Earnings Call: Q1 2023

May 16, 2023

Summary

Q1 revenue rose 39% and controlling net profit increased 94% to a record COP 834B, supported by strong subsidiary results and investment income. Currency effects and Protección consolidation complicate comparisons; net debt is targeted below 3x for 2023.

Good morning, and welcome to the financial results of the first quarter of 2023 of Grupo Sura. This event is divided into two. We will begin with a pre-recorded session presenting the main results of the highlights of the quarter. Next, we will have a live Q&A session. Today, we are joined from Grupo Sura by Gonzalo Pérez, CEO of the company, Ricardo Jaramillo, Vice President of Business Development and Finance, Juan Luis Múnera, Vice President of Corporate Legal Affairs, and Maria Mercedes Barrera, Manager of Corporate Citizenship. From our subsidiaries, Juan Fernando Uribe, Vice President of Investment Finance of Suramericana, and Carlos Oquendo, Vice President of Corporate Finance of Sura Asset Management. Here is Gonzalo Pérez. Thank you so much, Carlos. Again, thank you for joining us, and welcome to this call of results of the first quarter of 2023 of Grupo Sura. We end the quarter with total revenue that reached COP 9.6 trillion, up 39% compared to the year before. These results stand out because they still show a great commercial dynamics of Suramericana growing double digits in premiums, while Sura Asset Management also shows growth in revenue from commissions leveraged by the labor market that still has good dynamics and capital markets with better returns compared to the year before. The operating profit reached COP 1.4 trillion, showing a better operational result of our subsidiaries and an increase of 6% in the equity method. In the controlling net profit, this performance of the companies of our portfolio led to a profit in the first quarter of COP 834 billion, which increased 94% and is set as the highest of the history of Grupo Sura. Likewise, the net profit in the past 12 months reached COP 2.7 trillion compared to that of December of COP 2.1 trillion. Regarding the return of equity that we have discussed, and it is a purpose of the company, this return leads us that in the quarter, this adjusted ROE reached 11%, and we continue advancing towards our goal of sustainable profitability that we mentioned so much with a ROE that is closer to our capital cost. On this slide, we can see how all the companies of the portfolio are contributing to the net profit. We would like to highlight that the contribution of each of the companies which are part of our portfolio, the related companies contribute 57%, in which you can see that of Bancolombia, which still reflects great results this first quarter of the year, according to the trend of 2022. Subsidiaries contribute 43% of profits generated by the portfolio. In this graph, we would like to highlight the strength of our portfolio and companies which show positive results during this period, as well as the diversification of the net profit from all these companies, which are leaders in their own markets. This can also be evidenced when we look at the variation in the contribution of companies per sector, showing an increase of 115% for financial, Sura Asset Management, and Bancolombia, and 271% for our industrial companies, Grupo Nutresa and Grupo Argos. On the next slide, we see a balanced management of capitals, and it is very important. We have been talking about other capitals, but that balanced management of capitals is to have a good understanding of the value generated by the company and its goal towards sustainable profitability. That is why we look at the results extensively, looking at social, human, natural, and economic capital. As a company, we have to make a good use of the goods of the society and have a positive impact on the capitals of it. Here we can say that our results are sustainable, and we can contribute to the harmonious development society. As in past calls, this time we'll tell you about our management in one of the capitals, which is natural capital. We've talked about it before, but we'd like to deepen about this, and we'd like to keep in mind that management of this capital requires a long-term view, and these cannot be analyzed in the same terms like the financial indicators. We'd like to thank you again for joining us in this call of results. Now let's give the floor to Maria Mercedes Barrera, our Manager of Corporate Citizenship. Thank you, Gonzalo. Our management in natural capital can be seen under different dimensions: our own operation, the assignment of capital, new opportunities, and institutionality and knowledge. In the past year, we're advancing the development of our strategy of climate change, quantifying our emissions. This gives us more information to structure a responsible strategy towards an economy of zero net emissions. In addition, the strategy of sustainable investment of our subsidiaries advanced in the past year. It increased the topics 57% for Suramericana, 10% for Sura AM in the past year. There's an increase in the policies and manuals to clearly understand sensitive sectors and a 26% increase of insurance premiums with environmental criteria. In terms of our operation, we still monitor indicators of water, energy, and carbon footprint, and we reached an average decrease of 6% a year in our intensity of carbon in the operation. These are important challenges here that we have, like implementing a strategy of decarbonization, continuous improvement of reports of non-financial information, and implementing new strategies to promote better practices, both environmental, social, and of governance of the companies. Now let's give the floor to Ricardo Jaramillo. Thank you, Mercedes, and a special greeting to everybody that's joining us today. Let's look at the financial statements of Grupo Sura as a manager of investments. Now let's look at the relevant topics to understand the financial results. For this quarter, I'd like to highlight that we're making changes in the structure of our presentation, making it more graphic, and really focus on relevant topics while the quarterly report still complements this information. We're now presenting results with a vision of investments manager, explaining the performance of the companies of our portfolio, and more details in the subsidiaries like Suramericana and Sura Asset Management. Lastly, we'll talk about the consolidation of the results of Grupo Sura, its generation of cash flow, as well as our indebtedness and development. For this quarter and in 2023, there are two factors that influence the results of the company and make it difficult to compare it with 2022, since there are high percentage variations. One factor is devaluation. Firstly is the devaluation that we see in the Colombian pesos compared with the currencies in the region where we operate. For instance, as you can see in this graph, when it comes to Mexico and Uruguay, the devaluation of the Colombian peso has been close to 30%. While with other currencies, like the Chilean pesos or the Peruvian sol and the dollar, the devaluation has been at 20% and 25%. This is relevant because of the exposure that Suramericana and Sura Asset Management have in these regions. For Suramericana, 30% of its premiums come from overseas. While Sura Asset Management, about 80% of revenue of commissions come outside of Colombia. This goes with more growth in the lines of the income statements for these companies. The second factor that we mentioned other times is the consolidation of Protección. As of the fourth quarter of 2022, also affects the comparability of the numbers, since before you registered the profit proportion to the equity method, but now it is line by line. The revenue of Protección y Crecer represent 23% of the revenue of commissions of Sura Asset Management and 26% of total expenses of Sura Asset Management at the end of the quarter. Now, please, let us look at the next slide, where we will see in detail Suramericana. Before beginning to talk about the results of Suramericana, I would like to highlight the distribution of the premiums of this company in the region. Firstly, 70% of the revenue of the company come from Colombia, while 30% from the other eight countries where the company operates. In addition, if you exclude the mandatory business of the ARL and EPS, 50% of the revenue come from the other countries of the region. The other component that we have to keep in mind is a higher devaluation of the Colombian pesos, as I said before. This explains part of the growth and variation of the results of Suramericana. This mainly happens in the segment of casualty, which today is more exposed to other countries because of acquisition of RSA. The diversification that Suramericana has, in terms of segments, is still relevant. As you can see on the graph on the right-hand side, here you can see that there is a balance between casualty, life, and health. When it comes to premiums, representing 38%, 28%, 7%, and 35%, respectively. Particularly, if we look at the historical evolution five years ago, the composition of these segments was 49% casualty, 27% life, and 24% health. As you can see, the higher growth of the segment of health has gained more share in this diversification of the company today. Now let us look at slide 11, where you can see the net profit of the quarter and how the company reaches historical heights. Let us begin with a summary of Suramericana consolidated, and then we will look in detail the different segments that we mentioned before. To look at the complete performance of the company, let us begin with premiums and claims ratio. Here you can see it on the upper graph. Premiums issued reached COP 7 trillion in the quarter, up 25.7%, which is equivalent to 19.6% in constant currency. Here you highlight a positive movement of double digit of all three segments. Retained premiums earned closed in the quarter at COP 2.6 trillion, up 27% compared to 2022. When it comes to claims ratio, it slightly drops compared to the same quarter the year before at 71.6%, mainly because of deceleration of the inflation of car parts and new vehicles in the region, and strategies of the solutions and mobility, particularly automobiles, and a lower claims ratio in the IPS. These two factors have been positive and counteract the higher claims ratio we have had in the life segment that we will see closer when we look at the segments. The technical result can be seen here. It is COP 405 billion. It remained relatively stable compared to 2022, and it is explained because of the increase in the indicator of commissions of life through the affinity channel, particularly when it comes to bank insurance and higher expenses in labor risks to cover long-term obligations in the solution that we will also see ahead. Administrative expenses were at 12.4% for this quarter, up 19 basis points compared to the same period of the year before. This increase is because of technological investments made to boost smart management initiatives, transformation of operation models, and a continuous search of productivity, initiatives that are still strategic for the company. We would also like to highlight revenue from investments, which increased 122% compared to the year before, contributing COP 834 billion, thanks to the good performance of assets indexed to inflation and the favorable performance of interest rates for securities, combined with a significant valuation of alternative assets. With all this, the company reached a net profit and adjusted ROE for these topics that I have mentioned that led the company to reach that profit of COP 317, COP 318 billion, with it up 221% and with showing the best quarter recorded by Suramericana. The company showed an ROE adjusted in the past 12 months of 12.8% and a return of tangible capital of 16.4, which shows us tangibly the recovery of the profitability levels and generation of value of this investment of Suramericana for Grupo Sura. On slide 12, you can see the performance of the segment of Life, where the net profit increased 19.7%. Let us begin with premiums and claims ratio. Premiums reached COP 2 trillion, up 19.6%, while retained premiums reached COP 1.9 trillion, up 19.7%, driven by the solution of health growing 23.2%, updating rates and tariffs in Chile, and the ARL and the professional risk business grew 22.9%. The claims ratio was set at 65.8%, increasing compared to the year before because of the more reserves on a long-term basis. Right now, we have reserves close to COP 71 billion to cover particularly risks of increasing the minimum wage and extra longevity. When we look at this figure, what we really see is the increase of the minimum wage so far is COP 45 billion, and regulatory changes that want to reflect the variations of population risks, like extra longevity, represent COP 25 billion. Now let us look industrial results. The industrial result ended the quarter with a loss at COP 271 billion, up 77% compared to the loss that was seen in the first quarter of the year before. This is because of the claims ratio I talked about and an increase in the ratio of commissions from 21.2 to 23.6, with more growth, as I have said before, in the first page of Suramericana in the affinity channel. On the other hand, the expenses ratio remained stable. Revenue from investments were quite important. In this case, were COP 540 billion, up 85.7% because of the high inflation rates and valuation of the securities when it comes to several countries of the region. With all this, we can say that this segment reached a net profit up 97% and set at COP 291 billion. On slide 13, we will talk about Casualty, and here we would like to highlight that the claims ratio of this segment is improving. First, let's begin with the premiums issued, which reached COP 2.8 trillion, up 29% in the quarter, 15.7% in constant currency, leveraged by solutions of companies that grew 22.8% in constant currency, and solutions and mobility that grew 12.3%, also in constant currency, mainly because of the increase in rates to counteract the higher cost of car parts. In the middle, we look at the combined ratio, which is at 111% consolidated. However, we think it's more exact to analyze excluding two effects. One, Argentina, which because of the hyperinflation that affects claims ratio but creates more returns of investments, there is a distortion of this indicator. Second, the amortizations of the intangible, which are not cash flow. When you make adjustments, the combined ratio of the casualty is at 103%, improving 150 basis points compared to the first quarter of 2022. This is mainly explained by an improvement in the claims ratio of 130 basis points in car solutions, in which you see this at 62%. It was at 72% before. Close to 1,000 basis points in this first quarter, and an increase in the indicator of commissions because an adjustment in the expense deferment factor, which compensates against the reserves for production. Looking at revenue from investment, these grew 185% compared to the first quarter of 2022, reaching COP 241 billion because of what I said, higher inflation, more valuations of assets of rent, of fixed income. With all this, the segment reaches a net profit, which creates a growth that's very important of 391%, reaching close to COP 50 billion of profit in this first quarter. On slide 14, we can see the segment of health, and we would like to emphasize that the net profit in this segment closes on positive grounds. Let's look at the premiums issued of the segment, added COP 2.6 trillion, up 24%, which is seen as follows. Remember, we have the business of the EPS, of the IPS, and Ayudas Diagnósticas Sura. First on EPS, we see it grew 27%, reaching 5.2 million users, 119,000 more than the first quarter of 2022. On the other hand, the IPS with its services grew 18.4%, and Ayudas Diagnósticas Sura dropped 6.1% because there are less tests related to COVID, which were seen during the first quarter of 2022. Now looking at the claims ratio and expenses, claims ratio closed at 92.2%, improving 220 basis points because of the improvement of the claims ratio of the EPS of 221 basis points, set at 96.6%. That lower claims ratio of the EPS has to do with the UPC in February compared to the rates that were updated in the healthcare network that began in March. On the other hand, a major effort in this segment has been made when it comes to revenue from investments at COP 51 billion, up COP 45 billion compared to the first quarter of the year before. An active strategy of investments with the classification of investments that has favored and established a better financial revenue for the EPS. It is important to clarify that before we did not classify the ERI, and it had a certain volatility here. The second is that it is benefited from the short-term interest rate movements. As we have said in other segments, there is a persistence of the high inflation rates. With all this, the net profit of the health segment of the company closed in the quarter with a positive number, with COP 65 billion compared to a loss of COP 2 billion the year before. This is important because only in this segment, the company has a variation close to COP 67 billion in profit. To close the analysis of Suramericana, let us look at slide 15, where we see that the best performance of the three segments during the quarter contributed very significantly to the growth of the net profit, close to COP 221 billion. The profit reached COP 219 billion. This is explained by a significant growth, an improvement in the claims ratio of some of the solutions, and more returns from investments in the setting of high interest rates and inflations. Now let us look at the numbers of Sura Asset Management. On slide 17, we can first see the distribution of revenue. Before I talk about the results, it is important to highlight this distribution of revenue from commissions, highlighting its diversification. One, 90% of the revenue of commissions of Sura Asset Management comes from Colombia, while 81% comes from other countries. Particularly, what you can see in the graph, Mexico and Chile are relevant, with shares of 31% each. The higher devaluation of the Colombian pesos compared to these other countries, as we saw earlier, explains mostly the high variations we have seen on the income statement of Sura Asset Management. Also, it is worth underscoring that we have a mix between the savings and retirement business and Inversiones Sura of 85/15. Both businesses keep growing, and this mix is at the same percentage. On slide 18, we will take a closer look at the figures of Sura Asset Management, highlighting the improvement of the profitability levels of the company. This company began the year with a significant improvement of its results compared to the same quarter the year before. Before going on, I would like to emphasize is that we are giving pro forma variations to try to give you more clarity of the results, given the consolidation of Protección, since it makes it difficult the comparability and makes the figures of growth on the income statement to be quite high in some cases. Let us begin. Revenue from commissions that ended in the quarter with COP 1.1 trillion, up 75%, which reflects that consolidation of Protección and a higher devaluation of the Colombian pesos. When we look at the pro forma variation, assuming we consolidated Protección in 2022, the variation is at 25%. When you calculate this variation with constant rates, which reflects the operation in each country, the variation is at 5.3%. This is much more logical for the type of businesses in which we are. This growth is mainly driven by the segment of savings and retirement, which went back to grow, and we will look at this ahead. This growth is driven by contributions, especially in Mexico, which increased 15.4%, from 6.5% to 7.3%. This is in line with the pension reform that was there before, where the first year we had a lower commission, and after 2023, began to increase the contribution for each of the affiliates, which right now are at 7.3% and will reach 15%. So it more than doubles the size of the business when it comes to the AUMs. It is important to look at the revenue for reserves at COP 99 billion, which represents an annual yield, 7.7%, compared to a loss that we had in the first quarter the year before. These results show the better performance of the markets in every country. Perhaps not in Chile. Particularly, the performance of Colombia was very good, with an annual yield of 17% in this quarter. Let us look at operating expenses on the top right-hand side, which reached COP 845 billion in the quarter, with a pro forma variation in constant currencies of 6.4, where administration expenses grew 4.3% and sales costs, including the DAC, grew 15.1%. Due to the impossibility that we have to defer the expense for product because of the regulatory restrictions that are given in the industry of pensions or the savings and retirement in Mexico. The operating profit of the company ended the quarter at COP 422 billion, up 278%, showing the best performance of the business in different fronts. Lastly, the net profit and the profitability of ROE and tangible ROE, which in the first quarter closed at COP 206 billion compared to a loss of COP 47 billion the first quarter of 2022. Because of the better performance that we have discussed, growing revenue, better performance, the reserve, expense control, and lower impacts because of the exchange difference, understanding that in 2022, we had a negative figure. On slide 19, let us look at the segment of savings and retirement. Here we would like to underscore that the same topics in the total of the company apply for this segment. First, we will look at revenue from commissions of the segment that reached COP 904 billion in the quarter, displaying a pro forma increase in constant currency of 7.3%. This is because of the growth of the salary base of 12.3% in constant currency in the countries that go through flows with an increase of users of 6.2%. On the other hand, when it comes to the segment, the commissions under AUMs, mainly in Mexico, growth was seen of 6.7% with a positive development of AUMs in Mexico, an increase of 15.4 in the quotes of clients from 6.5% to 7.3%. It is also worth highlighting AUMs that reached COP 609 trillion, up 25% in pesos and 2.8 in constant currency. When we look at operating expenses of the segment, these were at COP 553 billion, with a pro forma growth in constant currency of 1.9%, and still show efforts of the company in terms of efficiency. This growth is because of the impossibility of deferring expenses in Mexico, since administration and sales expenses, excluding the DAC, are decreasing. This segment, which is required for the reserve, is seeing an improvement, significant drive, and it was set at COP 99 billion for this first quarter, which contrasts with the loss that we saw the year before. This better performance is explained by the better returns in the countries that had positive returns, excluding Chile. The operating profit of the segment closed at COP 506 billion, up pro forma 220%, mainly explained because of the more revenue, control of expenses, and more yields of the reserve. On slide 20, let's look at the voluntary segment. Let's begin with the AUMs, which reached COP 100 trillion, up 33.4% in pesos and 7.8% in local currencies. This is mainly explained by the growth of the insurance mandates in Colombia, where AUMs managed by Fiduciaria Sura went from COP 625 billion to COP 6.9 trillion with the financial assets that back the technical reserves of Asulado. The industry of investments in Latin America in recent months has faced challenges, mainly because of two things. A higher level of competition by bank entities which have higher rates and yields. Capital leaving countries of the region because of the social political risk perception, which has had an impact on AUMs and directly on the revenue from commissions, which reached in the first quarter COP 160 billion, with the pro forma growth of 9.2%, driven by the devaluation of the peso, since in constant pesos, it's dropping 6.5%. This drop is mainly due to these factors, the challenging setting of the industry, lower rates of the commission. While the investment strategies give priority to assets with lower risks, there is a lower rate of commission. Looking at the operating expenses of the segment pro forma in constant rates, these are falling 1.5%, reflecting efforts of efficiency to mitigate this challenge in the business. With all this, the segment is reaching an operating profit increasing 70%, driven by the consolidation of Protección. Pro forma, it's dropping 14. Look at the importance of understanding the comparability of both types of figures. Lastly, the net profit controlling of the segment is at COP 18 billion compared to the loss of the year before. On slide 21 to end, let's summarize the section of Sura Asset Management. Here you can see that increase in the profit of COP 253 billion compared to the first quarter of 2022 is because of the better performance of the segments that we saw in previous slides, the increase of administrative expenses of the corporate of COP 28 billion, mainly related to the amortization of the PPA of clients of Protección. After the consolidation, more investments in technology and the devaluation of the Colombian peso. In the segment of others, there are COP 32 billion contributed mainly because of the profit in the exchange rate of the corporate segment in 2023 compared to 2022. There you can see the net profit of the controlling of COP 208 billion. Now let's look at Grupo Sura. We end the analysis of both subsidiaries. On slide 23, we can see the companies related that still reflect very good results. At the end of the first quarter, the equity method closed at COP 575 billion, up 6%, with a good result of each. First, Bancolombia contributed COP 420 billion, decreasing 1% versus the first quarter of 2022. It still has a very positive margin with an efficiency ratio at very good levels. With all those, the company closed the quarter with a profit of COP 1.7 trillion, dropping 1% on ROE of 17.7%. Nutresa, it contributes in the method COP 94 billion, down 11%. It is important to understand that the contribution that Grupo SURA, that that contribution decreases because of the elimination of the dividend that Grupo SURA pays to Grupo Nutresa since it is a shareholder. The revenue of Nutresa were at COP 4.7 trillion, up 35.7% a year, with a double-digit growth in different segments and in different regions. Its EBITDA closed at COP 647 billion in the quarter, up 38%, and a margin of 13.3%. Lastly, the net profit closed in the quarter at COP 343 billion, up 16%. Grupo Argos contributed COP 57 billion, reaching consolidated revenue close to COP 5.7 trillion, up 25%, with good growth of its business in different lines: cement, energy, concessions. The EBITDA is COP 1.6 trillion, up 28%, with a net profit of the controller of COP 406 billion. On slide 24, we see as a summary, the net profit of Grupo SURA really reflects the positive contribution of the different businesses. After seeing each of the companies which are part of portfolio, we can conclude that despite the challenges we see in 2023, and because of high inflations, high interest rates, and economic deceleration, businesses really do show good results. The companies are contributing COP 1.1 trillion to the net profit in the quarter, COP 1 billion to the net profit of the controller, if we adjust Suramericana and Sura Asset Management. The administration expenses were at COP 30 billion for the quarter, remaining very stable versus the year before. Lastly, it is important to keep in mind that the interest of Grupo SURA were that of the debt close to COP 140 billion. The quarter increased 25.5% due to the increased inflation in IBR, which we hope to decrease in the second half of this year. Let us look at slide 25 and look at the cash flow of the company. I would like to talk about the dividends, which as a company that manages investments, and these are fundamental for the cash flow of the company. For 2023, after the approvals of the dividends and the assemblies of our investments, it is important to highlight the following. You can see this on the higher graph. Revenue from dividends are close to COP 1.7 trillion, up 48%, with growth of dividends paid of all of the companies of the portfolio. The growth since 2019, before the pandemic, has been 12.6% annual composed. The composition of this can be observed on the right-hand side, where Bancolombia this year is contributing close to 49% of dividends, Sura Asset Management 18%, Suramericana 13%, Grupo Argos and Grupo Nutresa 20%. We look at this on a longer scale of time, from 2019 to 2023, the contribution of different companies to the portfolio of Grupo SURA during that period of time has been Bancolombia 38%, Sura Asset Management 28%, Suramericana 15%, Grupo Nutresa 12%, and Grupo Argos 7%. Regionally, we estimate that about 60% of the dividends come from Colombia. Mexico is still with 11%, and Chile and Panama have about 6% in this mix. This also shows that importance diversification in the source of dividends of the region. Moving to cash flow, the expected uses for close to COP 1.7 trillion that we will receive during this year can be seen in the graph. Close to COP 151 billion in operating expenses and taxes for Grupo SURA, close to COP 561 billion in interest, which still show more or higher interest rates. But we believe that for the second half of the year, there is a transition towards lower levels. COP 669 billion in dividends that we will pay during 2023, increasing our remuneration to shareholders. This leaves about COP 294 billion available for different uses that are in the capital assignment analysis, including the decrease of the debt, possible investments, or even the stock repurchase program, which was approved by the assembly and should be regulated by the board of directors. Lastly, we would like to talk about the debt, and towards this, we would like to say we have reached proper debt levels after the expansion plan we had in previous years. This year, we will keep the net debt indicator below 3 times, as we mentioned some months ago. Also, we would like to emphasize the debt profile in which we feel comfortable, since the expirations in the next 3 years are manageable. The cost of the debt showed an increase that was significant, 500 basis points during the past 12 months. We are aware of this increase with the IPC, especially because of the exposure Colombia has. But it is also important to see in the graph that we have an exposure of 44% at a fixed rate. We can also see in the lower graph the trend of this indicator in the past years, where since the pandemic, it had a specific impact, but we returned quickly to improvements. So with this, we end our presentation, and now let us begin our live Q&A session. Thank you. The presentations of Maria Mercedes, Ricardo. We would like to begin with the questions. We have several already that were sent by mail. So let us begin with the very first question. Carlos, please read it. Perfect. We have 2 questions from Andres Zernick, and let us try to answer them together. Will you take any actions when it comes to the shares of SURA Asset Management, or do you prefer liquid revenue? Could you please talk about the shares and if this has anything to do with the debt? Okay, thank you, Carlos and Andres, for your questions. It is important to highlight that so far, officially, what we know is the intention of the board of Grupo Bolívar to execute the exit of its share in SURA Asset Management. Grupo Bolívar has been a shareholder since 2012. To understand the possible exit mechanism, we have to understand the contract. It is published on our website, and the contract has a first path, which is a direct sale, and it is that Bolívar can sell its shares to a third party. That is one path that can be taken. The second path is something called, in the contract, an action funded by dividends. Simulating when it comes to a normal loan, a bank loan, Grupo Bolívar could have the chance of shielding the dividends it receives to make the exit. In addition, in that path there's a possible exchange of preferential shares of Grupo Sura. Right now, we have not received an official communication from Bolívar of what it will do, the path it will take, but we are exploring right now the different scenarios that could take place. When it comes to the debt that we expect for the company, it's important to highlight what I said at the end of the presentation. Now, with the current debt, the main indicator that the rating agency look at is dividends against what we received, keeping in mind that dividends reserved is at COP 1.7 trillion, and that indicator is at 1.5 times. The guidelines we have said that by the end of the year, it could be at 2.5 and 3 times. This would mean something like the chance of us to have more than COP 900 billion in debt. It doesn't mean that we will have it, but simply that we, as administration, to have the flexibility depending of the development of the discussions with Bolívar and to see what path, that I just explained, is its exit. To end, officially right now, we have a communication from the board. We do not have one when it comes to the path that Bolívar will take. We have preliminary discussions with them to understand this, and both parties are willing to have a great ending of a great relationship for 10 years that has been impeccable with Grupo Bolívar. I'd like to add, as Ricardo Jaramillo said, that the relation with Grupo Bolívar is almost 70 years old, almost the age of our company, so it will be the best for both parties. But something else that I think it's important to add is that in any case, for us, it's evident Sura Asset Management is a strategic asset and it's part of our affiliates. In any condition, in some cases, we will be acquiring more share of Sura Asset Management, which again, is a strategic asset for us. So it would be an asset for another asset. They're also mentioning, related to this, Daniel Guardiola is also asking about the size of the contingent liability when it comes to Grupo Bolívar leaving Sura Asset Management. You can see in the contract that there's a calculation formula of the minimum guaranteed return. The first five years is a commission of IPC plus 4, and from there on, as you can see, the variation of the company starting with its initial investment. We also have, in our financial statement, estimates which are ours, and we have to underscore that, because you could see that in the contract that when we began the process, they sent us their calculation estimate of that value of the minimum guaranteed return. Here, I'd like to clarify that in the formula, there can be differences, and it's convenient and proper because it was a contract that was signed 12 years ago. So the part of the discussion is to see the different approximations of each company with its calculation, so can reach an agreement of the value. To end this topic, Daniel, basically, you can see what we have, that we have our own estimates, but it doesn't mean that these are of Bolívar. We have to have discussions with them. Christian Andrews asks about the development of the economic alliance after the higher interest rates of last year. Do you see any deceleration in 2023 also regarding the financial systems and the dividends? What are your expectations of interest rates overall for this year? Yes, Christian, thank you for your question. It's more macroeconomic. Here, there are thousands of experts about macroeconomics, but let us give you what we see daily here. Definitely, the Latin American region where we operate has not stood aside from higher interest rates and restrictive monetary policies, which lead to higher interest rates. That clearly has led to decreases after the pandemic, because right after the pandemic, we saw some increases. But now, in Colombia, in the first quarter, we see a growth of 3%, which is obviously lower to what we saw in 2022. But it's not a bad growth for a setting of inflations and higher interest rates that we see today. When it comes to impacts on the economy, you mentioned the NPLs in banks. We don't want to specifically talk about Bancolombia, but generally in the system, we see results announced by different banks and issuers, and we do perceive an increase of the cost of credits which particularly can be felt more in consumption, in retail, and that's a first indicator, which through the decisions made by the banks to lower their rates of credit cards, can be controlled. But we do see an increase in NPLs. Definitely, it's also important to mention that Bancolombia maintains a good margin level and a good efficiency level that has helped it to compensate both points with a higher level of credit to mitigate the impact that we're discussing. What's our viewpoint or our expectation because of the lower interest rates? We expect that in the second half of the year, we will reach a plateau, a peak, of increased interest rates, and in the second half of the year, especially in Colombia, we will have lower interest rates. But with our different models, we are being conservative because the speed and the decrease of the interest rate is not as fast as it grew. We imagine more an interest rate that will be parallel to the inflation towards 1-2 years, then it will reach the 6%. These are opinions that are entirely of ours. We're not macroeconomic experts. But with this, we can give you an idea of what we see as assumptions in our operations in different countries. Julian asks, "With the transition seen in Mexico with Sura Asset Management, what is the representation with that 13%?" Before answering, I'd like to specifically talk about Mexico's reform. When it comes to the pension system, not only Latin America, but worldwide, there is a challenge that we have to face. Undoubtedly, most of the population, hopefully all of the population, will gain its pension bond and a good compensation for retirement. I think that Mexican reform and the different ones that we've seen, that that reform is headed towards that. The one of Mexico goes from 6.5% to 15% in contribution, so Mexicans can have a better pension in the future. There is a challenge that is clear in every economy that we want to underscore, and it is a challenge to formalize economies, especially in Latin America. That formalization has a virtue, first, a fiscal relief, but also a compensation of social securities, and especially for health providers. Now I see somebody is asking about the impact of health in SURA. This is quite important to keep in mind. I think that the path towards formalization is something that all of the economies of Latin America must take that contributes to Social Security, and this reform of pensions that we see so far, the ones that are consolidated now, go towards that path, fortunately, Carlos. Yes, thank you, Gonzalo. Julian, look, to answer about Mexico specifically, Afore is 34% of our revenue, 26% of our operating profit. In constant conditions that we think it is hard to have in other countries, Mexico should represent more in the future, in next years, part of that pie of the results of Sura Asset Management. First, because of that contribution of the employees and employers to savings. It is like our salary base in Mexico would grow from 6.5% to 15%. Mexico also charges for AUMs and not for the salary base, and these should grow more in time. Although in the projection, we see that the fee that we charge will have an impact, it is really more marginal compared to the first lower of the rate from 0.83% to 0.57% from 2021 to 2022. Mexico should gradually increase its representation in our financial statements. Also, Carlos, let me take the question and talk about the reform. Our vision is what Gonzalo said. If the reforms are good for the people's pension and the savings of the countries and that boost formalizations, they are good for us. Although they hit us initially in revenue, like in Mexico, really the system becomes more sustainable, and that is good for us. When it comes to Mexico and El Salvador and Uruguay, we just closed reforms. There is a lot that is said early on with reforms, but in all three countries, we have seen good reforms for the system, good for the people, and they end up being good for the countries. Today, we have on file a reform in Colombia and Chile with good and bad things. What is good is that there is a wish of boosting a solidary and contributive pillar in voluntary. This is good. In Colombia, we are quite concerned the decoupling of the labor and pension reform, because that pillar or that topic of formality is not something seen as significant as it is. Based on the experiences that we have had with the reforms in Mexico, Uruguay, and El Salvador, we do believe that the reforms have a good effect on the system and on us. I would like to add something that is important. Overall, in this company and in our subsidiaries, we talk about knowledge, and this is related to another question that we received. Knowledge is what we use to have relations with different institutions, with different congresses, governments, and other entities. It is our knowledge and our relation, which gives way to contribute not only in health but also in pensions and really in every scheme, because there is something valid there to be kept in mind for all of these reforms. Julian also asked us, "When you talk about possible investments, have you considered one specifically, or do you have some disinvestments in mind?" Julian, let's listen to Ricardo later, but we've mentioned it here. We had 10 years of expansion, and now philosophically, we're really focused on all of these companies and the investments made in these 10 years will manage the point that we wanted when we made the investment. That's what we're headed towards. Nonetheless, as Grupo SURA, we're still looking at different investments that we can make and disinvestments that will take place. It's the nature of a business like ours. Although it's true, again, our philosophy is to seek today a return above the cost of capital in Grupo SURA and the investments that we have that have gone through a pandemic and have a cycle of maturity, it's also clear that investments and disinvestments at any given time will be analyzed by the companies independently and by Grupo SURA. Ricardo? Yes, let me add with regards to this. As investment managers, we have a model of capital assignments. When there are resources available, simply seen, we have three uses. We have principal sources, which are dividends received from different investments, which have three uses. One are investments, second, service of the debt, and third are the dividends, which is the remuneration to our shareholders. As Gonzalo Pérez said, in the past 10 years, what was important was the expansion, investments were higher, and this made us increase our debt and have lower growths of dividends to our shareholders. Now we want organic growth. We're looking at the benefits of those investments, looking at the profitabilities. We're balancing all three uses. Keeping that in mind, we have one indicator of debt that is dropping and that we want to keep it dropping. We have dividends that have been significantly growing in past years. We have a discussion about repurchasing stocks. Let me anticipate to another question, and we mentioned this. We have a tool that we as administration think that we should have in our toolbox. It's a program that was boosted for three years for COP 300 million. It should be ruled by the board, understanding the different conditions of the market and the big difference there is between preferential and ordinary stocks. That could be a use of efficient capital for us. We will keep that in mind. To summarize this, we constantly are looking at the balance that we want between all three components. Investments, very much connected to management that have to do with the criteria of capital, one. Second, the proper level of debt that has to do with investments in Sura Asset Management, that have to do with what we'll do with Grupo Nutresa, and thirdly and lastly, dividends for shareholders. I think with this, you can have a general idea of the strategy on the use of the company with sources of dividends received. Okay, we had questions with re-acquisitions and ordinary and preferential stocks. I think those are answered. Joanie Ruiz asks us, "What is the impact on the EPS for SURA without including life policies in this?" Before listening to Juan Fernando's answer, I think we have to look at this on a long-term basis. The EPS last year gave COP 150 billion in losses for SURA, but we have to look at this on long-term basis. Although it is true that EPS has not created value, it is quite marginal in the income statement of Suramericana, but it has not destroyed value either since it was founded. You could say in the past 30 years, the EPS has not destroyed value. In 2019, when we had the migration and last year, because of the reasons that we mentioned. Within that context, now let us listen to Juan Fernando. The EPS separate, that it lost COP 150 billion in loss before 2019, it has not destroyed value. But it is marginal when it comes to the profits of Suramericana. I would like to add, Gonzalo, that the EPS, you must understand the balance of the revenue that the company receives to meet its obligations in the basic health plan. EPS is really the one that gives us the revenue, and we see that the increase of the UPC in January this year versus what we have seen so far, we have a positive margin in the company. With this, the system has to seek that balance of having revenue that can compensate well the claims ratio or the demand of the services from users. When we can clearly see this, and we see a system that can operate rationally, remember, what is outside the basic health plan are services that we also have to provide and recharge, and that takes time, the compensation of those additional payments that we have to make, which leads to see an impairment of our cash flow. But if in a reform we can have a balanced operation, the system obviously will seek the well-being of Colombia, and it could be feasible and positive. That is what we seek as a company beyond having the profits, because it also helps us with other topics in terms of health and what Suramericana is as an insurer. We have more than 5 million people registered to the EPS. With the pandemic, we saw that our profitability was at 0.60, and there we are meeting one of our strategic goals, and we keep the balance that Juan Fernando has mentioned. For us, it is perfect, but still, we need to have a balance of economic sustainability. When it comes to the knowledge generated, the EPS for the entire industry and the ecosystem and the commitment to more than 10% of Colombia's population is something firm, because we have morbidity and mortality that has created to value to this corporation in 30 years. There is a question that we received that if the growth in health affects or not. I think that we have to look at the companies and all of the components. This is an ongoing analysis that Suramericana makes in the different portfolios and regions, and also in Grupo SURA, assigning capital that Ricardo mentioned. But looking at the analysis provided, we can build social value. For us, we will look at topics like indicator of expenses separately, so a system will not subsidize another one. I would like to add, Gonzalo, as well. Although you mentioned how we live the recent pandemic, in the EPS, we have no limitation financially to do what we had to do. We act, and we did everything we needed to do for the population, no matter what. And I think that is a clear example of what we think that an entity like this is to serve the Colombian population. Carlos Gómez asked, "Given the relevance of dividends, do you think it is sustainable to make the payment of 50%?" Carlos, thank you for your question, which allows us to tell you about the strategy of Grupo SURA. As a holding company, it is positioned as an investments manager, and we talked about a balanced and diversified portfolio. The over 50% is quite relevant, but if we look in the history, we see in different timelines, there are moments in which a company has compensated another one in terms of dividends, and that is why we think that diversification should be understood and seen closer. I would like to look at a list of what we think about in diversification that has to do with the capital assignment that we mentioned. First, we have to have a diversification in companies, in businesses within the companies and industries, in types of risks, in countries and territories, in stages of maturity of businesses, and that is something that we constantly see in all five investments. The main investments, these five investments, also need diversification. When we talk about SURA Asset Management and Suramericana, we looked at the diversification in geography and in business. This company, after making its expansion, remember, we have operations in eight countries. Today, we would be 100% only in Colombia. This question would not only have to do that we are only concentrating in Bancolombia, but also in Colombia. This is long-term strategy. The company has a long-term vision, and constantly in our management, as investment managers participating actively with these companies, we have to guarantee that the diversification will lead us to what? That the day that Bancolombia has a situation like that with the pandemic, we can resort to dividends from other companies and businesses. And when you look at the line in the corporate presentation, the line of the past 10 or 12 years of dividends received, you can see that the growth has been constant despite the volatilities that some of the investments have had. That question allows us to clearly tell you about our strategy as investment managers. Two things. In the 38 years of history of this company, without exception, we have always, in each year, paid dividends, and I think it is a story worth telling, and it is because of two things. One, what Ricardo said, and secondly, it is because of our knowledge. Remember, behind us in Grupo SURA, we have risk management. Perhaps in our calls close to the pandemic, we told you that we conducted a task or a survey looking at catastrophes and the correlation of the investments and those of risk. We look at the risk of liquidity. All of this leads us to anticipate truly what can happen to us in the future. There's something that I'd like to underscore in addition to what Ricardo said. 78 years in which the company has not stopped paying dividends, obeying to two policies. One, looking at diversification of risk, but second, the models and correlations of risks scientifically made to anticipate and manage what can happen to us in the future. Daniel Guardiola asks, "Could you give us an update of how Suramericana is in the United States?" Thank you, Daniel, for your question. Look, the question is quite deep. There are viewpoints of the local market and international market. We, as administration, are bind to provide good results, and that's foremost before going out into the market. Second, we have to prepare these companies. I talk about preparing all three companies for different options out there. The Colombian market has showed us it has huge liquidity challenges. These have increased in recent years. We mentioned in other calls that after 2017, there's a lack of correlation between the results of the company and the price of stocks in the Colombian market. There are many initiatives. One is the integration of the stock markets. You know better the different initiatives. What is a reality is that today, it's a market in which there are more OPAs than IPOs. This shows that the market is not attractive for new issuers, and that's something that we have to ask about, and we have to see if being in Colombia is proper for the prices that we seek in the capitals market. Saying this, it doesn't depend on us when we want to be listed or not, to go to another market or not. It really depends on the different circumstances of the market. For now, what we can say is that administration of responsibility is to look at the toolbox that I mentioned before to repurchase stocks, and we have more tools there, because what we have to give to our board of directors and shareholders the best information so they can make the best decision. For now, that's all we can say. We're still moving, and we believe that all three companies should have the best options for the best time. Camilo asks, "How do you expect the growth of AUMs for the rest of the year?" Okay, Camilo. When it comes to voluntary business, those that are not part of the pension system, we slowly see a recovery of the features that allow us to grow in the system. Based on our budget and with the positive net flow that we see in this quarter, we believe that we can reach 9% to 10% growth of AUMs. When it comes to the AFPs, and also keeping in mind that we have a salary base that's positive, that has an impact on the AUMs that we manage and the yields that we've seen, we think it could range from 6% to 7% in annual growth by the end of the year. Sorry, let me complement to Carlos. As we've said throughout this presentation, it's fundamental to follow up the company and the different investments to understand the relationship between the devaluation of the peso and the currencies in which we operate. That figure of 80% of Sura Asset Management is overseas, and our devaluation is strong compared to other currencies. It will have an impact directly when we see the growth of AUMs in pesos. These companies are in pesos. The presentation is in pesos. You can look at it in dollars and have a different perception, but there are very important variations. I'm sorry to repeat this, but for the analysis, it's fundamental. When we see increased expenses growing 80%, and we remove the consolidation of Protección, and the growth is 20-something percent, and then in constant currency, it's 3% growth. I mean, the range is from 80 and 3%. The conclusions that anybody can make is quite extensive. Keep in mind both factors that we've mentioned in the presentation for your analysis and the AUMs go through the same thing. Let me add, and it's history. History always confirms what we are capable of without having to say that we have to repeat it. Part of the work, and it's important to clarify this, there was a question that we received about this. Part of what each company does is not only to reduce expenses, but to go through different efficiencies. Not only to decrease expenses, but look at the operations, simplify them to eliminate some so that we can constantly have a good level of efficiency, which is necessary in every business that we are. An example is the IPS Sura. Recently, IPS Sura had expenses levels of 14%, but now it's less than 4%. We're talking about more than 50 million operations a year and serving more than 5 million people throughout the country. That helps us, and Juan Fernando mentioned, and it's part of the virtue of this management and diversification. It helps us so everybody can learn of the mechanisms and the efficiencies with an operation that's quite frequent and serves a lot. The same thing will happen with the AUMs. The big secret is how we can anticipate so that expense reduction will go through our sustainability. Of course, the processes are very important in this case. Daniela asks again, "Could you please share with us the succession plan you have in Grupo Sura?" The succession plan of Grupo Sura is part of an institutional process. I mean, it's regulated, and it's not the very first time in 78 years that we have successions. Firstly, it's led by the corporate governance committee. It has met to seek some advisors. These are not the ones that choose. Instead, it's the board of directors. But it's part of a process which evaluates a particular profile because it must be a person that has a cultural affinity to this company, and that's something that's essential. The culture of this company is fundamental to project it towards the future and understand its strategy and take it to its highest potential. Within this process, we make assessments like those that are made by headhunters, others that have to do with in-house, for instance, psychological profiles of our candidates. Anyway, there's a series of things that are made by that committee and should be kept in mind to make a recommendation to the board of directors, which takes the final decision. This process has begun, but obviously it's a process that takes time to end. I would like to add, you're asking Shirley about me. I would add that the succession plans of Grupo SURA are for all officers. Obviously, mine is much more popular, but every officer has a succession plan in place to look at the skills more than knowledge, because knowledge is dynamic. As Juan Luis Múnera said, we look at skills, not only intellectual, but also psychological and cultural. All of my colleagues, vice presidents and presidents, we all have our own succession plan for the sustainability of the company, obviously. With this, we have covered all the questions for this live session, but I'd like to add two topics. One, the results of this company this quarter. First, I'd like to recognize the companies and investments and our subsidiaries, Suramericana, SURA Asset Management, for your excellent results. Obviously, our investments in the portfolio, my colleagues in Grupo SURA, and your contribution to these results. But I'd like to highlight that those results are the result of knowledge, again. We're seeing quarter after quarter how we've managed the AUMs and the investments in SURA Asset Management claims ratio in the EPS and in automobiles. For many years, we have seen that there is knowledge that gives us the knowledge. Although there are volatilities in the market, we have the technical knowledge in-house to manage that volatility and to correct everything as it should be corrected. For instance, with the bank, it already had its call of investor, which we can also anticipate with good levels of reserves. Ricardo Jaramillo spoke about how we are anticipating to the increase of minimum wage with the ARL of Suramericana. This allowed us to have a reserve of COP 2 billion that Suramericana didn't have to capitalize. There's no chance here. We have knowledge, and we're managing everything based on our knowledge. Now this is why we are enjoying the results of Grupo SURA Asset Management, and Suramericana due to what everybody has done in these companies. It's important to highlight that that's what sets us apart. To all of you, thank you for joining us in this call. We hope to see you in the next time. Thank you.