Main financial figures

Chairman's review

"2019 was a significant year for the Group, as we have continued to grow profitably in an environment where the economy has slowed somewhat."

José María Serra Chairman

Jose María Serra Catalana Occidente Group president image

Dear shareholders, employees and customers,

I would like to share with you the 2019 annual report, which presents the key figures and milestones for the year, together with other aspects of our corporate strategy and culture.

2019 was a significant year for the Group, as we have continued to grow profitably in an environment where the economy has slowed somewhat.

In terms of results, the Group reports consolidated profit of 424.5 million euros in 2019, up 9.9% on the previous year, while revenues increased by 4.7% to 4,547.7 million euros. These figures reflect the solid performance of the Group's two lines of activity: the traditional and credit insurance businesses.

At the end of the year, we announced the creation of a new role to lead the traditional business, i.e, that carried out by the companies Seguros Catalana Occidente, Plus Ultra Seguros, Seguros Bilbao and NorteHispana Seguros. The purpose of this new role is to strengthen the organization's structure in this activity, with the appointment of Juan Closa as Managing Director of the Group's traditional business.

Meanwhile, in the credit insurance business, David Capdevila was appointed CEO of Atradius N.V., succeeding Isidoro Unda. Isidoro has retired after 12 years as the head of the credit insurance company. I would like once more to express my gratitude to Isidoro for his dedication, effort and commitment over the years, playing a key role in positioning Atradius as a leading firm in international credit insurance.

I would also like to congratulate Juan and David on their new appointments. Both are committed professionals who have demonstrated their leadership skills within the Group over the years. I have no doubt they will be able to successfully meet the challenges before them.

Returning to the key figures, there were notable improvements in the combined ratios, of 90.4% in the traditional business and of 73.4% in the credit insurance business. With respect to balance sheet soundness, permanent sources of financing at market value amounted to 4,584.8 million euros at year-end 2019, an increase of 17.3%. This all contributes to strengthening our solvency ratio, currently 213%.

Our investments are guided by a prudent and diversified management policy, with an evenly distributed investment portfolio. During 2019, we expanded our position in treasury and deposits and increased our exposure to real estate assets, purchasing several office buildings leased to third parties, located mainly in prime areas in Madrid and Barcelona. This allows us to obtain attractive returns despite the current financial climate of low interest rates.

I would also like to point out that in February we completed the purchase of Antares, a company that specializes in life, accident and health insurance, and provides group insurance policies to employees of the Telefónica Group. We are very pleased with this acquisition, as it positions us in the top 10 insurance groups in the health sector. This operation added assets of 1,113.1 million euros to the balance sheet. It also increases our pool of medical professionals by 18,000 and adds 245,000 new customers to our portfolio.

In 2020, our targets include continuing to develop our distribution networks and improve the technical management of the insurance business and investments, innovation and new technologies. These last two are key to addressing one of the major challenges facing the insurance sector: customer orientation.

I must stress this point, because customer orientation is increasingly linked to digitization and new technologies. We understand digitization as an instrument that can be used to bring us closer to the customer and enable us to adapt to their requirements and meet their needs, but also to improve our processes and be more efficient.

Looking beyond 2020, I believe that, as an insurance group, we cannot ignore the challenges that an ageing population will mean for us with respect to ensuring people's well-being and quality of life. Other challenges will include changing mobility trends and how to adapt to new forms of consumption driven by technology.

Of course, the insurance sector can and must play a very important role in meeting these new needs. Our role must be, more than ever, to help people manage the various stages of their lives with security and a sense of well-being. As a group, we therefore endeavour to anticipate and fully understand these needs and to be ready to continue playing a key role in society.

As insurers, we are part of a sector that is fundamental to people's lives. This role has become more important since the last economic crisis, when insurers not only managed without state bailouts, but succeeded in growing their profits and strengthening their solvency margins, creating jobs and fulfilling all their commitments.

Grupo Catalana Occidente's long-term goal is, therefore, to create a solid business and generate sustainable social value. Its social value stems from focusing not only on obtaining good financial results but also on promoting the well-being of its stakeholders and society as a whole.

Grupo Catalana Occidente's corporate social responsibility activity is channelled through Fundación Jesús Serra, covering five areas: business and education, social action, the arts, sport, and research.

I cannot end without thanking you again for your trust and support, and that of our brokers. All of us in Grupo Catalana Occidente work to ensure it is a growing, solvent and innovative organization, even in a complex and changing environment. I call on your continued support for the creation of value in the medium and long term.

José María Serra

Chairman