Good morning, welcome to Línea Directa six months 2021 earnings webcast. We are pleased to welcome you today and also thank you for following up the business of Línea Directa. This is Beatriz Izard, head of investor relations. We have the pleasure of having here with us Carlos Rodriguez Ugarte, our CFO, who will review our financial results and activity for the first half. Additional information can be found on our website, as well as in the Excel spreadsheets that we uploaded. At the end of the presentation, we will open the Q&A session. We'll start with the questions coming from investors joining us through the conference call, followed by questions received by webcast. We'll be, of course, available afterwards to answer any pending questions. Without any further delay, I now hand the conference call over to Carlos. Good morning to everyone. Thank you very much, Beatriz, and good morning. Thank you very much. I'm pleased to present our first half 2021 results as a listed company. We will be discussing how things work for Línea Directa for the first six months of the year with the accounts approved yesterday by the board and that are public at the moment. In a nutshell, Línea Directa had a strong six-month performance, delivery, recurring and stable high profitability metrics. Policyholders grew by 3.8% and gross written premium by 1%, mainly reflecting pressure on premiums in the motor line of business. In the same time, we had a standing technical development with a combined ratio of 85.5%, a strong testimony of our underwriting capabilities. Net result stood at EUR 58.2 million, and return on average equity stood at almost 35%. Solvency ratio for the first six months of 2021 stood at 203%. This figure is already taking into consideration the EUR 26.6 million dividend paid on July 7th, and which represented a payout of 90% on our first quarter results. It shows, I think, the intention of the company to have a strong dividend payout. Moving to the context where the results are being delivered on the insurance front, the Spanish Motor, Home, and Health line of business had a mixed behavior. With regard to Motor insurance, there is a slow recovery in vehicle sales, thus increasing the age of the Spanish fleet, which now stands at 13.2 years. We are also observing a migration of all risks with deductible to third party and extended third party, leading to a reduction in the average premium. Mobility is increasing. Fatal accidents rose by 34% as of June. Gross written premium for the market as a whole decreased by 1%. Turning to page number eight, Home insurance had a different development. The purchase of homes is picking up. There is also more awareness about the need to insure the home, as more time was spent at home during the pandemic. Market as a whole is growing at a rate of almost 5%. On the negative side, we can say that the atmospheric events are here to stay. Finally, sanitary assistance continues a steady growth, with the market also growing at 4.9%. The sanitary activity, which was halted during the crisis, is back to normal. We are also seeing a rise in the healthcare cost. Now I'll take you through the main figures of the first half. Premiums were up 1%, reflecting a 3.8% increase of new clients. Pressure on premiums is still very high in the Motor line of business. Average premiums are down almost 3% for the market as a whole. Technical result was strong, up 1.8%. The group combined ratio stands at a remarkable 85.5%. I would like also to highlight the 1.2 percentage points reduction in the expense ratio, thanks to our strict cost control measures. Financial results is resilient, yet reflects the current extremely low interest environment with falling reinvestment yields of our fixed income portfolio. Profit after taxes stood at EUR 58.2 million, a decrease of 1.2% against the same period of last year. Please turn to next slide, page 12, where you see the breakdown of the policyholders and gross written premium by line of business. The portfolio as a whole increased by 3.8%, sustained by higher retention ratios. Gross written premium grew a modest 1%, with the Home insurance and the Health insurance line of business growing by more than 8% and 25% respectively. Motor insurance decreased by 1% on the back of a lower price environment. More specifically, if we turn to next page, the Motor insurance experienced a modest decrease in gross written premium. New business was more challenging for the reasons explained before, whilst the portfolio experienced a solid growth and strong retention rates. On the technical front, combined ratio was excellent at 83.7, which is 4.1 percentage points below the sector with the latest available data. This is driven by ongoing cost discipline and strict underwriting in a context of increased frequency and severity. Moving to Home insurance, premiums were up 8.5%, a growth rate that beats the market by 3.6 percentage points. New business had a remarkable performance. Combined ratio in the home insurance was up only by 2.5%. The combined ratio for the market stood above 100%, coming from 94% in the previous period, with atmospheric events deteriorating enormously the result for the sector in this first half of the year. Línea Directa posted a combined ratio of 91.2%, 10 percentile points below the market with the latest available data. Expenses remain stable, which translated into a lower cost ratio as business grows. The health line of business continues its development with almost 21,000 new clients. Average premiums was slightly lower due by a change in the mix of the portfolio. Combined ratio is improving, albeit claims frequency is rising due to the return to normal and recovery of the healthcare activity. Please, let's move to slide number 16, where we break down claims and expense ratio by line of business. Claims ratio had an excellent performance in the Motor insurance line of business, despite increased mobility. Home insurance has recurring impacts of weather events, and loss ratio stood at 65.3%. On expenses, it can be seen the cost discipline of the company that we apply across all line of businesses. Expense ratio was down 1.2 percentile points to 20.2%. All these ratios made it possible to achieve a combined ratio of 85.5%. In a strict ongoing control of risk underwriting, and of course, expenses. We can see in the next slide, historically, the company has been able to achieve solid technical margins across various competitive and microeconomics environments. Consolidated claims ratio was up by just one percentile point, of which weather events contribute by 0.5 percentile points. With regards to expense ratio, the company has a recurring focus on cost control over the years. Expense ratio as of June 2021 is explained by lower acquisition costs, partially offset by higher staff expenses as a consequence of the listing. The item, other technical income and expenses, reflects the amount of settlement agreements between companies applicable in Spain. Let's please now move to the next slide. Financial results was resilient despite adverse interest rate environment. Fixed income revenue were down by 9.2%, yet equities and investment property had a remarkable performance. Investment portfolio is low risk, with corporates and government accounting for 35% and 42% respectively. Exposure to equities and equity investment funds increased in the first six months of 2021 by almost 3%. We were also increasing the duration of the fixed income portfolio, reinvesting government maturities at a longer term. Moving on to slide number 21. What we display here is a prudent provisioning of the company. We are on average at 99.5 percentile. It must be noted that 2020 and 2021 reveal atypical claim management patterns due to the pandemic. Specifically, some claims took more time to settle, some treatments were delayed, and it was also more difficult to adjust personal injury claims, not having access to patients and hospitals. Finally, solvency remains very strong and stands at 203%. It is already taking into account the first interim dividend and reflects the economic balance sheet changes occurred in the first six months of the year. I would like to close this presentation by very briefly going through our progress on a number of strategic initiatives. During the first six months of 2021, Línea Directa has continued to develop its digital acceleration process with new functionalities, making application more robust and improving the customer experience. As of June 2021, 50% of customers have requested towing via the application. Meanwhile, 47% and 29% of claims were opened digitally in Motor and Home, respectively. Customers who interact digitally with the company already add up to more than 83% of the total portfolio. The company also launched a new valuation and indemnification system for minor damages through artificial intelligence in real time and without any human intervention. Also, the company just launched an application that automatically analyze driving behaviors and rewards customers for good driving habits. Last but not least, the company is making further progress to our sustainability plan with an overall 92% achievement. Notably, the company market share in electrical cars in Spain stands today at 10%. Unfortunately, electrical cars still have a very low penetration in Spain. However, the company is fully committed to it. Well, with this, I finish my presentation. Thank you. Now I hand it to Beatriz to begin the Q&A sessions. Thank you very much for this presentation, Carlos. We'll start with the Q&A. First, we'll begin with the questions received from the conference call. Thank you. Ladies and gentlemen, the Q&A session will start now. If you would like to ask a question on the conference call, please press star followed by one on your telephone keypad. The first question comes from Mario Ropero of Bestinver. Mario, your line is open. Hi, good morning. I have a couple of questions. The first one is on the combined ratio evolution for motor. It's still relatively low, particularly compared to pre-COVID-19 levels. Could you give us some sort of indication about your expectation there? Then on the combined ratio in Home insurance, you mentioned that these normal atmospheric events are here to stay. To control the combined ratio of the Home insurance business, are you planning to implement additional cost initiatives to control the expense ratio in this business? Thank you. Thank you. On the first question, on the combined ratio on the Motor insurance business, I think it's a very good combined ratio. It is true that COVID-19 is still affecting the frequency of the business, especially in the first quarter of the year, where frequency there were lower than that of 2019. That, for us, is the reference as a normalized year. We'll see what happens on the third quarter, especially with the vacation period in Spain. On the other hand, severity of accidents was higher than what we expected, but if we take the two things together, still today, frequency is better than in the past. In our budget and in our planning for the year, we estimated on the second part of the year, especially on the fourth quarter, frequency will start to pick up, and it will get close to that of 2019. Having said that, I think the combined ratio of the Motor insurance business is going to be as powerful as you can see it in the first half of the year. On the Home insurance business, it's very difficult to do something on the atmospheric issue. We already plan every year that we will have a number of atmospheric. The trick here is to identify when it's going to happen. This year, it happened basically on the first two couple of months of the year, and that has impacted the combined ratio. It's very difficult, and it will depend how it evolves. It's very difficult to have any measures there. What we do on the combined ratio of the Home insurance business is keep on working on the cost side. Expense ratio dropped from the large number posted on December, and our intention is to keep on evolving there as we get scale on this business. On the claim side of the combined ratio of the Home insurance business, we have the numbers done at the beginning of the year of the amount that we will spend on atmospherics. As of today, the cost of this atmospheric, especially Filomena, the cost for us was in the neighborhood of EUR 2 million gross before insurance. Yeah, precisely. Filomena was, for us, EUR 2.1 gross and EUR 1.9 net. Okay, thank you. The next question on the conference call comes from Ashik Musaddi of JP Morgan. Ashik, please go ahead. Thank you, and good morning, Carlos. Just a couple of questions I have is, first of all, you were able to maintain still the growth in the number of customers, basically, which compares with the decline in the average premium in the Spanish motor market. How would you see that dynamic going forward? How comfortable you are that the growth in customer count will continue, and do you have any visibility on where the pricing is heading towards, especially given that the accident level or the claims frequency has started to normalize. Is there any visibility on that? That would be very helpful to know. The second is in the home segment, again, the growth was strong at 5%, as well as the prices are going up. Any thoughts on that? Where do you see that heading towards? Well. Just last one. Sorry. Go ahead. No, this was the last question is you mentioned that the combined ratio for second half for the group is more or less looking similar as first half. Was my interpretation right, or you were trying to say something else? Okay. Thank you. Well, first, on the Motor insurance business, I think the number of new clients in this line of business was remarkable in a difficult situation. I think especially on the first quarter, given the fact that the demand of new cars, the demand of purchase of cars is very low as compared to a normalized year 2019. That put a lot of pressure on the growth of clients. I think the numbers that we posted are quite well. In terms of average premiums, I still think there is going to be pressure on average premiums looking forward. I think the market is going to turn around probably by the end of the year. I don't see any improvement on average premiums on this year because still, I think there's a lot of pressure, competitive pressure. combined ratios there are still lower than in a normalized year. I think we will see that. Again, I think the number that we posted on new clients or increased portfolio is very good. It's a combination of two things. The good retention capabilities that we have and that we have demonstrated during the years, and of course, new clients coming into the business. With respect to the Home insurance I don't see any pressure on pricing going downwards. Indeed, I think all these atmospheric events, all this increasing frequency because of less mobility of the population, put a little bit of pressure upwards on the average premiums. I think as people start to go back to normal lives and start to use less the homes and all that, probably the average premiums will tend to stabilize. I don't see any pressure going downwards. In terms of the combined ratio looking forward, well, I cannot guess how it's going to look by the end of the year. What I think is that, well, first half was very good, especially because of the frequency on the Motor insurance business. I'm kind of worried about the frequency on the summer because people are eager to go out on vacation. Let's see how it evolves there on the summer. I think as we reach the end of the year, frequency will start to look more or less like 2019. Keep in mind that on 2018, our combined ratio was in this neighborhood, 55+, and on 2019 was on the 87%. We will move in that realm. Okay. That is very clear. Thank you. The next question comes from Thomas Bateman of Berenberg. Thomas, please go ahead. Hi. Good morning, Carlos. Morning, Beatriz. Thanks very much for taking my question. Just on solvency, I think there is another adjustment for about EUR 12 million on the own funds. Can you just give us a bit of an insight into terms of what's in and what's driving that movement, and whether we should expect that to be recurring, or is that a bit of a one-off? Secondly, just on Health insurance, do you have any change to the guidance there, or is there any new guidance in terms of when this business might break even in the future? I guess just on premiums on the Health insurance, is this in line with expectations, 25%, or do you expect that to pick up even more so in the second half of the year? Thank you. Hi, Thomas. This is Beatriz. Regarding the Solvency II question and our own funds work. Okay, basically what you have are the eligible own funds, of course, as 2020 year-end. You have the profit, the change in the available for sale portfolio, which basically is driven by further revaluation of our equity portfolio. The EUR 12 million adjustment mainly comes from the best estimate liability under Solvency II. Okay? We have an increase in the best estimate provision, and that's basically what is included in this EUR 12 million. Hello, Thomas. Nice to talk to you. Regarding the Health insurance, the first half of the year was business as usual, I think. We are very happy of the evolution of the Health insurance. I think now we have a portfolio close to 100,000 clients, with good increase in sales, good increase on the portfolio. Keep on developing our value proposition in a very different way as our competitors, as we spoke in the past. I think first half of the year, happy with the evolution and very much in line with what we expected for the first half of the year. Looking forward, I still think that in order to go to break even, we will need to double the number of clients, and I think that it will take at least a couple of years as we spoke, 2024 or by the end of 2024. No changes on that. I think in terms of the context or in terms of the market, I think there's still the need. I think the perception of Spaniards for the need of a private health insurance is there. I think people are increasingly demanding health insurance. In that regard, I think our value proposition is very valid for newcomers into the business, probably younger people, that they value our proposition, which is very much linked to direct. I think good numbers in that. Very much in line with what we expected. We don't change our expectations of getting to that break even by 2024, by the end of 2024. That is very clear. Thanks for your answers and congratulations on resilient set results. Thank you. The next question comes from Carlos Peixoto from CaixaBank. Carlos, please go ahead. Hello, good morning. This is Carlos Peixoto from CaixaBank. Just a couple of questions. First one would be actually a small detailed question on financial income. In the first half, I noticed that overall income is more or less stable versus last year, but the financial costs have declined materially. Is this related to lower interest rates? Any type of detail you could give us on that? The second question would be regarding the evolution of Home insurance. I was thinking, what type of growth do you expect to see throughout the rest of the year in premiums and particularly in 2022 as well, if you could share some visibility. What would be the combined ratio that you would feel as being the normal run rate for this business? Thank you. Thank you very much, Carlos. Regarding the financial income. Well, we still have a EUR 1 billion portfolio, very prudent still, of which I think 80% of the portfolio is in governments and on corporate with investment rating. It's a difficult environment. With interest rates on the negative side. Let's see what happens with inflation. The good part of the financial income for this year is that all the maturities that we expected on the portfolio on the debt side of the business have already happened. The second part of the year, we won't have those maturities, and then we won't have the problem of reinvesting those maturities in a lower interest rate. We have tried to do a couple of things, tried to do something more on the equity side of the business with a prudent approach. Trying to increase a little bit that. We did something on the real estate, which will provide us with good yields. I think the financial result has been positive given the fact that for the entire insurance business, it's going to be difficult to maintain those levels of financial income looking forward, unless interest rates will start to pick up. On the evolution of the home insurance business, I think the market is still moving upwards. Home sales, both firsthand and secondhand, are performing quite well. I think there's still room to grow this year there. Very happy with the numbers we posted. We grew by 5%, by 8%, sorry, our premiums close to 9%. Much more than the market, which I think is in the neighborhood of 5%. I think one of the positive sides of the Home insurance is that our partnership with third parties that are providing us with leads are working very well. We have a major partnership with Naturgy, where basically we are getting very high conversion rates on the leads that we get from Naturgy. Even higher than other channels that we have. If that works, I think it's going to be a good year for the Home insurance business, and you should expect, looking forward, growth rate very similar, the ones we posted on the first quarter. On the first half, sorry. The next question comes from Patrick Lee of Santander. Patrick, please go ahead. Hi, good morning, everyone. Thanks for taking my questions. I just have a couple related to solvency again. I noted that in this half, your solvency capital required went up by some 11%, which seems quite high compared to kind of the recent growth rate in recent years. I think some of the market risk was explained by what Beatriz mentioned earlier on. I also noted that the non-life underwriting risk went up by around 9%. Is there anything that we should pay attention to as to why the growth was that high? I guess related to that also contributed to your solvency ratio falling to 203%. While it is obviously high and very comfortable, it is lower than your recent levels at above 210%. I guess, whether we can take that as a sign or a signal that you are ready to take your solvency ratio lower towards your minimum or management level of 180%. Thanks. Thank you, Patrick. Nice to talk to you. On the solvency side and the increase on the capital requirements. Well, at the end, it's a combination of a couple of things. Beatriz also explained a little bit. First, we have increased a little bit our position on the equity market, and you know that requirements on that are higher than on the debt side of the portfolio. Second, there has been an impact, of course, on the adjustment that EIOPA publicizes every quarter. During the pandemic, that adjustment was negative. It somewhat decreased the capital requirement on the equity market, whereas in the first half of the year, that adjustment that is published by EIOPA, and you have to fulfill, has gone in the positive side. It has required more capital. That is the explanation of that increase on the capital requirement. Again, a little bit of more equity position, then the regulatory adjustment published by EIOPA on the first half of the year. Looking forward on the solvency ratio, I think was your second question. Well, we sent a message to the market that our intention was to get into levels of 190%, 180%. We are in 203%, which I think is one of the best solvency ratios of the market. We are not moving intentionally to get to that 180%, 190%, but we feel confident on that. The idea here is, keep on growing the business, keep on maintaining a stable solvency ratio. From that on, try to distribute dividends in the levels that we have. 203% is a good ratio for us. Again, our intention is to move forwards to that 190% of the market. Yeah. Patrick, hi. This is Beatriz. just to reinforce- Hi. Carlos' message, precisely. What was driving the SCR this semester was basically underwriting risk and market risk. Market risk, as Carlos is saying, because now we have more exposure to equities, okay? They are not listed, basically in private equity funds. Very profitable, there's a capital charge for that. Underwriting risk, because the USP, the specific parameter that you use, is based on historical basis. Paradoxically, last year was extremely good. So it adds volatility to the parameter. We have a slightly above normal, I would say, specific parameter for the non-life subscription risk. Okay. Thank you. Thank you very much for this coverage. The next question comes from Phil Ross of Mediobanca. Phil, please go ahead. Hi. Good morning. Thanks for taking the question. Just coming back to Motor insurance. You mentioned the migration of policies from all risk to third party. Can you give us an idea whether that is mainly new or existing customers? Can perhaps you give us some steer on what the average price difference normally is between those two products, please? Just a quick sort of second question. Quite high level, on claims inflation, that's been a talking point in some areas more generally across the economy. I just wonder if you have any signs at this stage, small as they might be, of claims inflation creeping into your claims costs. Thank you. Starting from the last, I think claim inflation was nothing new on the first half of the year. The inflation on the material cost is growing up every year on 3% to 5% every year. I think this is what is happening this year. The good thing there is that in our case, we are able to beat the market, and as I explained many times, our positive gap in terms of repair cost compared to the market, is quite high. Again, I think inflation on the repair cost is there. It was last year. It's doing this year. That is why we are relying very much on our own car repair shops, on our agreement with 500 repair shops in order to manage that cost and try to be more efficient because, of course, inflation is there and it's picking up. The second question was, Beatriz? I think regarding the average premium on new business and renewals. I think it was more on the, I'm thinking he was also asking on the breakdown of those that they are changing the type of insurance that they are doing from standard to third parties and all that. I don't have the breakdown with me now. Phil, we will have to look for it and send it to you, because we don't have that breakdown right now. Beatriz and Mark will get back to you on that one and will send you. Yes. Sure. Thank you. We appear to have no further questions on the conference call, so we can move to the webcast questions. The first question comes from Mario Santos from Soros Fund Management. He's saying, "Thanks for the presentation. Very helpful. Can you please develop the artificial intelligence engine initiative a bit more? How should we think about automation targets for the claims management process a bit farther away than 2022? Can you please provide us with an idea of what type of improvement in expense ratio you expect to get by progressively implementing these types of initiatives? How much of the benefits of that will be shared with customers? Thanks. This is a very good question, and I think I need the help here of the IT people because I'm not an expert on this. Regarding artificial intelligence, well, I cannot get on the technical part of that. I think the company is very much focused on using technology, especially on the management of clients. Of course on the selling part, but also on the management of clients. Artificial intelligence is something that we are using, as we use other IT tools. In order to give you an idea on how it works, I think we will have to ask our technical people, and we will get back to you on that. Regarding, of the improvement of the cost, which I can, like I say, a little bit more regarding on the improvement of the cost side due to our technological approach. We don't do numbers. We don't do numbers on that. What we think is that we need to do something on the technological side in order to improve the customer experience. I mean, the relation of the client with us. That will improve the quality perception by clients, and that will improve our retentions and of course our selling possibility. We don't do numbers on how much we are going to save. What we are seeing is our combined ratios, on the cost side of the combined ratio, they are improving and they are improving because of the technology, but they are also improving because of the cost discipline of the company. No numbers on that. It's more a strategy than doing numbers on how much I can save. In order to translate that to clients, what we try to do is being very efficient to have one of the best average premiums on the market. The answer is yes. As we get more efficient, average premiums on the market will be more competitive. That, of course. I would add that for the customer, it's extremely easy to handle this. There's a high percentage of customers that prefers indemnification as opposed to repair. In this way, they can get the bank transfer in just a few seconds, just by three clicks, basically, on the app. In terms of customer easiness