are vehicles on the road, we will be there to support them. My recognition goes to everyone who has made it possible as we continue to serve policyholders and masses, to timely complied with all payments and obligations and to disclose to our investors.

Two, support our customers. We implemented a 10% additional discount on top of several reduced prices for our new renewals during mid-March and until the end of May. We have also provided payment flexibility and interest-free installments. And for key customers, we have extended grace periods when needed.

On service, we have expanded the use of technological innovation tools in the case of an accident, such as the use of express claims, where under certain circumstances, we exclude the need of a claim officer making it faster and avoiding interaction, which reported 7% of the claims that we listed compared with low 1% to 2% during 2019. We believe we can double the claims to release -- sorry, the further claims to release there.

Number three, eliminate nonessential spending. We have gone over all major spending lines making choices. For example, on payroll. While we will not make any major personnel cuts, we have canceled all salary increases this year including inflation adjustments. We have also gone under hiring freeze. The elimination of all travel, meeting and events will contribute as well to reduce spending.

Fourth, crisis always brings opportunities. And while we are not actively pursuing M&A, we know that given the circumstances, they are likely to come. We are always open to listen to profitable business that fit our strategy and winning model.

And finally, act on social responsibility. We will maintain and increase our support to projects that improve the lives of those around us. It is in situations like these when this becomes the priority taking care of our own and those that use us.

In summary, the short and medium-term landscape presents a number of uncertainties and is challenging. But our business is strong, it's healthy, and we are taking the necessary actions that will allow us to once again rise to the occasion as a company that creates value to stakeholders -- to all its stakeholders. We are living extraordinary times, and you can be certain Quálitas is stepping up to the occasion by being true to the principles that have guided us, the excellence in service and stricter controls.

And with that, let's please open the line for questions. Operator, please.

[Operator]

[Operator Instructions] Our first question comes from the line of Ernesto Gabilondo with Bank of America.

[Ernesto María Gabilondo Márquez, analyst]

My condolences for the loss of Wilfrido Castillo. And congratulations on your results. I have 3 questions from my side. The first one is on your expected premium growth. We have seen a good quarter indeed, but given the lockdown and the economic activity, how do you see the trends for premiums growth in the coming quarters? Then my second question is on your loss ratio. With the lockdown, we have seen it has helped to reduce the cars in the streets. However, how do you see this loss ratio behaving in the next quarters? And what could be the impacts in your...

[Bernardo Salas, executive]

Ernesto, I'm sorry, we don't have -- the communication doesn't seem to be very well. Can you repeat the second question, please?

[Ernesto María Gabilondo Márquez, analyst]

Yes. The second question is related to your claims loss ratio. We have seen the lockdown has helped to reduce the cars in the streets. However, how do you see this claims ratio behaving in the next quarters? And what could be the impacts in your claims ratio given the peso depreciation?

And finally, my last question is on your financial results. We saw the impacts of lower rates and the equities position affecting the results. But how do you see the future yield for this line? Should it be more close to [ set this]? Or any guidance that you can provide will be very helpful.

[Bernardo Salas, executive]

Ernesto, thank you. And let me address some of the points and Jose Antonio may confirm this as needed. The premiums growth, we know that new car sales for the year will likely continue to decline at least for the second quarter. So we need to assume that growing top line will be quite a challenge during this year. We expect double-digit declines at the end of the year on these new car sales. And therefore, we will need to further prioritize the underwriting to our more than 15,000 agents. I think we have been quite successful over the past quarters on growing that traditional segment, and that will continue to be our priority. Now having said that, I don't think this will be a year in which we will grow top line.

And our loss ratio, we saw, with the start of the lockdown or quarantine effect in this -- the second half of March, we're seeing early results in April. I think we can continue to expect this trend to continue at least during May, that -- the lockdown has -- has it been extended? As Jose Antonio alluded, we're seeing the number of claims going down between 40% and 50%. But we expect, during the second half, to start seeing going back to normal. And that claim costs are going to be likely higher during -- because of the devaluation we mentioned and we're seeing. And therefore, we should expect that throughout the year, we end up somewhere in the expected range at the beginning of the year. As I said, our first quarter was down. We expect this trend to continue for the second quarter and then to balance in the second half, as we also start taking some of the prices up to reflect devaluation adjustment.

And to the last point on financial returns and equity exposure, as we mentioned, we were impacted by the decrease on equities, the global equities, mostly in the Mexican, which we have also mentioned that we are mostly invested in Mexican equity. We do believe that in cooperation with Alejandro Elizondo, our team will help us identify the opportunities. And together with investment committee, we will be assessing rebalancing of our fixed and variable income. We're seeking to maximize our return while always keeping a conservative approach. And I think this last piece is important because while we know that everyone expects a rebound, we will not do any radical changes in our investment strategy, while we will continue to look for opportunities. So we should expect the market to stabilize during the year. And I think it's realistic to expect our return on investments to be slightly ahead of the reference rate from now on.

[Operator]

Our next question comes from the line of Martín Lara with Miranda Global Research.

[Martín Lara, analyst]

Congratulations for the very strong results. I only have one question. Are you going to change the guidance for the year? Or you are keeping the same numbers?

[Jose Correa Etchegaray, executive]

Yes, thank you for the question. Let me tell you that, I guess, as you see and see the reports to every company, at this point, this is really, really hard to predict when things will stabilize. Also, it is difficult to predict the speed of the recovery. I think that the focus for us is to manage the situation, and we will update probably guidance once the dust settles.

However, I can tell you that we have run several scenarios, assuming market recovery in no more than 2 or 3 quarters. And we have been able, in our scenarios, to maintain a profitable business with a healthy position, and certainly, with our ROE within our long-term target, and this is very, very important. So again, the crisis now that we are living all in the globe now comes in at a time when Quálitas is at its best. Certainly, we are confident that we will come out well positioned for the recovery. Remember that, in Quálitas, one of the things that we have always did is that we have been very flexible, and our business model allows us to be very, very responsive in the situation.

[Operator]

[Operator Instructions]

[Bernardo Salas, executive]

In the meantime, let us take one of the questions that came through in the line.

[Foreign Language]

I think we've kind of addressed that question, which is similar to Ernesto's. Let me do mention that the growth, specifically on the new -- on the financial institutions for the quarter, while it's 22% above 2019, it's still 10% down versus 2018 first quarter. Therefore, again, it is more -- the continued stabilization of that business we're seeing in the second half of 2019, that had major increase or change in position in that segment.

To the specific question, we do not expect double-digit top line growth to continue for the balance of the year.

[Jose Correa Etchegaray, executive]

Now there's another one here that we have on the screen that says [Foreign Language] -- sorry, good morning and congratulations for the results. I have 2 questions. The first one is, what you're expecting for the second half of the year, specifically for written premiums? And the second question is, are you planning to change the strategy in investment portfolio?

Well, I believe that somehow Bernardo already answered the first one. Clearly, I would like to stress the fact that we are prepared to be flexible and also to expect that regardless of what happens to the premiums in the second half, we expect that we will have also a reduction in the claims ratio, which is also important.

Now regarding the second question, which is -- no, we are not planning to change the strategy in the investment portfolio, certainly. We are going to maximize the income and we are going to be fixing income, and we are not going to be playing around with the portfolio. We will remain to be a conservative company, and we expect better returns in the second semester.

[Bernardo Salas, executive]

Just to complement on Jose Antonio because there's a further question on the portfolio. As of the end of the first quarter, we have 12% on equity, both because of the decline on the value of the equity and also because we were already getting rid or getting out of some of the investments that we did not believe fitted our long-term strategy. So we have 88% fixed, 12% equity. Now within the fixed, we have around 40% of the government investments, which are risk-free, let's say, and then we have also private funds. We do not hold any paper from PEMEX because that was also one of the things that some analysts have questioned us. We do not have it within our portfolio of any kind of investments. Therefore, the downgrade of the institution doesn't affect us at all. So I wanted to provide that additional prospect.

[Jose Correa Etchegaray, executive]

There's another one by Enrique Mendoza. [Foreign Language]

Well, what I would like to say about payment terms is that, Quálitas would have been -- in terms of the market, we have had a stronger guidelines that the law recognizes in the past. I mean -- so here, really, the program is only to recognize some of the things that are happening in the environment, in the local environment. And I think it is something that is good. But let me tell you that we have been doing that even before the program that went into effect -- the program that was launched by the regulator here. So far, we don't expect any major impacts. And as we mentioned earlier, this is being limited to the time in which the pandemic crisis is. So I would expect this only to be for the timing from -- we have officially said until May -- until the end of May, and very likely, the start of the summer to achieve something that -- it will depend how the pandemic really develops in Mexico.

So I don't see really something much more different than what we have been doing.

[Bernardo Salas, executive]

All right. Next question is from -- comes from [ Mana kali. ] Could you give us some color regarding your investment portfolio? And within corporate debt, which sectors is quite mostly exposed to? And in particular, how much of the portfolio is invested in banks and financial institutions?

I think we kind of touched that. We only invest in AAA bonds. So that's more than the sector itself. It's more the quality of the bonds. And also we only have AAA bonds. And then on the banks and financial institutions, we have around 15% of our portfolio invested in bonds and cash. Okay. So I think that balance us.

[Jose Correa Etchegaray, executive]

The following question is, we have some U.S. auto insurance companies providing premium discounts for individual customers during this time of pandemic, given lack of cars driven on the road. Would you be doing the something similar?

Let me take on that one. And certainly, we have seen that insurance companies are giving back some money due to that. Let me tell you that we are doing so as well, and we have been dividing the pie. And we have -- and we announced in mid-March additional discounts and also some payments -- arrangements to our customers. So yes, the answer is yes, we have done that. And we are -- we have indicated that for 2 or 3 months until the pandemic lasts. So yes, we are taking similar approach. I guess it's a different execution, but similar approach as some U.S. insurers have done in the U.S.

[Bernardo Salas, executive]

To complement, we're -- in the U.S., we're doing actually 15% rebate for key accounts, while in Mexico we're taking a less aggressive approach because we do need to keep in mind the devaluation. So while today we're seeing a lower claim ratio and loss ratio, we need to account that, in the upcoming months, we will see surplus which make up for 25% to 30% of our claims costs going up. So we're ensuring we remain competitive but also responsible.

[Jose Correa Etchegaray, executive]

Okay. Next question comes from [indiscernible]. For the claims ratio in the first quarter, it didn't really benefit much from the lockdown since it only started at the end of March. Secondly, we're seeing a rise in crime in Mexico over the past few weeks as the economy deteriorate. Are you concerned about the rise in car thefts during this period of time?

[Bernardo Salas, executive]

Well, yes. Yes to both. First, on the claim ratio for the first quarter. Yes, it only incorporates the second half of March, at the beginning of the quarantine and lockdown. So we did have a strong January and February. And that, as I alluded to in my remarks, comes from the inertia we had from last year. So we expected this trend to be in place for the first quarter and second quarter, and then that's likely going to revert given all the price decreases that we did late in the 2019 year, and then obviously, in the devaluation which I mentioned.

Now the rise in crime will come. We're starting to see early signs of that happening. It is unfortunately, but it's also something that comes along every financial crisis. So we need to assume that robberies which we were seeing down -- a trend down, will stabilize, if not revert towards up. As we always do, we incorporate technology. We're doing everything we can in terms of [ wondering ] with suppliers to recuperate costs and recover them faster and in a higher percentage. So I think we will continue to stand against the industry on that regard.

[Jose Correa Etchegaray, executive]

Another one by [ Ben Hart ]. Can you comment on the recent increase in multi-annual policy mix? So let me take on that one briefly. It has -- I believe it has already been talked, but let me say that as Bernardo indicated, yes, we have -- remember that we were at 55% on multi-annual few years back, and we are now 22%. So that's really a major change in the positive.

So in the end, the important thing is that, over the past 3 years, we really did have the right price profitability equation in this side, in the multi-annual policy. So yes, we have seen some increase on it. That it is well below what we had a few years back. But in any event, it is being in a profitable mode. Clearly, we will have to be conscious, and we will have to take actions whenever they are needed to maintain the pricing right, to make sure that we price for the risk that we are covering.

I think that was the last question. Is there anyone else on the line that would like to post any questions?

All right. If not, I think this will conclude our call. Thank you again, everyone. Stay safe. And if there were to be any additional follow-up items, as always, we're open to discussing off-line. Thank you very much.

[Bernardo Salas, executive]

Thank you all. Bye now.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.