Slide 1: MAPFRE Investor Day 2017
MAPFRE INVESTORDAY 2017
Slide 2: Disclaimer
Disclaimer This document is purely informative. Its content does not constitute, nor can it be interpreted as, an offer or an invitation to sell, exchange or buy, and it is not binding on the issuer in any way. The information about the plans of the Company, its evolution, its results and its divide
Slide 3: Speakers
01 OPENING REMARKS Speakers Antonio Huertas Fernando Mata Eduardo Pérez de Lema Chairman & CEO CFO & Member of the Board CEO MAPFRE RE Jaime Tamayo Alfredo Castelo Natalia Núñez CEO International CEO North America Head of Investor Relations 3
Slide 4: Agenda
AGENDA 01 OPENING REMARKS Mr. HUERTAS 0 2 C A P I TA L M A N AG E M E N T Mr. MATA 03 REINSURANCE PROGRAM Mr. PÉREZ DE LEMA 0 4 I N T E R N AT I O N A L B U S I N E S S + M A P F R E U S A Mr. TAMAYO + Mr. CASTELO 0 5 C LO S I N G R E M A R K S Mr. HUERTAS
Slide 5: Opening Remarks
01 OPENING Profitable growth strategy Delivering results REMARKS Antonio Huertas
Slide 6: Profitable growth strategy is still in place and delivering results
01 OPENING REMARKS Profitable growth strategy is still in place and delivering results SPAIN NOTABLE RE IMPROVEMENTS PREMIUMS +3.7% PREMIUMS +3.8% PERU (vs. +0.03% for the market) COLOMBIA EARNINGS +39% TURKEY EARNINGS +9.2% Excluding catastrophes ITALY GROWTH ACROSS ALL ON THE ROAD TO RECOVERY LINE
Slide 7: 3Q Catastrophic Events
01 OPENING REMARKS 3Q Catastrophic Events › Occasional impact of natural disasters does not alter the profitable growth strategy › The 176 million net impact estimate announced in September is reaffirmed › Gross impact >€1.1 bn › MAPFRE’s protection measures have proven to be very effective 7
Slide 8: Effective capital management
01 OPENING REMARKS Effective capital management › High quality capital structure and financial flexibility › Successful investment management in a low interest rate environment › Commitment to stable and growing shareholder remuneration › Final dividend against 2017 results to be announced in Februa
Slide 9: U.S.: Moving toward a streamlined geographic presence
01 OPENING REMARKS U.S. : Moving toward a streamlined geographic presence › Reduced geographical footprint to achieve profitable growth. Exit five states: › New York, New Jersey, Kentucky, Tennessee and Indiana › Focus on Core Business (Auto and Homeowner) and digital transformation › Launch of Vert
Slide 10: Restructuring of international operations
01 OPENING REMARKS Restructuring of international operations › INTERNATIONAL AREA: Consolidation of EMEA and APAC regions into new EURASIA region › From Jan. 1st. To streamline operations in Europe and Asia › LATAM NORTH: creation of new subregion with all the Central American and Dominican business
Slide 11: Strategic plan 2016-2018: Focus on profitable growth
01 OPENING REMARKS Strategic plan 2016-2018: Focus on profitable growth Client Digital Excellence Culture and orientation transformation in technical human talent management To September 30th, satisfactory progress 97% of projects was made in executing our strategy 75% of indicators 11
Slide 12: Fulfillment of strategic objectives 2016-2018: Financial Objectives
01 OPENING REMARKS Fulfillment of strategic objectives 2016-2018 Financial Objectives Creation of sustainable shareholder value GROWTH ROE PAYOUT TARGET ≈+5% 11% 50-65% In 2018 CAGR 12
Slide 13: Client Orientation
01 OPENING REMARKS Core strategic objectives 2016-2018 Client Orientation PERCEIVED QUALITY METRIC MARKET SHARE NPS IMPROVEMENT IN THE FIRST HALF WE IN HAVE ALREADY REACHED 54% 65% NON-LIFE BUSINESSES (final target for three year (target 75%) period of 70%) 13
Slide 14: Digital Transformation
01 OPENING REMARKS Core strategic objectives 2016-2018 Digital Transformation INCREASE OF INCREASE OF 19.8% 33% IN DIGITAL TRANSACTIONS IN DIGITAL BUSINESS (target 30%) (cumulative target for three year period of 50%) 14
Slide 15: Excellence in Technical and Operational Management
01 OPENING REMARKS Core strategic objectives 2016-2018 Excellence in Technical and Operational Management GROUP COMBINED EXPENSE RATIO SERVICE PROVIDER RATIO MANAGEMENT 98.7% 28.1% (target <28%) Cost savings: €60m first year 73.6% 96.3% ex-NatCat automated assignments (target 60%) (target<96%) 15
Slide 16: Culture and Talent
01 OPENING REMARKS Core strategic objectives 2016-2018 Culture and Talent SATISFACTION GENDER EQUALITY OCCUPATIONAL AND RATE (2016) (1H 2017) GEOGRAPHIC MOBILITY management 38.8% levels occupied GPTW 72% by women (40%) workforce 10.6% (target>80%) 1.6% people with a disability (2%) annual workforce
Slide 17: Agenda
01 OPENING REMARKS Agenda Value creation in MAPFRE Group Effective capital management Cat risk management within MAPFRE Group Effective protection program Restructuring of International operations & U.S. footprint Optimizing profitability 17
Slide 18: Capital Management
02 CAPITAL Value creation in MAPFRE Group Effective capital management MANAGEMENT Fernando Mata
Slide 19: High quality capital structure and financial flexibility
02 CAPITAL MANAGEMENT High quality capital structure and financial flexibility Capital structure Leverage (%)1 18.1% 16.7% 16.1% SUBORDINATED BANK DEBT FINANCING 5% 6% SENIOR DEBT 09.30.2016 12.31.2016 09.30.2017 7% € 13.2 Solvency II ratio billion EQUITY 197% 210% 192%2 189% 82% 9,616 8,502 8,810 8
Slide 20: Growing equity base, underpinned by resilient earnings growth
02 CAPITAL MANAGEMENT Growing equity base, underpinned by resilient earnings growth and market volatility management CAGR 2012-16 YTD +4.0% -3.8% 9,153 9,127 8,574 8,781 7,810 7,833 12M 2012 12M 2013 12M 2014 12M 2015 12M 2016 9M 2017 YTD +€17 mn 881 628 651 -€526 mn 668 57 219 -199 -780 -636 -924 -
Slide 21: Changes in currency conversion differences (2017 YTD)
02 CAPITAL MANAGEMENT Changes in currency conversion differences (2017 YTD) % ∆ in ∆ conversion shareholders’ ∆ % currency differences equity per 10% ∆ in currency US dollar -11.0% -283 2.7% Brazilian real -8.4% -107 1.1% Turkish lira -11.8% -30 0.1% Other - -107 - Total - -526 - YTD: 9.30.2017 vs.
Slide 22: Successful investment management in a low interest rate environment
02 CAPITAL MANAGEMENT Successful investment management in a low interest rate environment › Search for yield and higher diversification Asset allocation › Equity & Mutual Funds: 8.7% at 09.2017 vs. 6.7% at 12.2016 › Spanish Fixed Income: 36% at 09.2017 vs. 39% at 12.2016 Successful strategy in › Abo
Slide 23: Active rotation of real estate portfolio throughout the cycle
02 CAPITAL MANAGEMENT Active rotation of real estate portfolio throughout the cycle Real Estate portfolio (Book Value at 09.30.2017): €2.2 bn Unrealized gains on real estate* 2012 › Spanish real estate crisis 733 604 - › Writedowns: ≈€200 mn 569 2013 › Purchase Plaza de Independencia (Madrid) › Purc
Slide 24: 2017: Capital management and cash flow upstreaming in MAPFRE Group
02 CAPITAL MANAGEMENT 2017: Capital management and cash flow upstreaming in MAPFRE Group MAPFRE S.A. - Net cash flows Dividends upstreamed from subsidiaries 2017 2017 Forecast Forecast Dividends paid to shareholders (2017 calendar year) -447 SPAIN 427 MAPFRE ESPAÑA 273 Interest and other payments at
Slide 25: Stable and growing shareholder remuneration
02 CAPITAL MANAGEMENT MAPFRE is working towards its commitment of stable and growing shareholder remuneration Payout 50.9% 50.6% 51.0% 56.5% 57.6% Dividends paid 400 431 400 447 against results 339 2012 2013 2014 2015 2016 › Dividend payout target range (50-65%) is still in place, with flexibility t
Slide 26: Reinsurance Program
03 REINSURANCE CAT risk management within MAPFRE Group PROGRAM Effective protection program Eduardo Pérez de Lema
Slide 27: Update on MAPFRE RE: CAT Risk Management Framework
03 REINSURANCE PROGRAM › Update on MAPFRE RE › OVERVIEW – CAT Risk Management Framework 1. Accumulation Control 2. CAT Modelling 3. Reinsurance Design 4. Credit & Liquidity Risk 5. Contingency Plan and Disaster Recovery 27
Slide 28: MAPFRE RE Premiums and attributable result
03 REINSURANCE PROGRAM Premiums CAGR 2012-2016 ≈10% +3.8% 4,235 3,732 3,254 3,343 3,180 3,300 2,885 2012 2013 2014 2015 2016 9M 2016 9M 2017 Attributable result CAGR 2012-2016 ≈21% -20.7% ≈+39% 186 142 153 excluding 109 123 87 97 catastrophes 2012 2013 2014 2015 2016 9M 2016 9M 2017 28 Million euros
Slide 29: MAPFRE RE combined ratio with reduced volatility
03 REINSURANCE PROGRAM MAPFRE RE continues achieving good underwriting results, with reduced volatility . . . (1) 114.0 115.0 107.7 93.2 92.6 95.2 93.2 90.0 91.1 90.1 90.6 89.8 86.8 100.6 99.7 96.6 95.5 95.7 97.0 93.1 93.9 94.1 92.3 91.6 93.5 96.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 30: Returns above the industry average
03 REINSURANCE PROGRAM . . . generating attractive returns, above the industry average 15.6 14.6 12.4 13.0 11.6 10.6 9.5 15.4 14.2 14.2 14.7 12.8 12.9 13.0 8.2 12.3 9.6 11.0 9.3 2.1 1.9 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9M 2017 MAPFRE RE - ROE Industry - ROE (1) MAPFRE RE Industry Av
Slide 31: Shareholders' equity and dividends paid by MAPFRE RE
03 REINSURANCE PROGRAM Evolution of Shareholders’ Equity Dividends paid Average Pay Out: 61% 103.3 1,279 1,312 86.0 90.3 90.3 81.6 1,179 1,174 56.6 1,010 969 848 2011 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 (Sept.) MAPFRE RE is a strong cash flow generator for MAPFRE and has been
Slide 32: Update on MAPFRE RE: CAT Risk Management Framework
03 REINSURANCE PROGRAM › Update on MAPFRE RE › OVERVIEW – CAT Risk Management Framework 1. Accumulation Control 2. CAT Modelling 3. Reinsurance Design 4. Credit & Liquidity Risk 5. Contingency Plan and Disaster Recovery 32
Slide 33: MAPFRE RE's role in Cat Risk Management within the Group
03 REINSURANCE PROGRAM MAPFRE’s CAT Risk Management Framework › MAPFRE RE’s role in Cat Risk Management within the Group › MAPFRE RE is a Professional Reinsurer › Present in 20 countries › Business in +100 countries › Extensive experience in Cat Risk Management › As MAPFRE’s reinsurance unit, it is
Slide 34: MAPFRE RE's reinsurance buying philosophy
03 REINSURANCE PROGRAM MAPFRE’s CAT Risk Management Framework › MAPFRE RE’s reinsurance buying philosophy › Separation between protections for the Non Group inwards portfolio in MAPFRE RE and MAPFRE Group Insurance business (MAPFRE Insurance and MGR) › Long term partnership with reinsurers › Prefere
Slide 35: MAPFRE's Catastrophe Reinsurance Protection
03 REINSURANCE PROGRAM MAPFRE’s Catastrophe Reinsurance Protection › Cat XL Regional Protections › Part of a comprehensive risk management and reinsurance framework › Objective: to protect MAPFRE in an efficient way › Structuring & placing global XL reinsurance programs › Simplifying the Group’s XL
Slide 36: Cover for three different business units
03 REINSURANCE PROGRAM Cover for three different business units, with different characteristics: 1. Accumulation Control MAPFRE 5. Insurance 2. Contingency Catastrophe Plan and Risk Disaster Modelling Recovery MAPFRE CAT Risk MAPFRE Management MAPFRE RE Framework Global Risks 4. Credit and 3. Reinsu
Slide 37: 1. Accumulation Control
03 REINSURANCE PROGRAM 1. Accumulation Control › The MAPFRE GROUP controls its exposures to natural catastrophes at different levels: › Detailed CAT Exposures are delivered by each MAPFRE entity upon the standard criteria set by MAPFRE RE: Legal Entity › By policy & location › High geocoding level ›
Slide 38: 2. Catastrophe Risk Modelling in MAPFRE Group
03 REINSURANCE PROGRAM 2. Catastrophe Risk Modelling in MAPFRE GROUP › Coordinated by MAPFRE RE, Cat modelling of: › Entities: 20 › Territories: 177 Dynamic Financial › Complete view of the Group’s Cat risk Analysis • Probabilistic scenarios • Frequency & Severity distributions (ReMetrica®) • Exceed
Slide 39: Probabilistic scenario outputs: capital requirement for CAT risk
03 REINSURANCE PROGRAM 2. Catastrophe Risk Modelling in MAPFRE GROUP › Probabilistic scenario outputs – Group’s capital requirement for CAT risk and reduction through reinsurance type (AEP 1/250 yrs) › All MAPFRE primary insurance entities / All perils / All territories % of Total AEP Loss 29.4% 29.
Slide 40: Effectiveness of reinsurance structures
03 REINSURANCE PROGRAM 2. Catastrophe Risk Modelling in MAPFRE GROUP › Probabilistic scenario outputs – Effectiveness of reinsurance structures › Estimated “Cost of Capital” of Regional Cat XL (AEP 1/250 yrs) Gross 100.0% 2017-18 “Ceded” Capital 100.0% % of Gross AEP 1/250y Ceded CAT XL Premium / Ce
Slide 41: Deterministic scenario outputs
03 REINSURANCE PROGRAM 2. Catastrophe Risk Modelling in MAPFRE GROUP › Deterministic scenario outputs Event#1 Storm in Europe DE, FR, UK, BE, NL, SE, NO, CH, DK, AT, IE, PL, LU, CZ, SK Return Period ≈ 90 yrs Event#3 Hurricane in U.S. Cat. 3 MA, RI, VA, NY, NC Return Period ≈ 120 yrs Event#2 Earthqua
Slide 42: Deterministic simulation: losses by entity
03 REINSURANCE PROGRAM 2. Catastrophe Risk Modelling in MAPFRE GROUP Deterministic simulation. Losses by Entity (redefined in % terms) Ced. Reins. Ced.Reins. Event Entity GROSS NET Event Frequency MAPFRE GROUP 9.5% 7.2% 1.1% 1.3% › Europe, Chile, EUROPE Local U.S. Storm MGR 0.1% 0.1% MAPFRE RE 9.4%
Slide 43: 3. Reinsurance Design: Group's retentions under Cat XL
03 REINSURANCE PROGRAM 3. Reinsurance Design › Group’s retentions protected under MAPFRE’s Cat XL (excludes MAPFRE RE “Non Group” business) Retention XL Limit Proportional Tty Facultative Facultative Facultative Proportional Retrocession Facultative Proportional Tty Proportional Tty Proportional Tty
Slide 44: Cat XL Regional Protections 2017-18
03 REINSURANCE PROGRAM 3. Reinsurance Design › Cat XL Regional Protections 2017-18 Determination of cover for North Atlantic Regional Cover (NARC) - OEP Losses USA Mexico Central Puerto Rico Dom.Rep. Caribbean Total NARC America 100 years Return Period 250 years Return Period Cat XL Limit 44
Slide 45: Cat XL Regional Protections 2017-18 (Million USD)
03 REINSURANCE PROGRAM 3. Reinsurance Design › Cat XL Regional Protections 2017-18 1,400 UMBRELLA (WW) 300 300 1,200 300 xs Underlying 1,000 Million USD 800 600 1,000 900 400 300 200 100 100 75 0 25 NARC MERC CIRC FREQUENCY COVER 75 xs 25 (AAD 75/ 1 Pre-paid Reinstatement) 45
Slide 46: Hurricane Maria. Gross Losses
03 REINSURANCE PROGRAM 3. Reinsurance Design: Recent Catastrophic Events › Hurricane Maria. Gross Losses (MAPFRE Insurance entities only) LOSS TO MAPFRE GROUP XL MAPFRE PUERTO RICO MAPFRE GLOBAL RISKS 639 750 10 500 MAPFRE BHD 500 55 445 (Dominican Rep.) 381 Contribution to 575 146 250 415 415 192 M
Slide 47: Hurricane Maria. Net Loss
03 REINSURANCE PROGRAM 3. Reinsurance Design: Recent Catastrophic Events › Hurricane Maria. Net Loss (MAPFRE Insurance entities + MAPFRE RE) 30 31 114 1 23 85 53 30 Puerto Rico Dom. MGR MAPFRE MAPFRE RE MAPFRE MAPFRE RE Total Republic Insurance Group Insurance Non Group MAPFRE Entities Entities + RE
Slide 48: Initial Net Loss estimates still apply
03 REINSURANCE PROGRAM 3. Reinsurance Design: Recent Catastrophic Events › The initial Net Loss estimates released on Sept. 25 and detailed on the Q3 2017 th Results Presentation still apply: MAPFRE PUERTO USA DOMINICAN Figures in million EUR MAPFRE RE MEXICO TOTAL GLOBAL RICO (FLORIDA) REPUBLIC HUR
Slide 49: Initial Loss estimates by event
03 REINSURANCE PROGRAM 3. Reinsurance Design: Recent Catastrophic Events › The initial Loss estimates released on the Q3 2017 Results Presentation still apply, but will be reviewed for the year-end closing: NET (Postax (Pretax and non- Facultative Non CAT Frequency Figures in million € Gross Loss CA
Slide 50: Hurricane Maria assessment
03 REINSURANCE PROGRAM 3. Reinsurance Design: Recent Catastrophic Events › Hurricane Maria › MAPFRE Puerto Rico’s conservative loss estimate, within our expectations and within Group’s protection. Very effective use of market intelligence and local knowledge to build a high quality portfolio › MAPFR
Slide 51: 4. Credit risk by rating level
03 REINSURANCE PROGRAM 4. Credit & Liquidity Risk › Credit risk by rating level. Estimated recoverable for 3 Quarter Events rd Figures in Facultative Non CAT XL Frequency Total CAT XL %/ Total million € Cession Treaty Cover AA 13 2 23 0 38 4% AA- 14 41 401 13.2 468 52% A+ 42 76 95 10.56 223 25% A 52
Slide 52: 5. Corporate Business Continuity Plan
03 REINSURANCE PROGRAM 5. Contingency Plan and Disaster Recovery › Corporate Business Continuity Plan › Successfully deployed in all events & entities (Puerto Rico, Mexico, US) › MAPFRE has been able to provide service to clients and community all the time › Strengthening of wireless telecommunicati
Slide 53: Key takeaways
03 REINSURANCE PROGRAM Key takeaways › The events occurred this year prove the effectiveness of our CAT Risk Management Model › These events will have a limited impact to earnings. They will not be a capital event › The Group’s Cat reinsurance structure has proved very effective for the protection o
Slide 54: Q&A
Q&A b\ \ \, | T POS eG tn BISSETT | \) oo Seo T eee eeeteeeee! H MAPFRE Dd Your trusted insurance company
Slide 55: International Business & MAPFRE USA
04 INTERNATIONAL BUSINESS & MAPFRE USA Jaime Tamayo Alfredo Castelo
Slide 56: International Business
04.1 INTERNATIONAL Restructuring of International operations BUSINESS Optimizing profitability Jaime Tamayo
Slide 57: International business: diverse markets
04.1 INTERNATIONAL BUSINESS INTERNATIONAL BUSINESS: diverse markets DIVERSITY NORTH AMERICA APAC EMEA GEOGRAPHIC USA INDONESIA GERMANY PUERTO RICO PHILIPPINES ITALY DEMOGRAPHIC MALTA LINGUISTIC TURKEY CULTURAL ECONOMIC DEVELOPMENT DEGREE OF MARKET MATURITY 57
Slide 58: International total premiums 9M 2017
04.1 INTERNATIONAL BUSINESS INTERNATIONAL - 9M 2017 1,977 -1% 1,717 +0% TOTAL PREMIUMS 1,390 501 -4% -19% 3,424 352 +2% 278 -2% +13% 260 -8% 259 +7% 33 56 -4% + 63% 23 58 Million euros
Slide 59: 2017 key achievements
04.1 INTERNATIONAL BUSINESS 2017 key achievements › Successful new branding of Verti Germany › Excellent results in › Business diversification into digital life insurance Massachusetts › DL Italy’s restructuring is delivering tangible benefits (4.9% Premium growth/ (net result up by 71% vs 2016) 96.
Slide 60: ABDA – 9M 2017
04.1 INTERNATIONAL BUSINESS ABDA – 9M 2017 ABDA INDONESIA 2016 2017 Issued Premium 56.9 56.5 Income from Investments 6.2 6.5 Total Income 62.8 62.7 Operating Expenses Ratio 31.9% 35.4% Net. Acq. Exp. Ratio 16.2% 14.8% Net. Admin. Expenses Ratio 15.7% 20.6% Loss Ratio 61.0% 58.7% Net Combined Ratio 9
Slide 61: International: Current organizational structure
04.1 INTERNATIONAL BUSINESS INTERNATIONAL – Current organizational structure *Members of the Executive Committee 61
Slide 62: International: Restructuring of operations
04.1 INTERNATIONAL BUSINESS INTERNATIONAL – Restructuring of operations MAPFRE USA is realigning and simplifying its operations IN A CHALLENGING Total Focus on Profitability outside Massachusetts ENVIRONMENT o US Market showing 10 years of lack of Reduced geographical footprint technical profitabili
Slide 63: Consolidation of EMEA and APAC Regions
04.1 INTERNATIONAL BUSINESS INTERNATIONAL – Restructuring of operations Consolidation of EMEA and APAC Regions Improve dimension adequacy Increase capacity of resources and services Nikos Antimissaris Nikos Antimissaris 63
Slide 64: APAC integration into EMEA creating EURASIA
04.1 INTERNATIONAL BUSINESS 1 APAC Integration into EMEA Region creating EURASIA as of 1st January 2018. Operations, Technology & Processes, Finance and Business & Clients areas will be integrated in Eurasia to preserve our expertise and know- 2 how in Asian markets and to keep on monitoring the ope
Slide 65: International premiums 9M 2017
04.1 INTERNATIONAL BUSINESS INTERNATIONAL - Premiums – 9M 2017 1,977 -1% TOTAL PREMIUMS 1,390 3,424 -4% -2% EURASIA 56 €1,446 mn + 63% 9M 2017 65 Million euros
Slide 66: EMEA key financial highlights by country
04.1 INTERNATIONAL BUSINESS EMEA – Key financial highlights by country PREMIUMS ATTRIBUTABLE RESULT COMBINED RATIO 9M 2016 9M 2017 Δ 9M 2016 9M 2017 Δ 9M 2016 9M 2017 Δ Turkey 617 501 -18.8% 22 39 77.4% 97.8% 96.5% -1.2 p.p Italy 345 352 2.1% -40 -11 -71.4% 128.6% 114.2% -14.4 p.p Germany 241 259 7.
Slide 67: Some challenges still remain
04.1 INTERNATIONAL BUSINESS Some challenges still remain › MTPL regulation in Turkey has materially changed the rules of the game and the negative effects will become more evident in 2018 › Turkish lira will likely continue to be volatile in the short term › DL Italy needs to finalize its turnaround
Slide 68: Turkey
04.1 INTERNATIONAL BUSINESS TURKEY Net combined ratio 9M 2017 MAPFRE SIGORTA has adapted quickly to the new market TOTAL NON-LIFE 100.3% context in Turkey and remains one of the most profitable Peer 1 90.7% companies in its “Top 4” peer group MAPFRE SIGORTA 96.5% Peer 2 97.7% › Continuous focus on t
Slide 69: Italy
04.1 INTERNATIONAL BUSINESS ITALY DIRECT LINE ITALY has almost completed its restructuring and now fully focused on building a profitable digital Key figures leader 9M 2016 9M 2017 Δ › The direct channel has been restructured according PREMIUMS 345.3 352.4 2,1% to plan and now back in recovery mode
Slide 70: Germany
04.1 INTERNATIONAL BUSINESS GERMANY VERTI GERMANY’S model has been put to test and In force policies shows remarkable strength 775,311 724,597 +7% › The highly successful rebranding has confirmed the strength of our value proposition… › … which has allowed strong growth in both 9M 2016 9M 2017 polic
Slide 71: Malta
04.1 INTERNATIONAL BUSINESS MALTA MAPFRE MIDDLESEA’s decisive actions on the motor business and the successful partnership with Bank of Valletta continue driving sustained value-creation Key figures 9M 2016 9M 2017 Δ PREMIUMS 246.9 278.4 12.8% › Pricing actions in motor have allowed a Life 203.4 232
Slide 72: MAPFRE is invested in a region with good growth opportunities
04.1 INTERNATIONAL BUSINESS In a nutshell: MAPFRE is invested in a region with good growth opportunities Real GDP growth forecasts 2017F 2018F TURKEY 5.0% 3.5% ITALY 1.5% 1.3% GERMANY 2.1% 1.9% MALTA 4.1% 3.5% Source: MAPFRE Servicio de Estudios Source: MAPFRE Economic Research 72
Slide 73: MAPFRE USA
04.2 U.S. footprint Moving toward a MAPFRE USA streamlined geographic Alfredo Castelo presence
Slide 74: MAPFRE USA realigning and simplifying its operations
04.2 MAPFRE USA MAPFRE USA is realigning and simplifying its operations with main focus on profitable growth Reduced geographical Focus on core More customer footprint business centric organization › Exit five states › Focus on core business › Digital transformation › Adaptation of regional (Auto an
Slide 75: Strengthening profitability initiatives
04.2 MAPFRE USA MAPFRE is strengthening profitability initiatives in a challenging year for personal lines carriers MAPFRE INSURANCE › Rate filings, 36 in Auto and 17 in Homeowners in 2017 › Enhance pricing engine outside Massachusetts Market context › Strengthening of underwriting and claims guidel
Slide 76: Massachusetts: leading insurance company
04.2 MAPFRE USA Massachusetts: MAPFRE is the leading insurance company, with a mature and profitable business Key figures – Massachusetts (mn USD) › MAPFRE is the leading insurance company in Massachusetts in Non-Life with important 9M16 9M17 Delta market shares: Premiums 1,273 1,336 4.9% › Private
Slide 77: Outside of Massachusetts: Focus on profitability initiatives
04.2 MAPFRE USA Outside of Massachusetts: Focus on profitability initiatives Key figures – Outside Mass. (mn USD) › Fall in premiums (-8%), due to profitability initiatives: › New Jersey: -34.1% 9M16 9M17 Delta › New York: -17.3%, › Connecticut: -9.8% Premiums 564 519 -8.0% › California: -8.6% Techn
Slide 78: MAPFRE USA's new geographic footprint: 11 core states
04.2 MAPFRE USA MAPFRE USA’s new geographic footprint: focus on 11 core states Core states VT ME › New England › Connecticut WA › Massachusetts › MT ND California MN NH NY MA › Rhode Island › Washington OR WI RI ID SD › New Hampshire › Oregon WY MI PA CT › Vermont › Ohio IA OH NJ NE › Maine IN › Ida
Slide 79: Core states
04.2 MAPFRE USA Core states: focus on eleven states, subject to profitable growth initiatives Key figures – Core states (USD ‘000) › Contribution to MAPFRE USA: › ≈91% of premiums 9M17 9M17 Combined › ≈135% of earnings before tax DWP* Ratio New England 1,397,199 96.4% › Core states selection rationa
Slide 80: Development states
04.2 MAPFRE USA Development states: subject to further profitability actions › Contribution to MAPFRE USA: Key figures – Development states (USD ‘000) › ≈4% of premiums 9M17 9M17 › ≈-20% of earnings before tax Combined DWP* Ratio › Development states selection rationale: › Florida and Arizona will b
Slide 81: Exit states
04.2 MAPFRE USA Exit states: decision to focus on core states › Contribution to MAPFRE USA: Key figures – Exit states (USD ‘000) › ≈5% of premiums › ≈-15% of earnings before tax 9M17 DWP* 9M17 Combined Ratio › New York and New Jersey: › Highly Regulated (NY) New York 43,364 114.8% › Very litigious w
Slide 82: Exit states: orderly withdrawal
04.2 MAPFRE USA Exit states: orderly withdrawal with commitment to our customers and agents › New York: MAPFRE has already engaged the services of an investment bank to pursue the sale of its New York subsidiary, MAPFRE Insurance Company of New York › New Jersey, Kentucky, Tennessee and Indiana: The
Slide 83: New regional structure aligned with business strategy
04.2 MAPFRE USA New regional structure aligned with business strategy Northeast region › More streamlined structure (reduction from - Massachusetts (*) 4 to 3 regions) - Maine - New Hampshire - Rhode Island › New operational structure with its new core - Vermont state footprint, brings decision maki
Slide 84: Digital transformation: strategic pillar at MAPFRE USA
04.2 MAPFRE USA Digital transformation: strategic pillar at MAPFRE USA › Soft launch in October, offering Auto Insurance to digital customers in Pennsylvania VERTI USA › Truly direct to consumer digital insurance operation with state of the art IT platform › MAPFRE Insurance will leverage the learni
Slide 85: Key messages
04.2 MAPFRE USA Key messages › Strategic realignment and focus on core markets: › Reinforced market position in Massachusetts/New England › Profitable growth strategy outside of Massachusetts › More customer centric organization with regional empowerment and accountability › Digital transformation t
Slide 86: MAPFRE Insurance 2020 targets
04.2 MAPFRE USA Key messages › MAPFRE INSURANCE 2020 targets*: › Average growth: ≈4% › Combined ratio: ≈97% › ROE: ≈8% Positioning MAPFRE USA for success through a focused business strategy (*) MAPFRE INSURANCE does not include Verti 86
Slide 87: Q&A
Q&A b\ \ \, | T POS eG tn BISSETT | \) oo Seo T eee eeeteeeee! H MAPFRE Dd Your trusted insurance company
Slide 88: Closing Remarks
05 CLOSING REMARKS Profitable growth strategy Antonio Huertas Accelerating our transformation
Slide 89: On the right path to achieve our targets
05 CLOSING REMARKS On the right path to achieve our targets › Positive underlying trends and strategic plan on track › Value creation through capital management › Effective Cat protection program › Restructuring in International units, focusing on US footprint 89
Slide 90: Prepared for the digital transformation to come
05 CLOSING REMARKS Prepared for the digital transformation to come › Changes in the essence of the insurance model › Empowerment of the connected client › Human element 90
Slide 91: Profitable growth levers
05 CLOSING REMARKS Profitable growth levers Technology and Multi-channel Client digital service Agent approach focus as allies challenge Reinforced Secure information, More internal structure systems and self-governance (local, regional, professional teams and control corporate) to achieve excellenc
Slide 92: New strategic initiatives
05 CLOSING REMARKS New strategic initiatives SAM 3.0 NEW AUTO INSURANCE PREDICTIVE MODELS BIG CITIES Different & simple Automatization of Taylor made mobility insurance solutions simple insurance products & services processes for the urban client ALL ONGOING DIGITAL HEALTH DIGITAL CHALLENGE The firs
Slide 93: Conclusions
05 CLOSING REMARKS Conclusions We are sustaining revenue growth Enhanced efficiency, automation and cost reduction Financial returns MAPFRE’s business model and strategy will ensure recurring profitable growth in the coming years 93
Slide 94: Thank you
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