Good morning. We continue in the Expansion financial meeting, this time with a special guest because it's been a while since he came to this forum. He is Antonio Huertas, president of Mapfre. Welcome, Antonio.
Very well. You are president Antonio, you have been president of Mapfre since 2012. It has rained a lot since then, so I would love to start by making a balance of how the insurance sector has transformed since you took office in the midst of a crisis. It was a very complicated time for Spain. And what prospects are there for Mapfre, especially this year and in the coming years?
Very well, thank you very much. First of all, thank you to Expansion. Indeed, some years I have missed because I had some other international commitments, but it is a pleasure to be here. Moreover, in the year you celebrate the 40th anniversary of the medium, which is a true luxury, isn't it? To have media outlets with so much life and that have followed, we were talking earlier behind the scenes that Mapfre began its international journey 42 years ago, that is, we have practically led a parallel life and you have covered it throughout these four decades magnificently well. Indeed, from 2012 onwards, everything has happened in the world, not only in the insurance world. And well, they were complex times, but insurance is an activity that is anticyclical. The elders of our activity always told us, 'When crises come, let them find you working in insurance, right? Because it is the clear way to be prepared and anticipating what may happen.' And I think we have demonstrated it, Spanish insurance and world insurance in general, but Spanish insurance in particular has been especially resilient. Earlier the president of IOPA mentioned it and well, our investment management, our business model and our diversification, especially Mapfre's, which is the most internationalized Spanish company in the world. We operate in more than 30 countries. Spain represents 32-33% of our activity. Brazil is reaching 20%, the United States 10-12%, reinsurance is also 30%, that is, we operate in many different environments and also, we carry the winter suit and the summer suit at the same time because it can be cold and hot simultaneously where we are and that makes us very prepared. In 2012 we were involved in the 2011 crisis, it took us 4 or 5 years to recover some normality. We lived 10 years with low interest rates, even negative, which is tremendously damaging for the financial returns of a portfolio of an insurance company that usually are very important, a very important part of the total return of the activity. And well, in a way we have also paid the small defect of our business in terms of understanding where profits are generated, how they are generated in a tremendously hostile environment. On one hand, interest rates, but also the successive increases in supervisory requirements. I'm not saying that's negative, but in a way the preparation for that more demanding supervision was necessary, but it complicated, especially for international insurers, life in terms of investors, in terms of conveying how we generate value for the shareholder and for society in general. Today that is seen better. We receive very good news, also from the proposals of the new European Commission regarding the simplification of supervision that will help because the United States plays in another league in that sense, doesn't it? It has a different and more flexible supervision and sometimes makes us lose competitiveness. And to finish, the balance of these 12, 13 years for Mapfre has been very positive. We have always had a reasonable floor of results that those who follow us on the stock market and the supervisors themselves have always valued for the excellence of our management, technical control, and the magnificent quality of our investment management. As rates have changed around the world, we have benefited from that change in trend and also the consequences of the pandemic which were initially negative and there were three hard years, 21, 22, 23, from 2024 onwards we are already in a situation of normality throughout the world and we have recovered a cruising speed of controlled claims, a very good expense ratio, excellent investment returns, and reasonable growth throughout the world, which presents magnificent prospects as the market is showing today, the stock market, which has already allowed Mapfre to be placed at share price levels much higher than its book value and well, it allows anticipating that for the coming years Mapfre's result will be quite good.
And where can we expect the focus of growth from now on?
Yes. As I said, our diversification allows us to compensate, right? And not everything can go equally in euros, because you have to consider that international companies have that small difficulty when we present quarterly and annual accounts. It is that Mapfre operates 60% with currencies in emerging countries and 40% between euro and dollar, right? And that generates some inconsistency in those accounts when there is fragility or volatility in currencies, which is happening now in a negative sense, right? And now a new anomalous situation has occurred, which is that normally the dollar and Latin American currencies acted as a hedge, they compensated each other. When the real or the Mexican peso deteriorated, the dollar held or appreciated. In this case, against the euro, the dollar has also depreciated and that has impacted us a bit more. So, we are growing normally around the world. Our bet is always to grow more in life than non-life, because obviously we have a certain imbalance also because the non-bank life insurance business in Spain is not so relevant and Mapfre has to fight in that world of banking giants alone and that creates some additional growth difficulty, but this year we are growing excellently in life in Spain and it is helping and compensating extraordinarily so that Mapfre's normalized growth worldwide is very good. We want to grow in health. Obviously in auto we maintain our cruising speed after the crisis we had in the post-Covid period due to the inflationary situation in many markets and in general that is our bet, organic growth, moderate, healthy growth and continue consolidating our leadership position in most of the markets where we operate.
Any new business that you can announce?
New businesses, we are always betting on innovating and looking for new partners, new partners to help us develop them. If you are referring explicitly to new markets, new countries, well no, new countries are difficult because you are already in many, but there is always, right? In fact, the trend in recent years has been to divest in some, right? Because we understood that if there was not enough scale, for example, in the United States, we continue very strong, but in seven or eight states where we don't have scale, we divested. We divested in Indonesia, we divested in China, we divested in the Philippines, in more assistance we have divested, in Saudi, now in 10-12 countries. That is, that was to clarify our geographical footprint, which is what we committed to shareholders 5 or 6 years ago, we have fulfilled it and now it's about continuing in those countries. We have always defined as strategic markets, obviously, apart from Spain and Brazil, the United States, Germany and Mexico fundamentally, right? These are countries where we aspire to grow in the future. The reinsurance business is very strategic for Mapfre and is presenting not only excellent results but also magnificent prospects for the coming years. It has just been published that Mapfre is, according to PCS, the eleventh reinsurer in the world, in the world. Mapfre at European level is the sixth European insurer between life and non-life according to IFRS standards. And we are the first European multinational, sorry, the first multinational in Latin America, operating in the entire region. Well, I think our positioning allows us to continue seeking business opportunities and new products. Why not? I think the transformation that society is undergoing also requires us to develop perhaps for already known situations, such as retirement, dependency, investment, we seek new opportunities. Mapfre has to grow in asset management. That is a big bet that we have been developing successfully in recent years. A few years ago Mapfre has an investment manager, Mapfre Investment, which is 35 years old, it just turned, and we have been developing a wealth manager, Mapfre Asset Management, Mapfre Wealth Management, with enormous success. We have an extraordinary strategic partnership agreement with Avantes and we have an active plan to continue developing financial and wealth advisory, which is very close to insurance, right? Just as banks do insurance, we do wealth advisory for clients. We want to go from being a product insurer to being a manager of services and broad solutions for our clients, and I think we have already achieved that in Spain.
When you spoke about having left some countries, I wanted to ask you, are you now in 38 countries? Surely about seven countries you mentioned account for close to 70% of the profit. Is it worth having that geographical diversification or will the trend be to retreat and concentrate on those markets that are more profitable?
