"In 2020 we strengthened our leadership and we have remained faithful, more than ever, to our values"
José María Serra Chairman
Dear shareholders, employees and customers,
I am pleased to share with you the annual report for 2020, a particularly complicated year during which Grupo Catalana Occidente was able to strengthen its position of leadership and has remained faithful, more than ever, to its values.
Before reviewing our Group's global evolution and performance, I would like to say a few words about the importance, in difficult times such as the present, of creating a strong long-term business and generating sustainable social value. This means focusing our activity not only on obtaining results but also on promoting the well-being of our stakeholders and society as a whole.
In 2020, the world economy was severely affected by the COVID-19 pandemic, closing the year with a 3.5% shrinkage. A downturn not seen since World War II. Spain was one of the hardest hit markets, with an 11.1% year-on-year GDP decrease. The health crisis has caused profound damage to the Spanish economy, affecting public finances, businesses, employment, consumption and investment.
In this extremely complex environment, we obtained a consolidated result of €270.1 million, 36.4% less than the previous year, due to the impact that the economic situation derived from COVID-19 has had on the credit insurance business. However, the Group's turnover increased slightly by 0.3% to €4,426.4 million thanks to the resilience of the traditional business. The integration of Antares, which contributed €142.8 million to turnover, was particularly satisfactory. In the credit insurance business, the result was €50.4 million. It should be noted that the government support programmes implemented in an agile and decisive manner in Europe, where Atradius has the greatest focus of its activity, have contributed to mitigating the dramatic effects that the pandemic is having in various sectors to which we are exposed.
Overall, it has been a year in which we have strengthened our leadership position in the Spanish market, where we have climbed to fourth place in terms of premium volume.
With regard to the Group’s balance sheet soundness, I would like to highlight that permanent resources at market value stood at €4,663.4 million at the end of 2020, which represents a growth of 1.7% and strengthens our solvency position, with a ratio of over 216%. At the same time, we have maintained our commitment to shareholders by paying a dividend of €105.85 million (€0.8821 per share).
We have chosen to be extremely prudent in our investments and to closely monitor financial margins and commitments to our policyholders. We have remained faithful to our strategy of investing in traditional assets, maintaining high liquidity rates in order to take advantage of market opportunities. At the same time, and due to the extension of the low interest rates over time, we have increased exposure to other types of assets such as loan or infrastructure funds, always with a long-term view. These represent a good opportunity to improve profitability and increase portfolio diversification.
As I mentioned at the beginning, no less remarkable than the financial results has been the fact that, since the beginning of the pandemic, we have promoted initiatives to protect employees and associates; to offer facilities to customers and suppliers; to support research and to help society in general, especially the most vulnerable groups.
In fact, the Group quickly implemented teleworking among all its employees in the companies Seguros Catalana Occidente, Plus Ultra Seguros, Seguros Bilbao, NorteHispana Seguros, and Atradius Crédito y Caución. At the same time, our intermediaries had tools to ensure continuity in the relationship with the customer through telematic means and remote contracting facilities at their disposal. To help our associates, mostly self-employed, we launched a plan of €20 million in interest-free advances on their invoicing, with the aim of providing them with liquidity.
In the provision of service to our traditional business policyholders, we quickly implemented aids such as flexible payment of bills and free medical assistance by telephone. Systems for customer service such as video-loss adjustments and digital signatures were implemented. For our corporate customers we extended cyber-risk coverage to employees who were teleworking. In the credit insurance business, among other measures, we made the period for declaring non-payment more flexible. All of this, with the desire to contribute to alleviating the difficulties caused by the pandemic.
At sector level, Group Catalana Occidente joined the solidarity fund for the fight against the COVID-19 health crisis with a contribution of €2.27 million. With this initiative, the sector recognises the efforts of all the staff of health centres and old people’s homes that are on the front line, facing the pandemic and offers them free life insurance and an allowance for hospitalisation in case they are infected.
In turn, the Fundación Jesús Serra’s solidarity action was focused on new initiatives aimed at alleviating the situation created by the health crisis: among others, it supported the Spanish National Research Council (CSIC) in its aim of promoting research into a vaccine against COVID-19; and it collaborated with Save the Children to help families in vulnerable situations.
Last but not least, in this review of the year, I must highlight that we have formalised the review of our material issues and established a sustainability plan 2020-2023 that confirms our commitment to integrate sustainability into the Group’s business model.
We have also signed up to the United Nations Principles for Sustainable Insurance (PSI) and Principles for Responsible Investment (PRI), formalising our commitment to contribute to an economically efficient and sustainable global financial system that creates long-term value.
As we look to the future, our objectives are focused on redoubling our efforts in customer orientation, based on strengthening our distribution networks and relying increasingly on digitalisation and new technologies, which provide us with new capabilities for customer interaction We will also continue to adapt our product and service offers to market trends in the areas of sustainability, looking after health and wellness, increased longevity, mobility and data security management. Many of these trends have been accelerated by the pandemic. Similarly, technical rigour in business management will continue to characterise our performance and we will continue to advance along the path of efficiency and integration.
To conclude, I would like to emphasise that insurers play a very important role in the lives of individuals and companies by accompanying them in their preventive needs and protecting them against uncertainties. Our vocation will continue to be to serve our customers, supported by our strategic pillars of growth, profitability and solvency.
Finally, I would like to thank you for your trust and support, as well as that of our intermediaries and external networks. I am convinced that together we will be able to continue to give the best of ourselves to others.
José María Serra