Mapfre Sa · BME:MAP
Mapfre Sa — Investor Day (March 2019)
121 slides from Mapfre Sa's investor day presentation, Mar 25, 2019
Slide 1: Opening Remarks
01 OPENING REMARKS 1 March 25, 2019
Slide 2: Disclaimer
01 OPENING REMARKS 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 res
Slide 3: Agenda
AGENDA 01 OPENING REMARKS 01 OPENING REMARKS Mr. HUERTAS 0 2 2 0 1 9 - 2 0 2 1 S T R AT E G I C P L A N Mr. GURTUBAY 0 3 C A P I TA L M A N AG E M E N T Mr. MATA 0 4 I N V E S T M E N T M A N AG E M E N T Mr. JIMÉNEZ 05 MAPFRE RE Mr. PÉREZ DE LEMA 06 BRAZIL Mr. PÉREZ-SERRABONA 0 7 I N T E R N AT I O
Slide 4: Speakers
01 DISCURSO DE APERTURA Speakers Antonio Huertas Chairman & CEO Fernando Mata José Luis Gurtubay José Luis Jiménez Eduardo Pérez Jaime Tamayo CFO & Member of de Lema CEO Head of Strategy and Chief Investment the Board CEO MAPFRE RE International M&A Officer Alfredo Castelo Fernando Pérez-Serrabona J
Slide 5: Opening Remarks: We're transforming ourselves
01 OPENING REMARKS 01 WE’RE TRANSFORMING OPENING OURSELVES REMARKS For growth and improved profitability Antonio Huertas 5
Slide 6: 2016-2018 Strategic Plan: Focus on profitable growth
01 OPENING REMARKS 2016 – 2018 Strategic Plan Focus on profitable growth 6
Slide 7: We're transforming ourselves for growth and improved profitability
01 OPENING REMARKS 2019 – 2021 Strategic Plan We’re transforming ourselves for growth and improved profitability 7
Slide 8: 2019-2021 Strategic Plan: Strategic pillars
01 OPENING REMARKS 2019 – 2021 Strategic Plan Strategic pillars 8
Slide 9: 2019-2021 Strategic Plan: Aspirational objectives
01 OPENING REMARKS 2019 – 2021 Strategic Plan Aspirational objectives VALUE GROWTH OPERATIONAL CREATION MANAGEMENT 2021 Revenue Non-Life ROE Boost 10% 30bn € LIFE Life-Protection premiums Combined Ratio 96% average Premiums +5%* +8%* average * On a constant basis 9
Slide 10: 2019-2021 Strategic Plan
01 OPENING REMARKS 2019 – 2021 Strategic Plan Excellence in Increase TECHNICAL AND › Open, flexible and global technology RPA* transactions OPERATIONAL › Advanced analytics platform MANAGEMENT +10mn 73% +41% Solutions for Client › Differential value proposition 1mn clients of businesses Digital Orie
Slide 11: 2019-2021 Strategic Plan Iberia
01 OPENING REMARKS 2019 – 2021 Strategic Plan IBERIA Grow and improve profitability: › Strengthen the MAPFRE network › Reinforce bancassurance channel › Distribution channels › Improve client experience › Family-oriented strategies › Companies segment 11
Slide 12: 2019-2021 Strategic Plan Brazil
01 OPENING REMARKS 2019 – 2021 Strategic Plan BRAZIL Optimistic about business development in Brazil › New agreement › Final stage of business restructuring process › Better discipline and technical control › Strengthened management team 12
Slide 13: 2019-2021 Strategic Plan LATAM North & South
01 OPENING REMARKS 2019 – 2021 Strategic Plan LATAM NORTH & SOUTH Mexico Multichannel & diversification of › Growth in most profitable lines product portfolio › Invest in distribution channels › Reduced Combined Ratio › Boost agent and digital networks › Life business › Bancassurance agreements › Ne
Slide 14: 2019-2021 Strategic Plan North America
01 OPENING REMARKS 2019 – 2021 Strategic Plan NORTH AMERICA United States › Leadership in Massachusetts › Profitability in key states › Digital business Puerto Rico › Digitalization of operations 14
Slide 15: 2019-2021 Strategic Plan Eurasia
01 OPENING REMARKS 2019 – 2021 Strategic Plan EURASIA Technological transformation and process modernization Italy and Germany › Boosting the Verti brand Turkey › Diversification of products and channels › Improved technical profitability 15
Slide 16: 2019-2021 Strategic Plan
01 OPENING REMARKS 2019 – 2021 Strategic Plan Minimize the Capacity for Europe and Group Better capacity volatility of the growth, LATAM: reinsurance after MGR catastrophe maintaining benchmark manager reorganization business efficiency reinsurer 16
Slide 17: 2019-2021 Strategic Plan
01 OPENING REMARKS 2019 – 2021 Strategic Plan › Transformation of internal › Focus on STRATEGIC markets structure for MAPFRE › Aspires to excellence with › New phase of PROFITABLE MAPFRE clients growth 17
Slide 18: Capital stability and strength, while maintaining dividend momentum
01 OPENING REMARKS 2019 – 2021 Strategic Plan Capital stability and strength, while maintaining dividend momentum Financial Strong solvency Cash flow Commitment flexibility position generation to investors 18
Slide 19: 2019-2021 Strategic Plan
01 OPENING REMARKS 2019 – 2021 Strategic Plan 19
Slide 20: 2019-2021 Strategic Initiatives
02 2019-2021 STRATEGIC PLAN 02 2019-2021 Strategic Initiatives STRATEGIC PLAN José Luis Gurtubay 20
Slide 21: Strategic Plan - Change Agenda
02 2019-2021 STRATEGIC PLAN 2019 – 2021 Strategic Plan – Change Agenda 21
Slide 22: Strategic Initiatives – Strategic Plan 2019-2021
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Customer- focused Digital Challenge Digital Business Plan MAPFRE Global Operational Large Cities Efficiency Model Digital Health Advanced Analytics SAM 3.0 22
Slide 23: Strategic Initiatives: Customer-focused
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Sales • Client retention Customer- focused • Encourage distributors Benefits Digital Challenge Digital Business Plan • Client growth and retention level Large Cities MAPFRE Global Operational Customer- focused
Slide 24: Strategic Initiatives: Digital Business Plan
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Profitability • Digital business Customer- focused Benefits Digital Challenge Digital Business • Increase digital business Plan • Improve results MAPFRE Global Operational Large Cities Efficiency Model Digital
Slide 25: Strategic Initiatives: Global Operational Efficiency Model
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Develop operational models • Enhance MAPFRE Customer- focused competitiveness Digital Challenge Digital Business Benefits Plan • Cost savings MAPFRE Global Operational • Improve claim costs Large Cities Effici
Slide 26: Strategic Initiatives: Advanced Analytics
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Discover new approaches • Build predictions Customer- focused • Generate recommendations Digital Challenge Digital Business Benefits Plan • Competitive leadership MAPFRE Global Operational Large Cities Efficie
Slide 27: Strategic Initiatives: SAM 3.0
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Key players • Opportunities from Customer- focused telematics Digital Challenge Digital Business Benefits Plan • Benchmark partner • Differentiated offering MAPFRE Global Operational Large Cities Efficiency Mo
Slide 28: Strategic Initiatives: Digital Health
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Leadership position in health digital market in Customer- focused Spain Digital Challenge Digital Business Plan Benefits • Better positioning Large Cities MAPFRE Global Operational • Improved customer Efficien
Slide 29: Strategic Initiatives: Large Cities
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Improve position in Spain: Madrid and Barcelona Customer- focused Digital Challenge Digital Business Plan Benefits • Increase market share MAPFRE Global Operational Large Cities Efficiency Model Large Cities D
Slide 30: Strategic Initiatives: Digital Challenge
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Objective • Adapt • Collaborative work Customer- focused • New behaviors Digital Challenge Digital Business Plan Benefits • Flexibility Large Cities MAPFRE Global Operational • Agility Efficiency Model Digital Challenge D
Slide 31: Strategic Initiatives – Strategic Plan 2019-2021
02 2019-2021 STRATEGIC PLAN Strategic Initiatives – Strategic Plan 2019 - 2021 Customer- focused Digital Challenge Digital Business Plan MAPFRE Global Operational Large Cities Efficiency Model Digital Health Advanced Analytics SAM 3.0 31
Slide 32: Capital Management
01 OPENING REMARKS 03 CAPITAL Creating value for investors Through effective capital MANAGEMENT allocation Fernando Mata 32
Slide 33: Capital management focused on stability, while maintaining dividend momentum
03 CAPITAL MANAGEMENT Capital management focused on stability, while maintaining dividend momentum Financial Strong solvency Cash flow Commitment flexibility position generation to investors › Leverage target: ~22% › Solvency II ratio: 200% › Diversification of cash › Dividends: stable and › Room fo
Slide 34: Diversified capital base
03 CAPITAL MANAGEMENT Diversified capital base Capital structure Breakdown – shareholders’ equity 12.31.2015 12.31.2016 12.31.2017 12.31.2018 13,646 12,840 Capital, retained earnings and 12,181 2,203 11,868 8,300 8,614 8,764 8,482 reserves 1,773 2,327 2,317 2,670 Net unrealized capital gains of 628
Slide 35: Retained earnings growth mitigates market movements
03 CAPITAL MANAGEMENT Retained earnings growth mitigates market movements Changes in shareholders’ equity 12.31.2016 12.31.2017 12.31.2018 02.28.2019 Opening balance 8,574 9,127 8,611 7,994 Retained earnings - ex goodwill writedowns 375 254 255 Currency conversion differences 264 -639 -103 102 Net u
Slide 36: Diversified currency exposures with limited sensitivities
03 CAPITAL MANAGEMENT Diversified currency exposures with limited sensitivities Currency conversion differences %Δ % Δ currency Sensitivity to 1 p.p 12.31.2018 Δ 2018 currency 2018 ∆ in currency 2019E* Total (738) (103) - - - Of which: US dollar 443 95 4.8% 20 -2.0% Brazilian real (630) (119) -10.6%
Slide 37: Strong credit metrics
03 CAPITAL MANAGEMENT Strong credit metrics Total debt Financial expenses 12.31.2016 12.31.2017 12.31.2018 Total debt 2,203 2,327 2,670 of which: Current average senior debt - 5/2026 1,003 1,003 1,004 cost of debt (%) ~2.6% subordinated debt - 7/2017 594 - - subordinated debt - 3/2047 (First Call 3/
Slide 38: Robust solvency position, despite high market volatility
03 CAPITAL MANAGEMENT Robust solvency position, despite high market volatility Solvency II ratio 210% 200% 203% 202% 208% 190% Fully loaded** 191% 180% 184% 183% 189% 174% 174% 9.6 9.2 8.9 9.0 8.9 8.8 4.6 4.4 4.4 4.4 4.4 4.7 12.31.2016 12.31.2017 03.31.2018 06.30.2018 09.30.2018 12.31.2018* Solvency
Slide 39: Strong solvency position at main dividend contributing units
03 CAPITAL MANAGEMENT Strong solvency position at main dividend contributing units Solvency II ratios Local Solvency ratios 393% 380% 365% 286% 274% 266% 257% 248% 210% 200% 219% 209% 190% 200% 199% 181% 162% 144% MAPFRE GROUP MAPFRE ESPAÑA MAPFRE VIDA MAPFRE RE USA BRAZIL 12.31.2016 12.31.2017 12.3
Slide 40: 2018: Capital management and cash flow upstreaming
03 CAPITAL MANAGEMENT 2018: Capital management and cash flow upstreaming in MAPFRE Group MAPFRE S.A. - Net cash flows Dividends upstreamed from subsidiaries 2016 2017 2018 SPAIN 365 398 355 MAPFRE ESPAÑA 243 244 231 2018 MAPFRE VIDA (1) 122 154 124 Dividends upstreamed from subsidiaries 647 INTERNAT
Slide 41: Stable and growing dividend policy, while maintaining strong solvency levels
03 CAPITAL MANAGEMENT Stable and growing dividend policy, while maintaining strong solvency levels Payout 57.6% 63.7% 84.4% 63.6%* Dividends paid against results 447 447 447 447 2016 2017 2018 2018 Earnings per share (€) 0.25 0.23 0.17 0.23* Dividend per share (€) 0.145 0.145 0.145 0.145 Dividend pe
Slide 42: Outlook: financial flexibility and improving profitability
03 CAPITAL MANAGEMENT High level of financial flexibility and improving profitability will underpin stable and growing dividends, as well as protect our current capital base Outlook Shareholders’ equity › Expected to move in a range of 8-9 bn€ AFS portfolio ≈ › Movements across different asset class
Slide 43: Investment Management
04 GESTIÓN DE INVERSIONES 04 INVESTMENT Optimizing returns in a low interest rate environment MANAGEMENT José Luis Jiménez 43
Slide 44: Economic Outlook: Low growth and low interest rates
04 INVESTMENT MANAGEMENT Economic Outlook: Low growth and low interest rates but a more positive environment 2019 GDP growth outlook (% y-o-y) Expected currency evolution vs EUR Previous Bloomberg 2016 year 2018 year 18/16 2019* 19/18 OECD IMF end end Var year end Var (2018) Consensus* Global 3.6 3.
Slide 45: Solvent and cautious investment portfolio
04 INVESTMENT MANAGEMENT Solvent and cautious investment portfolio Investment portfolio – Breakdown by asset class Main guidelines 49.3 • Sound asset allocation in the balance sheet with a bias to Other investments (9.6%) sovereign bonds. Increased allocation to Italy has been 4.7 Cash (4.5%) opport
Slide 46: Margin of improvement by portfolio diversification
04 INVESTMENT MANAGEMENT There is margin of improvement by portfolio diversification European listed Spanish 2018 MAPFRE Yield insurers (*) sector (**) Asset type target Allocation % Fixed income 69.3% 75.3% 74.1% Real Estate 4%-6% 60.0% Equity 8.9% 5.2% 4.9% Private Debt 5%-7% 20.0% Liquidity 4.6%
Slide 47: Stable income in our Euro Fixed Income portfolios
04 INVESTMENT MANAGEMENT Stable income in our Euro Fixed Income portfolios Actively managed portfolios1 - Non-Life (€7.2 bn) Actively managed portfolios1 - Life (€6.2 bn) Duration (%) Duration (%) 6.4 6.7 6.8 6.9 6.8 6.8 7.1 7.0 6.7 6.6 2.59 4.10 3.93 3.97 3.94 3.91 2.40 2.34 2.34 2.11 1.42 1.42 1.3
Slide 48: Positive outlook in US and Brazilian Fixed Income portfolios
04 INVESTMENT MANAGEMENT Positive outlook in the US and Brazilian Fixed Income portfolios EE.UU USA Brasil Brazil Duration 11.35 5.98 5.88 5.65 5.27 4.91 7.06 6.39 6.40 6.40 3.42 3.45 3.17 6.89 6.65 6.75 3.13 6.39 2.85 5.98 2.92 2.80 2.79 2.79 2.58 Duration 1.19 1.19 1.23 1.43 1.45 12/1/2017 3/1/201
Slide 49: ESG Analysis of our Investment Portfolio
04 INVESTMENT MANAGEMENT ESG Analysis of our Investment Portfolio Classification of issuers by market value (Europe + USA + Brazil) Issuers in portfolio with ESG assessment (Europe + USA + Brazil) Europe aggregate + USA + Brazil Issuers % Market value (€) % Europe aggregate + USA + Brazil Issuers %
Slide 50: Challenges and Objectives
04 INVESTMENT MANAGEMENT Challenges: Objectives: • Optimizing returns in a low interest rate • To protect returns in our fixed income portfolios. environment without increasing significantly the risk profile of the portfolio. • Increase our balance sheet diversification. • To boost the fee based bus
Slide 51: Q&A
01 OPENING REMARKS Q&A 51
Slide 52: MAPFRE RE
05 MAPFRE RE 05 MAPFRE RE MAPFRE Group Reinsurance Eduardo Pérez de Lema 52
Slide 53: Premiums and Attributable result
05 MAPFRE RE Premiums 4,235 4,222 3,732 3,787 3,254 3,343 2,885 2012 2013 2014 2015 2016 2017 2018 Attributable result 186 153 162 149 142 109 87 2012 2013 2014 2015 2016 2017 2018 53 Million euros
Slide 54: Large loss impact on MAPFRE RE
05 MAPFRE RE Large loss impact on MAPFRE RE (Pre-tax and minority interests) 375 CAT Man Made 372 342 107 117 278 114 250 244 234 226 222 51 136 110 90 156 149 127 161 268 254 275 81 51 228 198 142 134 136 98 95 75 73 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expected Losses 54 Million
Slide 55: MAPFRE RE achieving good underwriting results, with reduced volatility
05 MAPFRE RE MAPFRE RE continues achieving good underwriting results, with reduced volatility . . . 114.0 110.1 107.7 (1) 104.0 93.2 92.6 95.2 93.2 90.0 91.1 90.1 90.6 89.8 86.8 100.6 99.7 95.5 95.7 97.0 93.1 93.9 94.1 94.8 96.1 92.3 91.6 93.5 96.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 56: Generating attractive returns, above the industry average
05 MAPFRE RE . . . 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 12.6 11.6 9.6 11.0 9.3 3.0 2.1 1.9 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 MAPFRE RE - ROE (%) Industry - ROE (%) (1) -0.3 MAPFRE
Slide 57: Strategic priorities
05 MAPFRE RE Strategic priorities › Maintain the current level of profitability, with reduced volatility, a solid financial structure and risk management framework, that guarantees the solvency and stability of the entity. › Profitable growth of Non-Group operations, by strengthening positions in ke
Slide 58: Main rules of the reinsurance policy of MAPFRE
05 MAPFRE RE Main rules of the reinsurance policy of MAPFRE › MAPFRE RE will underwrite 100% of any reinsurance treaty of any MAPFRE Company (Excluding facultative) › Compulsory cession of a minimum share of every facultative placement to MAPFRE RE › Every fronting placement must be reported to MAPF
Slide 59: Main goals of MAPFRE RE with respect to Group reinsurance
05 MAPFRE RE Main goals of MAPFRE RE with respect to Group reinsurance › Provide adequate coverage for risks that exceed the Group risk appetite › Obtain the underwriting capacities necessary for the different MAPFRE companies to be competitive in the market › Capital management of MAPFRE companies
Slide 60: Options for Group reinsurance buying
05 MAPFRE RE Options for Group reinsurance buying › Group Covers: Portfolio 1 Preferred option in most of the cases, where portfolios are similar in various countries / Portfolio 2 MAPFRE RE Reinsurance companies (e.g. CAT, Property, Marine, Engineering, Agricultural, etc.) Portfolio … › Specific Co
Slide 61: Optimization of retentions
05 MAPFRE RE Optimization of retentions Group Retention Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4 Portfolio 5 Local Retention MAPFRE RE Additional 61
Slide 62: Reinsurance design
05 MAPFRE RE Reinsurance design › Determination of Group’s retentions protected under XL Treaties Retention XL Limit Proportional Tty Facultative Facultative Facultative Proportional Retrocession Facultative Proportional Tty Proportional Tty Proportional Tty XL Limit XL Limit XL Limit Retention Rete
Slide 63: Group reinsurance returns to MAPFRE RE
05 MAPFRE RE Group reinsurance returns to MAPFRE RE 120 120 .0% 103.1% 95 95.9% 95.3% 100 93.5% 94.5% 91.9% 91.2% 100 .0% 79 89.5% 91.4% 80 84.6% 83.3% 60 64 80. 0% 60 50 81.8% 48 41 36 36 29 40 60. 0% 26 20 40. 0% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20. 0% -20 -18 -40 0.0
Slide 64: Key takeaways
05 MAPFRE RE Key takeaways › MAPFRE RE continues delivering solid and stable results and dividend flow › Ambition and ability to grow profitably › Risk appetite and reinsurance program largely unchanged › Group reinsurance fully aligned with MAPFRE strategy › Centralized reinsurance management provi
Slide 65: MAPFRE Brazil Business
06 BRAZIL 06 MAPFRE BRAZIL BRAZIL BUSINESS An opportunity for growth Fernando Pérez- Serrabona 65
Slide 66: Brazil: an opportunity for growth
06 BRAZIL B R A Z I L : A N O P P O RT U N I T Y FO R G ROW T H › The recent change in government and expected structural reforms have substantially improved Brazil’s economic outlook for the coming years › This improvement will come with better development of the insurance market, according to the
Slide 67: Business positioning in Brazil
06 BRAZIL B US I NES S P O S IT IONING I N B R AZI L Number 1 Insurer not linked to the banking sector in the country Number 1 Group in the country in the Risks Market with a 15.5% market share 2nd Position in Auto with an 11.6% market share MAPFRE IN BRAZIL › MAPFRE’s second largest insurance opera
Slide 68: New agreement with BB
06 BRAZIL B US I NES S P O S IT IONING I N B R AZI L – N E W AG R EEMENT WI T H B B MAPFRE SEGUROS › Business from the traditional channel › Auto business from the bank channel BBMAPFRE › Life, Agro, Mortgage Life, SMEs and Homeowners insurance lines for BB clients DURATION OF THE AGREEMENT AND › Th
Slide 69: Strategic Plan MAPFRE Brazil Regional Area
06 BRAZIL 2 0 1 9 – 2 0 2 1 ST R AT EGI C P L A N M A P FRE B R A Z I L Profitable Create sustainable value Grow sustainably above Profitably drive for shareholders market levels Life business growth Gain and retain our Boost productivity of distribution Innovate in products, services clients’ trust
Slide 70: Strategic initiatives
06 BRAZIL ST R ATEG I C I N I T I AT I VES DIGITAL CHALLENGE DEVELOPMENT OF TECHNICAL AND ‘CONEXÃO GLOBAL’ PLAN COMMERCIAL KNOW-HOW TECHNICAL EXCELLENCE DIGITAL BUSINESS PLAN CUSTOMER-FOCUSED 360º UNIVERSAL COST CONTAINMENT PLAN CUSTOMER VISION ONGOING DEVELOPMENT OF PROCESSES, RISKS AND CONTROLS DI
Slide 71: Initiatives: 'Conexão Global' Plan
06 BRAZIL I N I T IAT IVES: ‘ CO NEXÃO GLO BAL’ P L AN > OBJECTIVE: Reduction of Auto Combined Ratio REDUCTION OF COMBINED RATIO 114.7% 5% 100% 2019 105% 29% 5% 28% 2020 103% 81% 2021 100% 67% CR OUTLOOK 100% 2018 2021 F Claims % Adquisiton expenses % Administration expenses % Actions defined in str
Slide 72: 'Conexão Global' Plan
06 BRAZIL ‘ CONEX ÃO G LO BAL’ P L A N 1. ACTUARIAL 2. LEGAL 3. ISSUE 4. FRAUD › Monitoring › Collections › Fight against fraud › Legal claims management (PLATEA) › Pricing management management › Portfolio protection › Renewal tariff > OBJECTIVE › Legal network › Redesign of renewal optimization ›
Slide 73: Initiatives: Bank channel development
06 BRAZIL I N I T IAT IVES: BA NK C H A NNEL D E VELOPMENT BBMAPFRE TO GROW SUSTAINABLY, ABOVE THE MARKET Actions defined in the strategic plan › Customizable sales platform: improvement in customer experience. Products adapted to customers needs › Digital sales platform: Policy issuing time reduced
Slide 74: Initiatives: Technical excellence
06 BRAZIL I N I T IAT IVES: T EC HNI CAL E XCELLENCE BACKOFFICE Development of Process, Risks and Technical and Digital challenge Technology > ACTIONS Controls Commercial knowledge Technology platform against fraud (Platea) Better technical- Convergence of core Teleworking > GOALS systems Commission
Slide 75: Initiatives: Cost containment
06 BRAZIL I N I T IAT IVES: CO ST CONTAINMENT Actions defined in strategic planning EXPENSE SAVINGS Internal Expenses Contract review Review of overhead › Review of technology and positioning in general › Overhead review (corporate credit card, transportation, refunds, Human Resources actions an
Slide 76: Main objectives
06 BRAZIL M A I N O B J ECT I VES 2 0 1 9 - 2 0 2 1 › Development of traditional insurance business: 7% growth in Auto; Multi- risks, 4%; Life, 13% › Development of bank channel with Banco do Brasil to increase sales volume by 9% › Better discipline and technical control, with a combined ratio reduc
Slide 77: Financial targets: MAPFRE Brazil 2019-2021
06 BRAZIL F I N A N C I A L TA RG E TS 2 0 1 9 - 2 0 2 1 MAPFRE BRAZIL – FINANCIAL OBJECTIVES 2019 - 2021 AVERAGE PREMIUM ROE GROWTH COMBINED RATIO Life <89% >12% >6% Non-Life <96% Auto <100% 77
Slide 78: Wrap up: good outlook for business in Brazil
06 BRAZIL WR A P U P POSITIVE ECONOMIC GROWTH OUTLOOK IN BRAZIL GOOD INSURANCE MARKET GROWTH OUTLOOK EXCELLENT BUSINESS OUTLOOK FOLLOWING THE NEW AGREEMENT WITH BANCO DO BRASIL IMPROVED MANAGEMENT AND BUSINESS CONTROL GOOD OUTLOOK FOR BUSINESS IN BRAZIL FOR THE NEXT THREE-YEAR PERIOD 78
Slide 79: International Business
07 INTERNATIONAL BUSINESS 07 INTERNATIONAL International Core Markets Overview BUSINESS Jaime Tamayo 79
Slide 80: International Area in 2018
07 INTERNATIONAL BUSINESS INTERNATIONAL AREA IN 2018 › Completed restructuring plan 2018: Positive Impact (e) $15.8 million in 2019 › Improvement of $24 million in the adjusted result in 2018 › Continuous leadership in Massachusetts Personal Auto market with a 25% Market share and results of $81 mil
Slide 81: Territorial Area – International
07 INTERNATIONAL BUSINESS T E R R I T O R I A L A R E A – I N T E R N AT I O N A L Written Premiums Attributable Result Dec-17 Dec-18 Δ Actual Dec-17 Dec-18 Δ Actual North America 2,529 2,425 -4% 49 35 -29% Eurasia 1,870 1,766 -6% 44 13 -70% INTERNATIONAL 4,398 4,191 -5% 92 48 -48% P R E M I U M / R
Slide 82: Eurasia Region
07 INTERNATIONAL BUSINESS E U R A S I A REGION P R E M I U M S & R E S U LT Written Attributable Δ Actual Δ Actual 1,124 Premiums Result Turkey 486 -26% 14.2 -71% Germany 327 5% 2.7 0% Italy 474 1% -3.9 72% Malta 390 11% 4.3 6% 328 Philippines 27 -32% 0.2 19% Indonesia 62 42% -2.2 -155% 155 136 16 1
Slide 83: Turkey = Volatility
07 INTERNATIONAL BUSINESS T U R K E Y = V O L AT I L I T Y April 2017 July 2015 • New capped January 2018 December 2018 prices for MTPL July 2018 September 2018 • End of ceasefire • Olive Branch • Q4 GDP -3%; with PKK • Referendum • Syrian refugees • Central bank Operation unemployment approved esti
Slide 84: MAPFRE Sigorta has weathered the storm
07 INTERNATIONAL BUSINESS M A P F R E S I G O R TA H A S “ W E AT H E R E D T H E S T O R M ” A N D R E M A I N S S T R O N G A N D P R O F I TA B L E I N T H E V O L AT I L E T U R K I S H M A R K E T 1 4 . 2 M I L L I O N I N A T T R I B U TA B L E R E S U LT S I N 2 0 1 8 I M PA C T S T O O U R O
Slide 85: Strategic approach: managing volatility
07 INTERNATIONAL BUSINESS S T R AT E G I C A P P R O A C H : M A N A G I N G V O L AT I L I T Y SHARE OF MTPL BUSINESS › Continuous focus on technical profitability and IN TOTAL PORTFOLIO average costs › Client-oriented: channel diversification following the MAPFRE model: 5% of Total DPW through 47%
Slide 86: Actions – Motor business
07 INTERNATIONAL BUSINESS A CTIONS - M OTOR B USINESS TARGET 2021: Decrease 10.5 points in COR Pricing & Claims management & Agency Management Financial Underwriting operational efficiency › Continuous management › Implementation of special › Improve the quality of › Balance sheet: Continue to and s
Slide 87: Strategic approach: value creation (Verti Italy)
07 INTERNATIONAL BUSINESS S T R AT E G I C A P P R O A C H : V A L U E C R E AT I O N KEY FINANCIAL HIGHLIGHTS › Italy’s Auto market amounts to €16 billion part of a €32 FY 2017 FY 2018 ∆ billion Non Life market PREMIUMS 471.4 474.1 0.6% › VERTI is in the process of consolidating its brand after the
Slide 88: Actions to transform operational processes
07 INTERNATIONAL BUSINESS A C T I O N S T O T R A N S F O R M O P E R AT I O N A L P R O C E S S E S A L I G N E D W I T H M A P F R E ´ S O P E R AT I N G M O D E L Growth Technical Claims Expenses › Optimize digital › Apply advanced rating › Consolidation of Group´s › Replacement of core capabilit
Slide 89: Conclusions, Challenges, Objectives
07 INTERNATIONAL BUSINESS CONCLUSIONS CHALLENGES OBJECTIVES › MTPL regulation in Turkey has materially changed › TURKEY: Continue channel and product the rules of the game and the negative effects will diversification while containing the effects of the continue in 2019 MTPL regulation. Focus on Tec
Slide 90: MAPFRE USA
01 OPENING REMARKS 08 Improved profitability outlook MAPFRE USA With focused priorities for the coming years Alfredo Castelo 90
Slide 91: 2018 results were affected by significant one-offs
08 MAPFRE USA 2018 results were affected by significant one-offs 2017 2018 2018 Attributable result 74.6 9.7 Combined ratio 104.1% Cat / Weather -1.3 -13.8 Cat / Weather -0.9% Verti -6.3 -15.1 Verti -0.9% Compulsory pools 7.5 -8.8 Compulsory pools -0.6% Exit plan* -8.5 Adjusted combined ratio 101.7%
Slide 92: Strong signs of improvement in key states and lines
08 MAPFRE USA Strong signs of improvement in several key states and lines of business . . . Strong performance in › Premiums: +2% Massachusetts › Pre-tax profit: 81mn USD › Combined ratio: 100%, despite challenging weather Turnaround in California and Ohio › California improved its results by 16 mn
Slide 93: Strengthening profitability initiatives
08 MAPFRE USA . . . leading MAPFRE to strengthen profitability initiatives Claims management & Pricing Products & Clients operational efficiency › Comparative Raters & › Automation to reduce › One product strategy and Underwriting Models: expenses and improve clearly defined value improve customer s
Slide 94: Massachusetts: Mature and profitable business
08 MAPFRE USA Massachusetts: Mature and profitable business, with leading market position in Non-Life and strong performance in 2018 despite the weather › Market shares in Massachusetts: › Private Passenger Auto: 24.6% (#1) › Homeowners: 13.5% (#1) › Commercial auto: 15.4% (#1) › Growth driven prima
Slide 95: Outside of Massachusetts: Focus on profitability initiatives
08 MAPFRE USA Outside of Massachusetts: Focus on profitability initiatives Outside Massachusetts Premiums 2017 675.0 2018 570.0 Delta -15.5% › Fall in premiums (-16%), due to profitability initiatives: Technical results (83.0) (63.0) 24.0% › Exit States: -38.6% Financial Income 26.0 21.0 -16.3% › Co
Slide 96: Priority 1: Improve profitability in Personal Auto
08 MAPFRE USA Priorities 2019-2021 Priority 1: Improve profitability in Personal Auto in CT, FL and WA Main actions Contribution to MAPFRE USA: › Comparative Rater Strategy for new business › ≈ 8% of premiums ›Target desirable segments › ≈ USD 29 mn of Personal Auto technical › New Underwriting Deci
Slide 97: Priority 2: Commercial Lines Outside of MA
08 MAPFRE USA Priorities 2019-2021 Priority 2: Challenging performance in Commercial Lines Outside of MA Contribution to MAPFRE USA: Main actions › ≈19% of Commercial premiums › Commercial Auto Pricing strategy › ≈USD 12 mn of Commercial technical loss › Limitation on eligible vehicles › Re-underwri
Slide 98: Priority 3: Expense reduction initiatives
08 MAPFRE USA Priorities 2019-2021 Priority 3: Expense reduction initiatives Organizational Structure re-alignment 23.1 10% reduction in workforce since 2018 Operational efficiencies 23.0 Total 46.1 98 Million USD
Slide 99: Combined ratio reduction
08 MAPFRE USA Priorities 2019-2021 Combined ratio reduction MAPFRE Insurance 2018 Combined Ratio* 103.1% Personal Auto technical actions: 1st - CT, FL and WA -1.5% priority - Rest of the states -1.6% Commercial lines technical actions: 2nd - Outside Massachusetts -0.6% priority - Massachusetts -0.1%
Slide 100: Key messages: Improved profitability outlook
08 MAPFRE USA Key messages: Improved profitability outlook for the coming years › Massachusetts: maintain leadership position with strong performance and implementation of new IT platform › Outside Massachusetts: focus on profitability in Personal Auto and Commercial lines › Expense and Operational
Slide 101: MAPFRE Insurance 2021 targets
08 MAPFRE USA MAPFRE INSURANCE* 2021 targets Business Growth Combined Ratio ROE Premiums 8% 4% 97% *Excluding Verti 101
Slide 102: MAPFRE Open Innovation
09 MAPFRE OPEN INNOVATION 09 MAPFRE OPEN INNOVATION José Antonio Arias 102
Slide 103: MAPFRE cutting edge
09 MAPFRE OPEN INNOVATION MAPFRE cutting edge 103
Slide 104: Overview
09 MAPFRE OPEN INNOVATION Overview › Certainty › Uncertainty The change › The speed of change › Customers › Environment › Risks › Business models Insurtech is different… Collaboration vs full disruption 104
Slide 105: Strategic and Disruptive Innovation
09 MAPFRE OPEN INNOVATION STRATEGIC DISRUPTIVE Innovation Innovation Case Venture builder Capital Short term Long Term & Internal External Agreements with R&D Universities/ Business Experts Schools 105
Slide 106: Our lines of action
09 MAPFRE OPEN INNOVATION Our lines of action Intrapreneurship R&D experts Case Builder innova Expert knowledge on › Design and test to verify the robustness and market fit for new innovation › 34 creativity workshops trends › Acceleration specific cases › 17 cities, 3 countries: Spain, Peru & USA l
Slide 107: R&D Innovation as a Service
09 MAPFRE OPEN INNOVATION R&D Innovation as a Service Making MAPFRE future-ready +550 vehicles analyzed through crash tests +2,000 different models tested › ADAS test › Autonomous car › New crash test +525 C onnected research projects A utonomous S hared 107 E lectric
Slide 108: Who we are: the concept
09 MAPFRE OPEN INNOVATION › WE collaborate WHO WE ARE › WE drive THE CONCEPT › WE inspire › WE are transforming ourselves 108
Slide 109: Created to transform the insurance sector
09 MAPFRE OPEN INNOVATION Created to transform the insurance sector 2 innovation programs Acceleration Program Adoption Program › Seed & Early stage › Market traction 109
Slide 110: Start-up applications from more than 25 countries
09 MAPFRE OPEN INNOVATION Start-up applications from more than 25 countries 110
Slide 111: Identifying first mature wave of opportunities
09 MAPFRE OPEN INNOVATION Identifying first mature wave of opportunities › Deal flow & investments: Focus, Tier 1&2 100% Insurtech value proposition & technology Venture Initially other industries but an interesting Capital InsurTech “use case” Opportunistic, (Tier 3) Transversal value proposition o
Slide 112: Strategic Innovation Our Examples
09 MAPFRE OPEN INNOVATION Strategic Innovation Our Examples E-sports Players INSOORE Parametrix Index 3D Model underwriting Agro Insurance with drones Business Unit MAPFRE Spain MAPFRE Asistencia MAPFRE RE MAPFRE Global Risks Phase Local deployment Pilot Pilot Prototype Parametric Index Agro Fly a d
Slide 113: Strategic Innovation Our Examples
09 MAPFRE OPEN INNOVATION Strategic Innovation Our Examples VR claims adjusters Drone insurance Predictive flight cancelation Business Unit CESVIMAP MAPFRE Spain MAPFRE Asistencia Phase Pilot Local deployment Pilot Description Training claims Insurance for Prediction of flight adjusters using VR pro
Slide 114: Takeaways
09 MAPFRE OPEN INNOVATION Takeaways › Innovation aligned with the business strategy › Limited investment, well balanced and focused on execution › Start-ups with proposals for insurance products and services for the present and future › From an in-house model to an open model › Combination of intern
Slide 115: Q&A
09 MAPFRE OPEN INNOVATION Q&A 115
Slide 116: Closing Remarks
01 OPENING REMARKS 10 WE’RE TRANSFORMING CLOSING REMARKS OURSELVES For growth and improved Antonio Huertas profitability 116
Slide 117: We are sustainability
10 CLOSING REMARKS We are sustainability Strategic Plan for Energy Efficiency and Climate Change 2030 SDG Agenda Fighting climate change: › All MAPFRE companies based in Spain and Portugal will be carbon neutral in 2021 › This represents a 61% decrease in the Group’s current emissions › We will no l
Slide 118: We are commitment: United Nations Global Compact
10 CLOSING REMARKS We are commitment United Nations Global Compact › Finance Initiative of the United Nations environment program (UNEP FI), the UN pilot program to evaluate climate change › We are the only Spanish insurer participating in the UNEP FI › Principles for Sustainable Insurance (PSI) › P
Slide 119: Social and Environmental Commitments
10 CLOSING REMARKS Social and Environmental Commitments 2019 – 2021 Strategic Plan 1 119
Slide 120: 2019-2021 Strategic Plan: Focus on profitable growth
10 CLOSING REMARKS 2019 – 2021 Strategic Plan Focus on profitable growth 120 #WeAreMAPFRE
Slide 121: Thank you
Thank you wy) 3 | T ee 6 WX EE [| LE | eh 2 | OO | u | ; nis ty | | | ®MAPFRE Z radora olahal de canfian-