Chairman's review

Dear shareholders, employees and customers:

I am delighted to share with you the annual report for the 2022 financial year, a year in which we have consolidated our leadership position, remaining faithful to our values and our strategy.

The financial year began with the change ordered by the Group's senior management. Ignacio Álvarez presented his resignation as CEO at the end of 2021, after ten years in office and having met the objectives that the company had set during that period. Thus, on 1 January 2022, Hugo Serra assumed the position of CEO with the mission of strengthening the strategic purpose of Grupo Catalana Occidente.

Grupo Catalana Occidente's strategy is a continuous one. We have always said that we are more about evolution than revolution and we follow a management practice by which we avoid favouritism, always supported by our team. The Group has thus experienced this change in a completely natural way.

After the exceptional nature of 2020 and 2021, two financial years strongly conditioned by the pandemic, 2022 has been profiled as the year of the recovery of the health, economic and social crisis caused by Covid-19. However, we are also in a complex scenario, marked by strong uncertainty, especially in the economic field, due to the consequences of the war in Ukraine, the increase in energy costs and inflation, among other factors.

In this context, we have achieved a consolidated result of €542.6 million, 15.9% more than the previous year. Meanwhile, the Group's turnover is up 7.4% to reach €5.2456 billion, which shows sustained growth in two branches of activity: traditional business and credit insurance business. The recurring profit of the traditional business (Seguros Catalana Occidente, Plus Ultra Seguros, Seguros Bilbao and NorteHispana Seguros) grew 7.5% to €262.6 million. As regards the credit insurance business (undertaken by Atradius Crédito y Caución and Atradius Re), the recurring result stood at €354.6 million, 46.7% more than in 2021. We are therefore very satisfied with the evolution of the financial year and in an unbeatable position to face the challenges that arise in the short, medium and long term.

In this regard, one of the main challenges of 2022 was the launch of the new 2022-2024 Strategic Plan, which is being developed around three strategic pillars: growth, return and solvency. To contribute to our profitability, we have made progress, among other initiatives, in the corporate simplicity process. In this regard, Grupo Catalana Occidente has started a process of integrating operational and service platforms for years, which has allowed us to be more efficient and obtain a competitive advantage in the provision of services to our policyholders. In 2022, this strategy was continued with the completion of the integration of our product platforms. In 2023, we will continue to make progress on this path, through the unification of the traditional business companies (Seguros Catalana Occidente, Plus Ultra Seguros and Seguros Bilbao), in order to be a simpler organisation and, therefore, more streamlined, and able to adapt quickly to market demands.

Within the framework of the strategic axis of growth, we have always expressed our interest in continuing to advance our successful path of inorganic growth. This goal keeps us permanently in tune with the opportunities that may arise in the market, as was the case with the acquisition of the Mémora funeral services group on 9 February 2023, the leader in the Iberian Peninsula, announced in July. This operation involves the acquisition of a specialist group that is renowned for providing funeral services.

Solvency is the third and last axis of our strategic plan. At the end of 2022, the Group's estimated Solvency II ratio stood at 240%, consolidating the insurance group's strong position, able to withstand adverse situations.

Grupo Catalana Occidente's management has also been endorsed by the main rating agencies.  In July, A.M. 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 Grupo Catalana Occidente in traditional business and also in credit insurance. For its part, in October Moody's awarded an A2 rating to Grupo Catalana Occidente's main operating companies in credit insurance, upgrading its outlook from stable to positive.

Similarly, in 2022 we continued to make progress in the path of digitalisation and omnichannel. We are convinced that new technologies allow us to improve the solutions offered to our customers. Aware of the advantages and opportunities offered by the digital environment, but without forgetting at any time the fundamental role of mediators in our business model, we continue to support agents in the digitalisation of their commercial activity.

Innovation has been part of Grupo Catalana Occidente's DNA since its inception. The desire to thrive and innovate has placed the Group at the forefront of the insurance sector, always seeking to anticipate the trends of society in order to respond to the needs of the insured parties. Today, innovation is embodied in the Xplora intra-entrepreneurship programme, which promotes the cultural transformation of the organisation.

We have also continued to implement our 2020-2023 sustainability plan. Grupo Catalana Occidente adheres to the principles of the Global Compact and it is committed to the Sustainable Development Goals. It is also a signatory to the UNEP FI Principles for Sustainable Insurance (PSI) and UNPRI Principles for Responsible Investment (PRI). In 2022, we have taken a step further in our sustainability strategy and the Group has joined the Net-Zero Insurance Alliance. Since February 2023, we have adapted the offer of 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.

Grupo Catalana Occidente's long-term goal is, therefore, to create a solid business and generate sustainable social value. The sustainable 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. In this regard, Fundación Jesús Serra, the organisation through which Grupo Catalana Occidente channels its social actions, has participated in 60 projects helping those who most need it, in different areas of activity within the fields of research, business and teaching, social action, sport and promoting the arts.

I couldn't end without first highlighting and thanking Francisco Arregui for his contribution to the Group's achievements over more than 30 years, who made his retirement effective on 1 January 2023. He has been one of the company's key managers with extraordinary dedication and loyalty and has been a fundamental person within the Group's successful trajectory in recent decades.

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. Together, we have achieved excellent results that, as I said at the start of this letter, place us in a good position to face the challenges facing next year.      

José María Serra