Quálitas Controladora S.A.B (Q) Q2 2024 earnings summary

Executive summary

• Written premiums grew 32.7% in the first half of 2024, reaching a record 32,228 million pesos in 2Q24 and outpacing the Mexican auto insurance industry.

• Net income for 2Q24 was 2,621 million pesos, up 59.6% year-over-year, with a 12-month ROE of 23.5%.

• Market share in Mexico's auto insurance industry reached 32.6% as of March 2024.

• Combined ratio improved to 91.4% for the first half and 92.1% in 2Q24, reflecting effective cost control.

• Board appointed Roberto Russildi as CFO, effective July 16th, to support ongoing growth.

Financial highlights

• Written premiums increased 32.7% year-over-year in 2Q24; earned premiums up 28.9% to 15,069 million pesos.

• Net income of 2,621 million pesos for 2Q24 and 2.6 billion for the first half; net margin at 9% for the quarter.

• Financial income rose 32% year-over-year in 2Q24 to 2,194 million pesos, with an 8.9% ROI.

• Regulatory capital at 13,985 million pesos, with a 377% solvency margin.

• Assets totaled 93,637 million pesos, up 19% from 2Q23; stockholders' equity rose 11.3% to 21,274 million.

Outlook and guidance

• Full-year premium growth expected in the low to mid-20% range, above initial guidance.

• Growth in written premiums supported by strong new car sales and 2023 rate increases.

• Second half anticipated to see slower growth due to cautious consumer behavior and reduced government spending post-elections.

• International subsidiaries expected to continue growing at 20%-25% annually.

• U.S. operations to remain flattish in premiums until 2026, with breakeven targeted for that year.