Mapfre Sa · BME:MAP
Mapfre Sa — Investor Day (March 2021)
56 slides from Mapfre Sa's investor day presentation, Mar 16, 2021
Slide 1: Management Insights Day, March 16, 2021
© MAPFRE MANAGEMENT March 16, 2021
Slide 2: Agenda
AGENDA 0 1 S t ra t e g y u p d a t e a n d b u s i n e s s re v i e w Mr. HUERTAS 0 2 Re i n s u ra n c e Mr. PÉREZ DE LEMA 0 3 I nv e st m e n t s a n d A s s e t M a n a g e m e nt Mr. JIMÉNEZ 0 4 C a p i ta l M a n a g e m e n t Mr. MATA 2
Slide 3: Speakers
SPEAKERS Antonio Huertas Chairman & CEO MAPFRE S.A. Fernando Mata Eduardo Pérez de Lema José Luis Jiménez CFO & Board Member CEO CIO MAPFRE S.A. MAPFRE RE MAPFRE S.A. 3
Slide 4: Strategy update and business review
Strategy update and 01 Antonio Huertas business review 4
Slide 5: 2020 overview: strong results in a year marked by COVID and economic crisis
2020 overview > strong results in a year marked by COVID and economic crisis Consolidating profitability trends in insurance units and resilient balance sheet PREMIUMS €20.5 bn -11.1% ‐ Rapid implementation of business continuity plan > in all countries and units at constant exchange rates -4.1% ‐ C
Slide 6: Iberia: 2020 highlights
IBERIA > 2020 highlights Advancing in strategy execution in a challenging environment NON LIFE PREMIUMS €5.3 bn +0.6% Profitable growth ‐ Outperforming market growth in key Non Life segments and Life Protection LIFE PROTECTION PREMIUMS ‐ Cost contention > expense ratio ex-COVID measures: 20.7% (-0.6
Slide 7: Iberia: Spanish market context
IBERIA > Spanish market context Outperforming the market in key segments . . . Relative stability of leading market positions Premium growth by segment 14.2% 14.1% 13.9% 2.2% 1.5% -0.4% -3.0% -2.0% -2.0% 11.3% 11.4% 11.3% 1.9% Motor 1.3% -3.1% -4.0% -3.6% Total -6.1% Non Life 2018 2019 3M 2020 6M 20
Slide 8: Iberia: Spanish market context
IBERIA > Spanish market context . . . while maintaining a significant profitability advantage Combined ratio Homeowners Condominiums Motor ∆ 2019-20 ∆ 2019-20 94.9% ∆ 2019-20 95.8% 95.0% 96.6% 94.2% +2.7 p.p. 88.6% -6.4 p.p. 94.3% 94.3% 92.6% 93.6% ≈ 90.5% -8.9 p.p. 91.5% 84.7% 93.5% 93.4% -1.2 p.p.
Slide 9: Iberia: 2021 outlook and priorities
IBERIA > 2021 outlook and priorities Focused on gaining market share and cost contention Outlook Priorities Initiatives High uncertainty surrounding • Growth > gain market share across • Bancassurance > optimize BANKIA exit economic recovery and mobility key business lines value as well as existing
Slide 10: Brazil: 2020 highlights
BRAZIL > 2020 highlights Focus on growth while improving profitability levels Solid local currency growth trends PREMIUMS ‐ Bancassurance (+15%) > outperforming market with growth in Life Protection €3.1 bn +5.1% (+12%) and Agro (+23%) at constant exchange rates ‐ MAPFRE channel (-5%) > fall in Moto
Slide 11: Brazil: market context
BRAZIL > market context Market leader in profitable segments, while selectively reducing exposure in Motor Market share evolution Technical margin (2) Motor (1) 66.0% nº1 24.7% 62.5% 58.1% 18.6% 18.9% 24.6% 13.2% nº1 6.0% 18.4% 17.7% 18.2% nº7 2018 2019 2020 11.5% 10.1% 7.7% Life Protection 36.7% 33
Slide 12: Brazil: 2021 priorities
BRAZIL > 2021 priorities Transition year, while consolidating technical management improvements ‐ Motor > adjust processes and technology, improve product offering in existing channels and identify new forms of distribution MAPFRE ‐ Growth and technical excellence in Life > identify strategic distri
Slide 13: USA: 2020 highlights
USA > 2020 highlights Streamlined geographic presence and transformation process underway PREMIUMS Streamlining of geographical presence €1.7 bn ‐ Exit of Arizona and traditional business in Pennsylvania completed of which ≈90% in the Northeast region ‐ Evaluating several options for exit of Florida
Slide 14: USA: market context
USA > market context MAPFRE is the absolute leader in P&C personal lines in Massachusetts Private Passenger Auto (PPA) Insured vehicles (PPA) Combined ratio Ranking Ranking (‘000) 104.5% 104.5% MAPFRE 22.0% MAPFRE 1,053 100.6% PPA Peer 1 14.0% Peer 1 742 96.4% 95.5% Peer 2 399 93.5% Peer 2 10.3% Pee
Slide 15: USA: 2021 priorities
USA > 2021 priorities Return to growth while maintaining positive claims trends and strict cost control ‐ Return to growth in premiums and policies > grow new business and improve retention ‐ Agreement with AAA motor club > enhance capabilities ‐ Customer and agent segmentation > differentiated valu
Slide 16: 2019-2021 Strategic Plan: focus on transformation and restructuring
2019-2021 Strategic Plan > focus on transformation and restructuring Successfully adapting our business model . . . 80/20 program ‐ ≈ €1.8 bn of premiums cancelled during 2016-2020 ‐ United States > ‐ Exit of 5 states in 2018 and commercial lines outside of Massachusetts in 2019 ‐ Exit of Arizona an
Slide 17: 2019-2021 Strategic Plan: leveraging new opportunities
2019-2021 Strategic Plan > focus on transformation and restructuring . . . while leveraging new opportunities Santander ‐ Successful first year and extension of agreement to Portugal agreement Distribution ‐ Positive performance of Actinver in Mexico agreements ‐ Increased stake in Abante in Spain D
Slide 18: 2019-2021 Strategic Plan: moderate and profitable growth
2019-2021 Strategic Plan > moderate and profitable growth Clear priorities, focusing on profitability and optimizing capital allocation going forward ‐ Focus on core markets > Spain, Brazil, the United States and Mexico Capital ‐ Lower future capital allocation in non-core markets > mainly focused o
Slide 19: Key figures: February 2021
Key figures > February 2021 Δ at constant 2M 2021 Δ exchange rates Total written and accepted premiums 4,228 -4.8% 2.3% - Non-Life 3,487 -3.1% 3.5% - Life 740 -12.2% -2.8% Non-Life Combined Ratio - MAPFRE S.A. 94.6% -5.2 p.p. Non-Life Loss Ratio 66.4% -4.7 p.p. Non-Life Expense Ratio 28.2% -0.5 p.p.
Slide 20: 2021 Financial Targets
2021 Financial Targets 2019-21 2021 Status Target Guidance ROE 7.8% (1) (ave. 2019-21) 8%-9% ≈ 8.5% (2) average Combined ratio 96.2% (ave. 2019-21) 96-97% ≈ 95% average Total revenue €28-€30 bn €25.4 bn in 2020 ≈25.4 bn Adjusted net income (3) - €763 mn in 2020 ≈ €700 mn Payout >50%, >50% 73% in 202
Slide 21: Reinsurance
Reinsurance 02 Eduardo Pérez de Lema 21
Slide 22: 2020 overview
2020 overview MAPFRE RE continues showing resilience in turbulent times Gross Premiums 1,060 1,256 Global Risks 4,235 4,222 4,520 4,431 Reinsurance 3,254 3,343 3,732 3,787 2,845 2012 2013 2014 2015 2016 2017 2018 2019 2020 Attributable result 186 Reinsurance 142 153 163 149 87 109 15.1 Global Risks
Slide 23: 2020 highlights
2020 highlights ‐ Healthy growth in Non-Group reinsurance business in improving market, with a better balanced portfolio Business ‐ Stability of MAPFRE business Development ‐ Strong growth in Global Risks portfolio after restructuring, based on a very good pricing momentum ‐ Manageable and below mar
Slide 24: Large loss impact on MAPFRE RE
Large loss impact on MAPFRE RE (1) Pre-tax and minority interests CAT Man Made Covid 19 402 375 372 342 344 112 107 117 278 92 114 250 244 234 226 222 51 118 136 110 90 156 149 127 161 268 254 275 51 253 81 228 198 171 142 134 136 98 95 75 73 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 25: COVID impact
COVID impact Breakdown by line of business (1) Line of Business Q1 Q2 Q3 Q4 Total Property BI - 67.5 -1.5 20.4 86.5 Marine - 1.7 0.8 2.5 5.0 Credit - 10.0 0.1 -9.3 0.7 Others - 0.9 0.2 1.4 2.5 Total Non Life - 80.1 -0.4 15.0 94.7 Life - 0.2 0.3 17.2 17.7 Total - 80.3 -0.1 32.2 112.4 ‐ Impact of COVI
Slide 26: MAPFRE RE continues beating the market in difficult years
MAPFRE RE continues beating the market in “difficult years” 114.0 109.1 107.7 105.3 101.1 100.6 91.1 93.0 92.6 90.0 93.2 93.2 90.1 89.8 88.6 99.7 86.8 100.6 99.2 101.2 95.5 95.7 97.0 96.5 94.8 96.1 92.3 93.1 93.9 94.0 91.6 93.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 27: Main segments performing as designed
Main segments performing as designed Non Group Business 109.1 105.3 101.1 100.6 ‐ Solid performance, with reduced volatility 93.0 91.1 89.8 90.1 ‐ High quality and very diversified portfolio 88.6 95.3 97.7 98.5 98.4 ‐ Very low expense ratio allows outperforming the market 99.7 96.8 92.6 94.3 90.5 20
Slide 28: Combined Ratio
Average Non-Life Combined Ratio > reinsurers 2015 – 2020 Proven track record of competitive performance and reduced volatility compared to peers 100.0% Average Combined Ratio: 100.1% Combined Ratio MAPFRE RE (1) 90.0% 0.0% 10.0% 20.0% (1) Reinsurance business only, doesn’t include MAPFRE Global Risk
Slide 29: MAPFRE RE maintains very solid capital and solvency position
MAPFRE RE maintains very solid capital and solvency position Shareholders’ equity 1,746 1,771 1,668 387 358 403 1,302 1,359 1,413 1,179 1,174 1,279 1,265 969 1,010 848 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ‐ The company has financed growth through retained earnings ‐ Dividends upstreamed
Slide 30: Positive treaty renewals during the last 12 months
Positive treaty renewals during the last 12 months Non Life Non Group April 2020 Midyear 2020 January 2021 Total Business Proportional +10.6% +12.0% +3.6% +5.4% XL +31.7% +28.8% +14.0% +18.6% Total Treaty +18.1% +16.4% +5.2% +7.9% ‐ Across the board improvement in terms & conditions: ‐ Average risk
Slide 31: MAPFRE reinsurance protection
MAPFRE reinsurance protection MAPFRE Insurance Group reinsurance program ‐ Unchanged ceded reinsurance policy ‐ Structure has proved its effectiveness in recent years ‐ Main renewal period (July) > no changes or capacity shortage are foreseen, with risk appetite unchanged ‐ Frequency cover already i
Slide 32: 2021 priorities and outlook
2021 priorities and outlook ‐ Assuming a normalized large loss activity, MAPFRE RE should return to profitability and resume dividend upstreaming ‐ Both MAPFRE business and Non Group business continue to have a key strategic role for the Group ‐ No relevant changes are expected in risk profile or fo
Slide 33: Investments and Asset Management
Investments and Asset 03 Management José Luis Jiménez 33
Slide 34: Economic outlook: rising growth expectations
Economic outlook Rising growth expectations Growth forecasts are high by historical standards and more importantly are being revised upwards in recent weeks, especially in 2022. This may led to a “Goldilocks period", as long as growth is high enough to improve asset prices, but spare capacity remain
Slide 35: Economic outlook: smooth normalization of yields
Economic outlook Smooth normalization of yields The expected evolution of rates is upward, but very gradually. In fact, even current forecasts point to curve levels well below the pre-pandemic period even in 2022, regardless of recent volatility. 35
Slide 36: Assets under Management
Assets under Management Breakdown > December 2020 55.2 Third party assets 44.9 ‐ Lower AuM compared to 2019 due to 2.1 the reclassification of Bankia MAPFRE 2.4 Vida as held for sale 2.2 1.4 2.5 ‐ Real Estate accounted at net book 2.7 value (€874 mn unrealized capital MAPFRE Other gains) 8.1 GROUP A
Slide 37: Investment portfolio: MAPFRE Group
Investment portfolio > MAPFRE Group Financial investments > breakdown by portfolio type Life Business (€21.5 bn) Non- Life Business (€15 bn) Equity 13% Equity 16% Fixed Income 84% Fixed Income 87% Actively Managed Actively Managed Inmunized Conditioned Free TOTAL Inmunized Conditioned Free Total IBE
Slide 38: Investment portfolio: additional information
Investment portfolio Additional information Fixed Income (€31.5 bn) Equity (€2.7 bn) Rating Breakdown (*) Geographical Breakdown (*) ‐ 80% investments in US and European companies. Less than 20% in Spain ‐ Top 10 holdings amount to one third of total equity portfolio ‐ At the end of 2020 we had capi
Slide 39: Fixed income portfolios
Fixed income portfolios Stable income in Euro fixed income portfolio and positive outlook for US and Brazil portfolio Actively managed portfolio – Non-Life (Iberia + MAPFRE RE) Actively managed portfolio – Life (Iberia + MAPFRE RE) Duration Duration USA Brazil Duration 39
Slide 40: Responsible Investment
Responsible Investment Significantly improving our portfolio’s ESG quality Investment Portfolio at Market Value 2018 Investment Portfolio at Market Value 2020 40
Slide 41: Responsible Investment
Responsible Investment Improving our footprint MAPFRE Portfolio SDG impact MAPFRE Portfolio SDG impact Index of impact of each asset class to each SDG. Yearly comparison Index of impact of each asset class to each SDG Source: MAPFRE and University of Siena. The index ranges from 0 (center of the cir
Slide 42: Investment strategy
Investment strategy Book yield > keep it as high as possible without increasing risk profile Corporate credit > consider tactically decreasing exposure in anticipation of potential spread widening Equity allocation > favor long term approach. We do not realize capital gains unless our Investme
Slide 43: Conclusions
Conclusions Looking forward in a post-COVID environment Outlook > we expect some tailwinds coming from the macro picture (GDP growth, interest rates and FX), but as the old saying makes clear, “We hope for the best but we plan for the worst” Conservative investment portfolio > since last March,
Slide 44: Capital Management
Capital Management 04 Fernando Mata 44
Slide 45: Capital structure
Capital structure Diversified and stable capital base Capital structure Breakdown – shareholders’ equity 13,080 12,831 12.31.2018 12.31.2019 12.31.2020 Capital, retained earnings and 11,868 reserves 9,010 9,155 9,244 2,974 2,994 Net unrealized capital gains of 2,670 291 1,006 1,282 AFS portfolio* 1,
Slide 46: Currency exposure
Currency exposure Diversified exposures with limited sensitivities Currency conversion differences Sensitivity to % Δ currency % Δ currency % Δ currency 12.31.2020 Δ 2020 1 p.p ∆ in 2020 03.12.2021 2021E** currency Total -1,916* -676 - - - - Of which: US dollar 301 -189 -8.2% 23 2.2% 1.2% Brazilian
Slide 47: Debt position
Debt position Strong credit metrics Total debt (mn€) 12.31.2018 12.31.2019 12.31.2020 Total debt 2,670 2,974 2,994 of which: senior debt - 5/2026 1,004 1,005 1,006 subordinated debt - 3/2047 (First Call 3/2027) 618 618 618 Current average subordinated debt - 9/2048 (First Call 9/2028) 503 503 504 co
Slide 48: Solvency II
Solvency II Robust and stable solvency position Solvency II (bn €) Breakdown of BSCR (mn €) Solvency 190% 187% 177% 184% 180% 183.5%** 12.31.2018 12.31.2019 12.31.2020 II ratio Market 2,498 2,924 2,894 Fully loaded* 173% 172% 164% 171% 167% 170% Counterparty 800 729 704 Life Underwriting 969 1,056 1
Slide 49: Solvency II by entity
Solvency II – by entity Strong solvency position at main dividend contributing units Solvency II ratios Local Solvency ratios 473% 483% 380% 239% 236% 249% 210% 205% 201% 214% 189% 180% 174% 148% 150% 150% 132% 127% MAPFRE ESPAÑA MAPFRE VIDA MAPFRE RE USA BRAZIL MEXICO 12.31.2018 12.31.2019 12.31.20
Slide 50: Capital position
Capital position Regulatory developments underway and ICS results reflect an even stronger capital position Solvency II ICS disclosure - 12.31.2019 (1) 12.31.2020 Solvency II ratio (provisional figures) 183.5% 228.6% 186.8% 10.7 Fully loaded (provisional figures) (2) 170.3% 9.0 Solvency II ratio (es
Slide 51: Dividend upstreaming
Dividend upstreaming Supported by core units with solid underlying results and cash generation Dividends upstreamed from subsidiaries (mn€) Average payout 2018- 2018 2019 2020 › 2020 SPAIN 355 433 388 82% Dividends upstreamed from Operating Units to of which: Holding Company should cover: MAPFRE ESP
Slide 52: Dividend history
Dividend history Returning to sustainable dividend path, supported by BANKIA proceeds, with target payout ratio unchanged at > 50% P/BV 14.5 14.5 14.5 14.5 14.5 14.5 14.5 14.0 14.0 14.0 13.5 13.0 13.0 13.0 12.5 12.0 12.0 11.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Payout ratio 50.9% 50.6% 51.0
Slide 53: Capital Management outlook
Capital Management > outlook Strong balance sheet and capital position, and stable cash flow generation from subsidiaries Shareholders’ equity › Expected to move in a range of €8-9 bn AFS portfolio › Movements across different asset classes expected to be neutral Currency effects › Lower drag than p
Slide 54: Investor Relations
Investor Relations For further information, please contact or visit: Email: IR@mapfre.com Telephone: (+34) 91 581 23 18 Corporate website: www.mapfre.com Financial documentation center: www.mapfre.com/en/financial-information/ Upcoming events – H1 2021*: Follow us at: 18 March Morgan Stanley Europea
Slide 55: Terminology
Terminology Revenue Top line figure which includes premiums, financial income, and revenue from non-insurance entities and other revenue Combined ratio – Non-Life Expense ratio + Loss ratio Expense ratio – Non-Life (Operating expenses, net of reinsurance – other technical revenue + other technical e
Slide 56: 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 development, its results and its divi