Chairman's review

Dear shareholders, collaborators and customers,

As is already customary at this time of the year, I am pleased to share with you the annual report for 2023, a key year in the history of GCO, in which we have taken one step further in our corporate simplification process, with the aim of becoming more agile and able to effectively respond to new market demands.

Undoubtedly, the most important milestone of the year was the launch of Occident, our new traditional business brand, which we announced in February 2023 and which began operating on 1 January 2024. Occident was created for the purpose of understanding and guiding people and companies in all the stages of their life, putting ourselves in their place, to ensure their peace of mind in the present and their trust in the future. In the first phase, the merger of Seguros Catalana Occidente, Plus Ultra Seguros and Seguros Bilbao took place, which will be completed with the integration of NorteHispana Seguros at the end of 2024. 

With the launch of Occident, we not only achieve the efficiency and capacity to respond to the challenges posed by the current society, but it also represents a competitive advantage for our Group. In this regard, it should be noted that once the merger process of the four companies has been concluded, Occident will provide service to 4.5 million insured parties through more than 14,000 mediators, more than 1,400 offices and a network of around 2,700 professionals, (such as experts and repairers, among others). As part of the merger, we have implmented a voluntary redundancy plan that will affect around 20% of our traditional business employees, who we show our full appreciation because they have undoubtedly been part of the Group's success for all these years.

2023 was a year strongly marked by a context of high inflation, geopolitical tensions and, more specifically in the area of insurance, an increase in claim costs. In fact, inflation management has been one of the sector's main challenges of 2023, which, at GCO, we have managed through two levers: the costing and containment of claims. In the first case, we adjust the premiums to the reality of the average costs of the claims gradually, thus ensuring the long-term relationship with our policyholders. With regard to the second lever, the average claim cost is an area we manage with our network of repairers and workshops. All of this is done with the ultimate aim of providing an excellent service to our customers.

There were other highly significant corporate milestones in 2023. In February we completed the purchase of Mémora, which has made us the leading funeral group in the Iberian Peninsula by increasing our presence in the national funeral sector and entering the Portuguese market. In April, we announced that the Grupo Catalana Occidente corporate brand was shortening its name to its acronym, GCO, in order to better adapt the brand to an international environment.

In this key year for the group, GCO recorded good results both in traditional business and in credit insurance, as well as in the funeral sector. The results are the result of the Group's excellent work and the fact that we are firmly prepared to confront the challenges that arise in the short, medium and long term.

In fact, GCO's management and solvency has been endorsed by the main rating agencies. AM Best affirmed the Long-Term Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of a+ (excellent), to the main operating entities of GCO in traditional business and also in credit insurance. For its part, Moody's improved GCO's rating in the credit insurance business to A1, with a stable outlook, thus consolidating the positive evolution of Atradius in terms of solvency and financial strength.

On another level, in 2023 we continued with our commitment to digitalisation and an omnichannel approach, always alongside our mediators, who are a fundamental part of our business model. To achieve this, we have continued our commitment to the continuous development of the mediation network, in which we are dedicating great efforts to training and technological support. In turn, we have made great progress with our omnichannel strategy, allowing the customer to choose new channels to interact with the company.

In the development of our offer, we have continued our efforts to adapt to the new market demands. In this regard, we have expanded our range of services for senior customers and we have improved our value proposition for policyholders in key areas such as health, in which we have included new coverage, diagnostic tests and surgical techniques. We have also launched new digital healthcare services on our e-customer platform, such as access to medical reports and electronic prescriptions.

A significant milestone in our innovation strategy and with the aim of contributing growth and profitability to the Group, this year we have launched GCO Ventures, which was created to shape new business ideas and has already launched its first venture.

Similarly, and as in every financial year, we have also focused on the development of actions to contribute environmental, social and economic value in 2023. To name just a few of these areas, which are explained in more detail in our Sustainability Report, in March we joined Nactiva as a founding partner, the first market builder for the protection and regeneration of natural capital that aims to generate a transformative impact throughout the Mediterranean region. Aditionally, we have adapted the offer of our investment fund products in accordance with Article 8 of the Sustainable Finance Disclosure Regulation (SFDR), explicitly incorporating environmental and/or social considerations into its management. For its part, the garage network that provides vehicle repair services to the group has become the first to receive Sustainable Certification, guaranteeing that its activity is carried out in accordance with sustainability and environmental care criteria.

It should also be noted that, as an insurance group committed to the well-being of society, we have developed over 60 research, teaching, cultural activities, and sports and solidarity initiatives through the Fundación Jesús Serra to promote equal opportunities. Likewise, the Fundación Jesús Serra has also been renamed Fundación Occident, so that the Foundation's work is accompanied, reinforced and identified with our new brand.

Finally, I would like to take this opportunity to thank our employees and collaborators for their efforts this year, for the support of our shareholders and the trust placed in us by our customers in 2023. Thanks to all of them, we have obtained excellent results and we hope to continue counting on each and every one of you to continue evolving in 2024.

José María Serra