MESSAGE FROM THE CHAIRMAN
Dear investors:
Despite the challenges presented by the insurance market, due to the effects of Hurricane Otis, at Peña Verde we were able to end 2023 with profitable growth. This was the result of the implementation of efficient strategies to improve the performance of our investment portfolio, increasing premium issuance and reinforcing the control of claims costs, while also benefiting from a more stable economic context.
The improvement in the Group’s data structure has been crucial to achieve more effective control of claims-related costs. This optimization has enabled a more precise resource management and a faster response to emergency situations, which has strengthened our ability to mitigate the adverse impacts of natural events such as hurricanes and other disasters.
In 2023, we achieved a significant milestone in premium issuance, reaching a total of Ps. 16,147.4 million, representing an increase of 10.5% compared to the Ps. 14,607.0 million recorded in 2022. This remarkable increase was the result of the successful deployment of our commercial strategy, reflected in double-digit growth in both business divisions. In this regard, the Reinsurance division reported a 12% increase in written premiums, while in General de Seguros it was 10.4%, driven by greater market penetration and the expansion of our product offering.
Full year 2023 ended with a profit of Ps. 242.1 million, a significant improvement compared to the net loss of Ps. 736.4 million recorded in 2022. This result drives us towards achieving our objectives set out in our 2022-2027 Business Plan. These objectives focus on key aspects such as profitability, growth, greater operating efficiency, excellence in customer service, investment liquidity, and compliance with sustainability best practices.
Regarding our investment strategy, we maintain an increase in the duration of our portfolio, taking advantage of high interest rates. We also have a predictive model that enables us to make projections for our portfolio in various highly complex scenarios.
In our sustainability approach, called Peña Verde Consciente, we continue to carry out actions in the three pillars of Environmental, Social and Governance (ESG). Some of the most outstanding actions in the Environmental axis include the planting of 860 “patula” and “oyamel” pines on the slopes of Iztapopo in collaboration with A.C. Reforestamos México, we sent for responsible electronic recycling more than 900 electronic devices collected through our annual internal “Reciclatón electrónico” (Electronic Recycleathon) campaign. In the Social axis, we participated for the third consecutive year in the 16 days of activism to end violence against girls and women, a United Nations campaign, and continued to collaborate with different associations in the promotion and awareness of their causes, such as Banco de Tapitas, Adolescencia Feliz Evitando la Callejerización Infantil (AFEECI), Fundación Aquí Nadie Se Rinde (ANSIR), and Omeyocan, among others. In the Governance axis, we renewed our commitment to the implementation of the ten principles of the corporate sustainability initiative, Global Compact, and we developed and published our internal Environmental and Sustainability policies.
In line with our commitment to innovation, growth and continuous improvement in all areas of our operations, we will continue to move forward in the coming year with our Group-wide portfolio of strategic projects, comprising 15 initiatives. These projects cover a wide variety of focus and development areas. It is important to highlight that these initiatives have strong financial backing, with a strong initial investment of 180 million pesos.
Furthermore, within the framework of the CONECTA project in the Insurance Division, we were able to put 5 Casualty products into production on our new policy administration platform; we also successfully completed the development of a Minimum Viable Product (MVP) for the Auto line segment. This solution will allow us to quote, underwrite and issue policies for individual vehicle insurance. The implementation of this MVP is scheduled to be launched in the second half of 2024.
The Integral Health Program for Minor Medical Expenses has begun to operate in all 9 target cities; as a result, 68% of medical consultations are now transacted through the new “wee” system, 34% of pharmacy prescriptions and 17% of laboratory and cabinet orders are also transacted through this new system; in addition, the claims rate has been contained, achieving a 3% reduction in the annual rate, which is equivalent to a savings of 1.3 million pesos.
In the Reinsurance unit, several successful initiatives were carried out. First, the CORE “SIREC” system was updated. Subsequently, Reaseaguradora Patria successfully implemented the automation of the Technical Administration operating process through the use of 12 bots based on RPA technology, which led to a significant improvement in the efficiency of the process. In addition, a comprehensive review of Patria’s business model and all its key processes was completed.
In relation to Grupo Peña Verde’s financial position, the rating agency Fitch Ratings confirmed the rating of Peña Verde and its subsidiaries Reaseguradora Patria, General de Seguros and General de Salud. The ratings for 2023 were “BBB+” for Peña Verde, “BBB+” and “AAA (mex)” for Reaseguradora Patria, and “AA+ (mex)” for General de Seguros and General de Salud.
Meanwhile, A.M. Best, the largest global credit rating agency specialized in the insurance sector, has assigned ratings of “bbb” for Peña Verde; “A”, “a” and “aaa.MX” for Reaseguradora Patria; and “A-”, “a-” and “aaa.MX” for General de Seguros and General de Salud.
Without a doubt, 2023 has been a turning point for the recovery of profitability and the expansion of our business, driven by a number of projects underway in all our subsidiaries. Looking ahead to 2024, we will maintain a constant focus on technological innovation, comprehensive risk management and operational sustainability, with the aim of securing profitable growth and strengthening our market position. At the same time, we will leverage our enhanced data analytics capabilities to efficiently identify and address key risks, as well as capitalize on new opportunities to drive our performance.
In this regard, we carried out a structural reorganization within the Group, which will contribute to improve cultural integration, economies of scale and synergies among the companies, particularly in the areas of Finance and Administration, as well as Insurance and Reinsurance, achieving better financial and operational control. This implies that Asset Management and Financial Strategy (GAEF), as well as Business Support and Transformation (SET), will be under the supervision of the Corporate Management, adopting the name of Business Transformation and Financial Strategy Unit (UTEEF). The Insurance and Reinsurance general management will report to the Business Management.
Finally, we would like to express our sincere appreciation to our distinguished stakeholders for the trust they continue to place in us. Their collaboration and support are fundamental to our continued growth and success. In addition, we extend our appreciation to our valuable team of collaborators, whose talent, dedication, and tireless effort are the driving force behind every achievement and advancement at Grupo Peña Verde. Together, we are committed to continue building strong relationships, driving innovation and delivering exceptional results, because together we deliver results!
Enrique Julio Zorrilla Fullaondo
Chairman of Peña Verde
Manuel Santiago Escobedo Conover
CEO of Peña Verde
Andrés Hernando Millán Drews
Business Transformation and Financial Strategy Unit Director
Francisco Fernando Martínez Cillero
Reinsurance and Insurance Business Unit Director
