Dear Shareholders:
As Chairman of Peña Verde, and on behalf of the Board, I would like to greet and welcome you to our first annual report.
2020 was an unprecedented year that shocked the entire humanity and will be remembered in history primarily for the disastrous loss of millions of human lives due to the COVID-19 pandemic, and also for the profound worldwide economic crisis (3.5% contraction), where Mexico was one of the most severely hit economies with a drop of more than 8.5%.
During the year, the global insurance sector showed signs of resilience in the face of the health contingency and the economic downturn, while in Mexico it contracted 2.7% in real terms according to the Mexican Association of Insurance Institutions (Asociación Mexicana de Instituciones de Seguros, AMIS for its Spanish acronym).
In this scenario, so unfavorable for business management, Peña Verde demonstrated the organizational strength and financial soundness required to meet the challenges of 2020, both at the consolidated level and in each of its subsidiaries.
We took decisive steps forward in each component of the Transformation strategy. In Cultural Transformation, we stepped up training in cultural pillars, the new performance evaluation model, succession and talent development plans, and corporate governance initiatives and the comprehensive restructuring of the Boards.
Convinced that the future of the industry lies in digitization, business transformation initiatives and technologies such as SAVIA, MOVA, TEKKU, CONECTA and the consolidation of the Business Support and Transformation and Asset Management and Financial Strategy teams remained on track.
On the financial front, I would like to highlight some of the most relevant financial results of Grupo Peña Verde as of December 2020:
1. At the end of December 2020, Grupo Peña Verde’s written premiums reached Ps.10,226.6 million, 24.5% higher than in the same period last year, mainly driven by Reaseguradora Patria's 41.2% year-over-year growth.
2. The Company's combined ratio, calculated as the sum of the acquisition ratio (28.3%), claims ratio (58.7%) and operating ratio (8.9%), was 95.9%, 1.9 pp. above that reported in 4Q19.
3. Despite these results, we did not come out unscathed by the uncertainty brought about by the pandemic and its subsequent economic crisis, whose impact caused us to underperform, as at the end of 2020 the Company recorded a Ps.195.5 million net loss. Nevertheless, it is relevant to note that the underwriting result and most of the key operating metrics exceeded the figures set forth in the “2020-2025 Strategic Plan: Sustainable Profitability” to which we are committed.
The global economy is expected to recover during 2021, conditioned by the successful delivery of effective COVID-19 vaccines and continued flexible fiscal, financial, and monetary conditions. For Mexico, forecasts also suggest an optimistic economic recovery. At Peña Verde, despite the encouraging results achieved in 2020, we will continue to operate with caution in the face of the projected recovery of the economy, paying special attention to those variables that directly impact our business.
On behalf of the Board of Peña Verde, I am pleased to reiterate my gratitude to you, our shareholders, for the trust you have placed in us to guide the Company's future. I would also like to thank the Board of Directors and all of the Group's employees, as the results attained are the product of their effort, dedication, perseverance, and tenacity.
Enrique Julio Zorrilla Fullaondo
Chairman of Peña Verde