Qualitas Controladora S.a.b. De C.v. · BMV:Q
Qualitas Controladora S.a.b. De C.v — Investor Day (November 2017)
30 slides from Qualitas Controladora S.a.b. De C.v's investor day presentation, Nov 6, 2017
Slide 1: Analysts' Breakfast
Analysts’ November 6th, 2017 Breakfast 1
Slide 2: Quálitas in 2034
Quálitas in 2034… (when Q turns 40 years old in the Mexican market) 2 2
Slide 3: Mexico's Forecast
Mexico’s Forecast • Population • Automobiles per person • Registered vehicles • Insured vehicles • Qualitas’ market share in Mexico 3 Source: Quálitas estimates 3
Slide 4: Population
Population 2014: 117 million 2034: +147 million 4 Source: Quálitas estimates 4
Slide 5: Automobiles per person
Automobiles per person 2014: 0.25 auto per person 2034: 0.50 auto per person 5 Source: Quálitas estimates 5
Slide 6: Registered Vehicles
Registered Vehicles 2014: 30 million 2034: +70 million 6 Source: Quálitas estimates 6
Slide 7: Penetration / Insured Vehicles
Penetration / Insured Vehicles 2014: 28% / 10 million 2034: 60% / 42 million 7 Source: Quálitas estimates 7
Slide 8: Quálitas market share / Q insured units
Qualitas’market share / Q insured units 2014: 24.9% / 2.5 million 2034: 27.5% / 11.5 million 8 Source: Quálitas estimates 8
Slide 9: Premiums 2034
Premiums 2034 $100.5 billion pesos 9 Source: Quálitas estimates 9
Slide 10: The drivers of success 1994-2017
The drivers of success 1994-2017 Service excellence Cost control 10 10
Slide 11: Quálitas Mexico
Quálitas Mexico 11 11
Slide 12: The competition – market share
The competition – market share 2009 2010 2011 2012 2013 2014 2015 2016 6M17 Quálitas 18.9 19.6 20.1 21.5 22.5 24.9 25.3 31.5 32.2 G.N.P. 12.8 12.4 11.1 12.3 12.4 12.5 14.3 12.7 12.3 ABA 18.1 17.4 18.6 18.1 16.5 14.0 12.1 10.9 8.8 AXA Seguros 8.5 9.5 8.6 7.5 7.8 7.7 7.0 6.8 8.0 HDI Seguros 1.6 1.7 1.
Slide 13: The competition – operating result, automobile segment
The competition– operating result, automobile segment 2009 2010 2011 2012 2013 2014 2015 2016 1H17 Total Quálitas (220) (75) 475 903 484 (93) 48 1,104 184 2,811 G.N.P. (2,050) (1,906) (2,112) (2,508) (2,469) (3,405) (3,553) (1,855) (2,003) (21,860) ABA (106) (150) 482 517 433 70 10 897 337 2,489 AXA
Slide 14: Underwriting and Growth Strategy
Underwritting and Growth Strategy Premiums Segment 9M17 9M16 Δ$ Δ % Breakdown Individual 5,514 4,458 1,057 23.7% 22.8% Fleets 5,997 4,652 1,344 28.9% 24.8% Financial Institutions 10,861 10,416 445 4.3% 44.8% Foreign subsidiaries 1,245 955 289 30.3% 5.1% Other 607 477 130 27.3% 2.5% Total 24,224 20,9
Slide 15: Financial Results
Financial Results 15 15
Slide 16: Growth 2012 – 9M17
Growth 2012 – 9M17 Underwritting Collection CAGR: 19% CAGR : 17% Cash and Investments Integral Financing Result CAGR : 21% CAGR : 14% 16 Figures in million pesos 16
Slide 17: Growth 2012 – 9M17
Growth 2012 – 9M17 2012 2013 2014 2015 2016 9M17 CAGR 12-17 Written Premiums 13,657 15,226 17,340 19,856 30,190 24,224 19% Earned Premiums 12,108 13,558 15,356 17,065 23,825 20,624 18% Integral Financing Result 900 782 1,036 833 826 1,351 15% Investment Income 757 648 917 693 582 1,116 14% Premiums
Slide 18: Claims – cost control measures
Claims – cost control measures Collision Agreements with car agencies and repair shops Use of generic replacements Certified repair shops Third Party Liability Fast negotiation to avoid trials Variable compensation to lawyers Total Theft Physical Inspection Tracking devices – radio frequency Medical
Slide 19: Investment Portfolio
Investment Portfolio Invested Assets End 9M17 MXN m Securities 22,925 Overnight 471 Cash and Cash Equivalents 659 Discounts and Re-discounts 1 427 Total 24,368 Average Invested Assets 22,622 Investment Income Investments 707 Sale of Investments 614 Strategy 9M17 Valuation of Investments - 396 - Fixe
Slide 20: Investment Portfolio Strategy
Investment Portfolio Strategy DEBT EQUITY Predictability and monthly Return to overcome the Cetes constancy 28 days* Estimated income: 100 MM MXN monthly variable • Variable rate and short term • Long term vision Strategy: • Liquidity position – benefit • Value investors from changes in rates • Less
Slide 21: Cash per Share
Cash per Share Cash & Investments per Share** Dividend Payments** $0.30 $0.30 $0.40 $0.50 $1.50 $0.50 $0.60 $3.80 CAGR: 19.0% CAGR: 16.2% *CAGR: Compound Annual Growth Rate 21 **Figures in Pesos
Slide 22: Solvency II – great benefit for Quálitas
Solvency II – great benefit for Quálitas Reserves release for $752 MM MXN Decrease of capital requirement Discipline continuation for Corporate Governance Greater barrier of entry for new competitors Harder to gain market share 22
Slide 23: Solvency II – great benefit for Quálitas
Solvency II – great benefit for Quálitas Excess 1,463 Objective 1,595 2014 2015 2016 9M17 Leverage P/C 4.6 4.8 5.8 5.9 Objective Capital (1.5x) 4,569 5,218 4,726 4,786 Excess over objective (380) (494) 685 1,463 Dividend payment 225 270 23
Slide 24: Quálitas with a great future ahead
Quálitas with a great future ahead 24 24
Slide 25: Drivers of growth and profitability in the past
Drivers of growth and profitability in the past: • Insure vehicle requirement • Float growth goes hand in hand with emission and financial surcharge • Scale allows fixed costs absorption • Leverage improvement with Solvency II • Increases in interest rates • Capex covered with productive portfolio i
Slide 26: Conclusions
Conclusions In the past Q has proven to be more successful than the competition by combining growth and profitability For the future… 26
Slide 27: The strategy will be:
The strategy will be: UNDERWRITTING • Multi-channel sales to guarantee growth • International CR less to 100% • Specialized rates model with constant adjustments (minimum quarterly) INVESTMENTS • Q´s cash generator – annual growth of 19% in float • High rate environment ( ≈7%) • Priority -> investme
Slide 28: International CR < 100% + ROI ≈ 7% + Leverage ≈ 6x
International CR < 100% + ROI ≈ 7% + Leverage ≈ 6x = ROE 18% - 24% long term sustainable return 28
Slide 29: Q Valuation vs peers
Q Valuation vs peers Principal Valuation Indicators Sep 29, 2017 P/E P/BV ROE Mkt Cap 12M Mill USD GF Interacciones 10.1 1.9 19.6 1,241 Gentera 13.4 2.8 19.3 1,649 Crédito Real 6.9 1.4 18.4 631 Quálitas 12.0 2.0 17.4 747 GF Inbursa 13.4 1.8 16.1 11,095 GF Norte 17.4 2.6 15.8 16,359 Porto Seguro 11.6
Slide 30: Analysts
Analysts Institution Analyst Target Price Recommendation Actinver Enrique Mendoza 36.0 MXN Buy BBVA Research Rodrigo Ortega 34.9 MXN Buy Grupo Bursátil Mexicano Jorge Benitez - - Interacciones Martín Hernández 37.0 MXN Buy Merrill Lynch Ernesto Gabilondo 43.0 MXN Buy Nau Securities Iñigo Vega 34.4 M
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