Good morning and thank you for joining Qualitas' second quarter 2026 earnings call. I'm Jorge Pérez Rivero, Qualitas IRO.

Joining me today are Bernardo Risoul, our CEO, as well as our CFO, Roberto Araujo. As a reminder, please note that information discussed on today's call may include forward-looking statements.

These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's call. Qualitas undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

With that, I will now turn the call over to Bernardo, our CEO, for his remarks.

Thank you, Jorge, and good morning, everyone. It is great to be with you all again.

Let me start by saying that while the second quarter confirmed that 2026 continues to be a transition year for Qualitas, we are encouraged by the way the company is navigating a demanding environment. The quarter reflects the complexity of the market, the resilience of our business model, as well as the early and ongoing benefits of the actions we began implementing at the end of last year.

As we have been communicating, 2026 poised itself to be quite unique, as we would have to cope not only with the implications of global turmoil and Mexico's stagnant GDP growth, but also with the effects associated with the VAT regulatory change in which the sales tax paid in claims is no longer credited. On top of that, competition has intensified, and supplier costs continue to rise due to minimum wage adjustments.

In the case of Mexico, for example, GDP is expected to grow by approximately 1%, tightening disposable income across both companies and individuals. In that context, we continue to move forward with initiatives focused on operating efficiencies, cost control, pricing discipline, and further leveraging the advantages that come from our leadership position, scale, and vertical integration capabilities.

These efforts are helping us partially offset the new cost dynamics, despite the mentioned challenging market conditions. From a quarterly performance standpoint, written premiums were basically flat, while presenting a 7.7% growth on a year-to-date basis.

To better understand these results, it is important to look at the market dynamics, as we are at the stage of the underwriting cycle where several competitors are increasingly relying on price cuts to seek volume growth. This is not new, we have seen it before, and even anticipated.

What has been a bit unexpected is the depth and aggressiveness, especially in a year where the whole industry is digesting the mentioned effects of VAT changes. In several cases, both fleets and individuals, premiums are below a year ago, despite the explained inflationary headwinds.

On this front, our compass for all decisions is doing what is best for Qualitas in the long term. We have never managed the company to deliver a quarter, but rather sustainable value creation.

Easier said than done, but it basically resums [resumes?] to defend all accounts where it makes sense to do so, but also wise when deciding to let some of those go, especially if there is certainty that those accounts will come at a loss.

When it comes to pricing, we will be aggressive, but not irresponsible. In parallel, we will continue to strengthen our service, which, by the way, continues to improve, being at the highest satisfaction survey in the past 5 years, and by doing so, seek to recover those customers that leave because of a lower price once the cycle normalizes.

We have determined that while seeking efficiencies and productivity, we will not jeopardize services in any way, but rather double down on it as a long-term competitive advantage. The environment is pushing us to go beyond on cost control, and we are relentlessly doing so.

For instance, our loss ratio remained within our technical target range, despite not only the mentioned VAT impacts, but the fact that this year's rainy season appears to be starting earlier than usual, with heavy rains already observed throughout the second quarter. Keeping loss ratio in control led to a cumulative combined ratio of 92.8%, in line with our full-year objective.

Our investment portfolio continues to be a solid contribution to results, benefiting from the timely extension of duration, allowing us to continue generating financial income above reference rates despite the downward trend in interest rates. Overall, this translated into a ROE for the period of 21.4%.

According to the latest AMIS figures, as of Q1 2026, Qualitas remains the undisputable leader in the Mexican auto insurance industry, with a market share of 34.2% in written premiums, 37.4% in earned premiums, and 45.4% in the heavy equipment segment. In underwriting results, Qualitas accounted for 83% among the top five auto insurers in the sector.

More importantly, our leadership continues to be reflected not only in scale, but also in profitability and operating performance, reinforcing the strength of our business model even during periods of elevated market pressure. Looking ahead, we remain cautiously optimistic for the rest of 2026.

As we enter the second half, a period typically characterized by higher claims volumes and the impact of underwriting at lower premiums, we are committed to executing our defined strategic priorities, continuing to invest in key areas, and proactively adjusting our operations to remain agile and ready to respond. Regarding our three-pillar strategy, winning in Mexico remains our foremost priority.

Our insurance business in Mexico continues to be the main driver of the group and the foundation of our long-term value creation. From a new vehicle sales standpoint, according to AMDA, the quarter continued to show a positive trend, both in light and heavy units, with growth of 7.1% in light vehicles and 8.2% in heavy units.

These figures were a pleasant surprise and an outlier relative to some other sectors in Mexico. We do expect a slowdown in personal auto, while commercial vehicles, including trucks and buses, are expecting to recover from a year-to-date decline of 11.5%.

New vehicle sales remain an important industry metric, even if the competitive landscape and the broader macroeconomic context continue to remain fluent. At the same time, our priority remains on serving and retaining our existing customer base.

Regarding our second pillar, we continue to see encouraging progress in our international subsidiaries. I would like to emphasize the traction and positive momentum we are experiencing with strong performance across all priority markets.

Our LatAm subsidiaries grew 39% this quarter in US dollars, consolidating as a strong option through our proposal that relies on excellence in service. We remain committed to investing in these operations and building their capabilities with a long-term perspective.

We are making good progress towards them becoming an engine of profitable growth. As for our US subsidiary, we continue to reshape the portfolio toward profitability.

We are focused on properly managing the runoff of the businesses we have decided to exit, while continuing to build a stronger and more competitive binational PPA proposition. This approach has reduced the risk associated with the commercial segment and reflects our disciplined focus on those businesses where we believe we have a clear right to win.

Overall, in this important pillar, our strategy remains focused on disciplined growth, strengthening local capabilities, and continuing to replicate Qualitas' operating DNA in those markets where we see attractive long-term potential. In parallel, we continue to move forward on our third pillar through our new businesses and vertical integration strategy.

These businesses continue to strengthen our operating model by generating efficiencies, improving coordination across the value chain, and supporting better claims management and cost control. As in prior quarters, we see these benefits materializing gradually, but they are increasingly becoming an important component of our long-term competitiveness.

We will continue to assess avenues of growth in new segments or markets, as long as they fit with Qualitas' DNA and can be accretive to our operations. Before closing, I would like to recognize our team.

Their commitment, discipline, and execution continue to be the foundation of our results and the reason why we remain confident in the future of Qualitas. With that, let's move on to the financial details and take a deeper dive into the quarter results.

Roberto, please.

Thank you, Bernardo, and good morning, everyone. Going directly to our top-line performance, written premiums for the quarter showed a marginal decline of 0.5%, which translates into a 7.7% growth for the first half of the year, consistent with our full-year top-line expectations.

It is important to highlight a one-time effect resulting from a shift of coverage in one of our largest multi-annual accounts. Excluding this effect, written premiums growth would have been 3.4%, and year-to-date would have stood at 9.5%.

In our Mexican operation, the traditional segment accounted for 63% of total written premiums, posting a decline of 3.2% in the quarter, while showing an increase of 5.5% growth year-to-date. Within this segment, individual business grew 2.5% in the quarter and 3.1% year-to-date, while fleets decreased 12.4% in the quarter and grew 8.9% year-to-date.

The referred one-timer came into the fleet business, which would have grown mid-single digit if normalized. Regarding the financial institutions segment, which represented 32% of total written premiums, it grew 5.9% in the quarter and 15.4% year-to-date.

The growth within this segment was also affected by the competitive environment in specific brands and models with some financial institutions. As reported, our international subsidiaries contributed approximately 5% of total written premiums year-to-date, with LatAm strong growth being partially offset by the US operation decline.

Across Latin America, as reported, our subsidiaries posted strong growth of 26% in the quarter and 22.9% year-to-date. It is important to highlight that our LatAm subsidiaries' results have been affected by foreign exchange effects, mainly due to the depreciation of the US dollar.

This has had an impact on the reported growth in peso terms. Excluding this FX effect, written premiums in LatAm would have grown 38.8% in US dollar terms during the quarter, compared to the reported 26%, and 40.1% year-to-date, compared to the reported 22.9%.

In Colombia, performance remains in line with our expectations. As we continue adapting to the market's unique characteristics, we are building a solid foundation with the same service excellence DNA that defines our group, committed to achieving sustainable growth through the same discipline and vision that have proven to be part of our success.

As of today, we have 20 active offices enabling $11.4 million of written premium, well above our initial projections. Our goal by year-end is to have 25 offices open, but most importantly, to consolidate as the preferred options to those agents that have given us an initial opportunity.

In the US, premiums declined 80.3% in the quarter and 78.8% year-to-date, consistent with our expectations, as we focus only on the private passenger auto business line. Including all subsidiaries, we closed the quarter with more than 6.1 million insured units, up by approximately 120,000 units versus the same quarter of last year, equivalent to a 5-year compound annual growth rate of 8.5%.

Back to our financials, earned premiums increased 4.4% for the quarter and 8% year-to-date, growing at a faster pace than written premiums. As earned premium growth is directly correlated with reserve behavior.

During the quarter, we released 322 million pesos in reserves, compared to 730 million in reserve constitution in the second quarter last year. For the first semester of the year, reserve constitution totaled 2.6 billion pesos, 2% below the same period last year.

This, combined with the deceleration seen in written premiums and the change in the mix of multi-annual policies in the portfolio, which declined from representing 23% in Q2 2025 to 20.7% in Q2 2026, explains the dynamics of our earned premiums. Moving down to our costs, the loss ratio stood at 64.8% for the quarter.

This result reflects the early start to the rainy season, as well as the impact of higher average claim costs resulting from the VAT effect, which by the end of the first half of 2026 represented approximately 340 basis points of the loss ratio. All of this was partially offset by the effective implementation of the initiatives we have put in place, including targeted pricing adjustments, strict cost control measures, and efficiencies across our vertically integrated operations, as well as the reduction in thefts, coped [coupled?]

with the continuous improvement in our recovery rate during the year. Furthermore, on a year-to-date basis, our loss ratio closed at 63.7%, standing at the midpoint of our 62% to 65% target range.

In Mexico, the loss ratio stood at 63.9% for the quarter and 62.5% for the first half of the year, well within our desired and sustainable range of 62% to 65%, highlighting the strength of our underwriting discipline and operational execution, even under a more challenging regulatory environment and intense competition. It is worth mentioning that frequency for the quarter was 6.6%, representing a decrease of 23 basis points versus the same quarter last year.

As for thefts, year-to-date theft cases decreased 15.3% for Qualitas, despite having more insured units, becoming an important building block for our claim cost performance. Qualitas' recovery rate stood at 49.4%, 619 basis points above the rest of the industry and improving versus last year.

We continue enhancing our technological tools and coordination with suppliers and authorities to reduce costs and improve efficiency. Moving to our acquisition ratio, it stood at 25.1% for the quarter and 23.7% for the first half of the year, driven by the stronger growth of the financial institutions segment, which carries higher commissions.

Then, our operating ratio stood at 5.8% for the quarter and 5.4% for the first 6 months of the year, including the employee profit-sharing provision, as well as fees paid to service offices and corporate bonuses linked to their successful performance during the year, aligning productivity and control efficiencies towards the positive results of Qualitas. The quarterly ratio increase was also influenced by the deceleration in written premiums, as a lower top-line base naturally puts additional pressure on the ratio.

Excluding employee profit sharing, which by law must be incorporated, our operating expenses ratio would have stood at 5% for the quarter and 4.4% for the first 6 months of the year. All of the above resulted in a combined ratio of 95.7% for the quarter and 92.8% for the first half of the year, standing within our 92% to 94% full-year target.

Once again, I would like to reiterate that Qualitas' business model is built for the long run. Even while facing adverse factors during the year, our focus will always be on returning value to our stakeholders through sustained business profitability.

Now, moving to the financial side of our business, comprehensive financial income decreased 4.7% for the quarter and 15.1% year-to-date, mainly reflecting the lower interest rate environment versus the same period last year. As benchmark rates have continued to decline, the reinvestment yield of the portfolio has moderated accordingly, lowering quarterly financial income.

Nonetheless, our investment committee and team have remained very responsible and diligent, while at the same time taking advantage of selective windows of opportunity that have emerged in recent months as a result of macroeconomic volatility. In those periods, we have been able to lock in products offering attractive yields and extend the longer end of the curve in order to maintain our duration within the ranges we have been targeting.

Results speak for themselves, as we currently stand on the Mexico portfolio on a yield to maturity of 8.9%, where reference rate in Mexico stands at 6.5%, a 240 basis points delta that will allow us to continue seeing strong results for the coming quarters. We remain mainly invested in fixed income, which represented 85.7% of our total 53.4 billion pesos portfolio, with an average consolidated duration of 2.6 years and a yield to maturity of 8.4%.

With the current portfolio composition, for each 25 basis point decrease in rates, the annual benefit on portfolio valuation is approximately 309 million pesos. The rest of our portfolio allocated to equities has remained resilient during the first half of the year.

For example, although the S&P 500 stumbled in the first quarter of the year, a positive 9.6% return was still observed on a year-to-date basis, setting a relatively more constructive tone as markets headed into the second half. All our investment assets are classified as available for sale, meaning their unrealized gains or losses are reflected in the balance sheet until realized, even as uncertainty persists across markets amid geopolitical risks, trade tensions, and concerns about a potential economic slowdown.

Our investment strategy has not had any relevant changes in 2026. We have continued targeting a fixed income duration of around 2 to 2.5 years, as reference rates remain in the mid to high single digits in Mexico, following the guidelines and strategy defined by our investment committee as part of our institutionalized corporate governance.

Our comprehensive financial income reached 1.2 billion pesos during the quarter and 2.3 billion pesos year-to-date, delivering 7.4% ROI in both quarterly and year-to-date perspectives. Total unrealized gains are approximately 2.4 billion pesos, including FX impact.

The unrealized gains increased from the 1.5 billion level at the end of Q1 this year due to the performance of our equity portfolio and the interest rate reduction of 25 basis points observed during the quarter, which led to higher valuations of our fixed income assets reflected on the balance sheet. When considering all positions on a mark-to-market basis, ROI would have stood at 13.6% for the quarter and 8.9% for the year.

Approximately 21% of our portfolio is invested in US dollars, given our international presence. For every peso that the exchange rate appreciates or depreciates, the estimated annual impact is around 665 million pesos, serving as a natural hedge against FX depreciation.

Looking ahead, we expect our investment portfolio to continue delivering steady performance, with our fixed income allocation serving as an anchor during periods of volatility in equity markets. The duration of our portfolio enhances our ability to weather market fluctuations.

Going forward, the financial markets in 2026 are expected to present a mix of challenges and opportunities. Despite the volatility in equity markets, our strategic focus on fixed income leads us to believe that our investment approach remains well balanced.

Our effective tax rate was 30% year-to-date, in line with historical levels. Net income reached 1.4 billion pesos for the quarter and 2.9 billion year-to-date, with net margins of 8% and 7.5%, respectively.

Our 12-month ROE stands at 18.3%, reflecting the full-year one-time VAT impact recognized during Q4 of last year. ROE for the period stood at 21.4%.

Despite headwinds, we continue to be committed to a long-term ROE of close or above 20%, including this 2026. Our regulatory capital stood at 6.6 billion pesos, with a solvency margin of 16 billion pesos, equivalent to a solvency ratio of 341%.

In turn, our trailing 12-month earned premium to capital ratio stood at 2.9 times. Our performance delivered industry-leading profitability, while our strategic execution has ensured earnings durability and capital efficiency, positioning us well to navigate volatile times.

As we have been communicating, we are in the midst of our transition year, navigating a complex and challenging environment. In challenging environments, character shows, and service is where character becomes tangible to our customers.

Our results this quarter reflect some of these headwinds. Yet, the full picture is what matters, and our full picture is built on a simple principle: when our clients need us most, Qualitas delivers.

That is our foremost priority. In closing, we are proud of our solid first-half performance.

We delivered profitable growth, paving the way for the future and reaching key milestones despite external pressures. Our capital position remains robust, and our strategy is clearly defined.

While the second half may present new challenges, we are fully prepared to navigate them and continue delivering long-term, sustainable value. Thank you for your continued support and confidence in our company.

Together, we will navigate these challenging times and seize the opportunities that lie ahead. Now, operator, please open the line for questions.

Thank you.

Hello, good morning, everyone. Thank you for the call.

Congrats on the results. My question is just on the top line, to twofold the question.

You mentioned the release that you have a change in coverage for a multi-annual account. It wasn't 100% clear to me what exactly does it mean, if it's you lost a client to a competitor, if the client reduced the coverage, if it's a timing recognition issue.

If you can provide a little bit more color on what you meant by this comment. Then, the second point of the question is, what is the outlook for the year, right?

You used to have a, if I'm not mistaken, a soft guidance of high single digit to low double digit written premium growth. I just want to confirm what is the latest kind of soft guidance for the top line in the year for after this print, right?

Thank you so much.

Hello, Guilherme. Good morning.

I'll take a couple of the questions that you mentioned. First, regarding the one-timer reflected on the quarterly premiums, there is one large multi-annual premium that changed coverage from a full coverage to a limited and reduced extension.

No? Important to know the customer is still with us.

Just as a reference, if we go back to Q4 of 2024, we called out into this same audience one large fleet which accounted to a significant booster in what was a growth of 30% back then, no, in the quarter. It is linked to that and somehow also speaks because customers adapting to market and financial conditions, which as we mentioned, are currently skewed to seeking a cheaper or a fairer prices, no?

Again, that one-timer accounted for around three points of growth for the quarter, and we wanted to call it out because the base business is still growing in the low to mid-single digit for the quarter. Again, if we were to see the 6 months year-to-date, we are still posting a growth that is still attractive, closer to 9%.

Now, if I were to shift to your second question, what can we expect moving forward? I think it's fair to anticipate that aggressive pricing will continue, likely throughout 2026, and probably until loss ratio starts bringing the bills of the suboptimal underwriting decisions being made, no?

Considering that and what is likely to be an ease on new car sales, we do expect that second half premium growth will be tighter, but I would say still positive. At this point, we believe top line for the year should end up in the mid to high single digits.

Now, importantly, the discipline we've taken across all fronts lead us to still hold our bottom line expectations, and it was called out by Roberto that as at the beginning of the year, we saw a combined index at or slightly up of our 92% to 94%, and an ROE close to the 20% long-term target. Those bottom-line targets still hold and prevail, and that is important because as we see that top line particularly trailing momentum, bottom line will hold.

Now I will also like to highlight that we will continue to invest on businesses that are ramping up, such as Qualitas Salud and Qualitas Colombia. We will also sustain investment on IT and the staffing on key roles.

Those are businesses and innovation that will create value and growth in the upcoming years, and therefore we have decided not to take any investments away. Lastly, I will also mention that we will not cast on service matters.

We will actually double down on this and as a main competitive advantage and what we will believe will prevail in the long run. With that, Guilherme, I'm hoping I cover both the particular situation on the shift of coverage on that large multi-annual premium, and as well as expectations as we seek the second half of what is being a transition year.

Very clear, complete answer. Thank you so much.

Hi, all. Thank you for the opportunity of making questions here.

Nice to be here. My question is related to the VAT.

I see that year-to-date the impact was 320 bps in loss ratio. I know that's too early to call, but how's the impressions so far?

How do you manage the increasing costs in general, and what expectations for the second half of this year, mainly related to the VAT impact? Thank you and congrats for the results.

Good morning, Arnon, and thank you for joining us this morning. As you pointed out, yes, we are experiencing and digesting the VAT impact not only in 2025, but also in 2026.

As we called out, we see our loss ratio for the first half of the year at 63.7%, and that already takes into account 3.2 percentage points of VAT impact. If we were to exclude that, certainly it would be even much better than last year at that same point.

Now, some of the things to be able to digest that impact we've been highlighting back even from Q4 2025, we've been certainly adjusting pricing where the market allows us and in the different segments. We also been very proactive that we cannot only take that price down to the customer and see how will react, but rather we've been putting a lot of control discipline behind our figures, and taking advantage of our scale, our operational efficiencies so that we can make the most out of our competitive advantages.

By looking at that, if we were to only stay, let me give you just a flavor of, if we wouldn't have done anything compared to last year, we would be even in a much worse situation, and we would be having a much bigger impact into the VAT for our loss ratio. There are a couple of initiatives behind the scenes that are occurring, and that has led us to be able to keep in control not only the quarter, the 64.8% that on top of the VAT we had the earlier rainy season, but when you look at the full-year figures, we've been able to keep in the mid-range of our long-range target.

We've been being very active to try to digest this impact. Now to the second portion of your question, what should we expect?

We should expect to continue having this because this would continue to be playing in the second quarter. The non-credited VAT will continue to be hitting our P&L, but still, we will continue to be driving initiatives to manage those efficiencies.

Hope that answers your question, Arnon. Thanks.

Yes, sure. Excellent.

Very clear.

Thank you. Hi, good morning, Bernardo and Roberto, and thanks for the opportunity to ask questions.

My first question is a follow-up on premiums growth, competition, and technical reserves. Given a softer macroeconomic backdrop and tougher competition, can you provide us some color on what are you detecting in terms of the pricing strategy from competition?

I don't know if they are maintaining prices, lowering, or raising the prices. Is there a segment in which competition has been more aggressive?

How should we expect the release of technical reserves throughout the rest of the year? That's my first question.

Second question is on the operating costs. How should we think about this ratio if there is more moderation in the premium growth in the second half due to the weaker macro and competition?

My last question is if you can give us probably your two main risks for the rest of the year and for next year, that would be very helpful. Thank you.

Thank you, Ernesto, and good morning. Great having you.

Let me take the first one that relates to what we have been talking about premium growth and competition. At the beginning of the year, we were already expecting that the traditional pricing pressure was going to be there.

We did think that due to the increased pressure between the inflation and the VAT changes, we thought it was going to ease, but that was not happening, or that has not happened, no? Prices across all three segments have tightened, but specially relevant in fleets.

As you think about where are we seeing most of the pressure, I would say is the fleet segment, because that tends to be the way that competition increases volume, more volume all at once. I would say that in fleets, while service continues to play a big role, the macroeconomic conditions tend to shift the decision, or at least in the short term, more to prices, no?

Price cuts are not new. Some of the competitors have taking some accounts below what loss ratios are and historic loss ratios, they're basically banking on gaining volume at expense on bottom line.

From our view, we're willing to be aggressive, but not irresponsible, no? As I called out on my remarks, all Qualitas has been making are decisions that are right for the long run, no?

We will defend those businesses that makes sense, but we're also willing to let those that do not see a long-term relation or at loss, and hopefully we will see them back as time goes on, no? I think for the balance of the year, as you call out, we do recognize that price sensitivity will remain.

Thus, we also need to accelerate cost-saving projects, because we need to be competitive not only on service, but also on prices. We're doing so, and we will expect to continue seeing the benefits along the year, no?

I would just wrap it up on this section that it is more an art than a science. Many factors come into play, but as stated, this is not the first time we go through them, and as before, doing what is right usually pays out.

We're really hoping that the industry as a whole restores profitability. We will do our part, but I think it's fair to say that we will not be shy to defend our business.

We will not stand still, we will not see our accounts that we've worked throughout the years go, and we're ready to put on a fight as we are, but we are also ready to be, once again, responsible when it comes to making the decisions. With that said, Roberto, do you want to take the operating cost?

Let me just address the reserves question as well. Thanks, Ernesto, good morning.

When you think about reserves, you're absolutely right. In the first quarter, we saw a significant double-digit growth, 15.3% for the quarter, and that led us to make reserve constitution.

On the other side, on this quarter, we see the flattish written premium growth that we've been talking about, and that led us to a reserve release. When you think about what is coming to the future, that would have to depend on that the ease of the written premiums growth will actually play a important role on those most likely releases or adjusting as to how also interacts with the growth in the financial institutions.

Depending on how we play out in the second quarter, that would also had a driver on whether it would end up with a reserve constitution or a release. As this is tremendously linked to the ease of the written premiums growth.

As now turning into the second question, when you think about operating expenses, when you look at the quarter by quarter, is basically not keeping it flat. If you compare it to last year, we actually, in a year-to-date basis, we reduce our expenses despite the salary increases and the inflation and some of the natural expenses going up.

We've been keeping an eye and a tight control on this line item. As indicated in my remarks, if the written premium starts easing out, that will have additional pressures onto the ratio.

It also is linked our operating expenses on profit sharing and also on the bonuses on our profit model. As we would go into the loss ratio to the second half of the year depending on the rainy season, depending on how pricing pressures play out, and that would translate into more pressure into a combined ratio, that will also have an adjustment favorable on profit sharing and service office fees to be able to contain that absolute number, and therefore, would not be driving it higher.

That would also tell a little bit of the story that we've been keeping it very tight, and as we see the second half, we'll keep it even tighter so that we can deliver on our 92% to 94% combined ratio target.

Just before we move on to new questions, on your third question, Ernesto, what are the main risks that we see for the next 6 to 18 months? I would say first and foremost would be that the price cuts continue for a longer period of time.

Recall that we're playing in a market that is fully free competition. We have around 36 players, insurance companies, serving the auto segment in Mexico.

We have large local multi-segment, we have bancassurance, we have global companies. They all have different strategies, they all have different funding sources, and likely different time horizons.

I would say if we were to see longer periods in which we're not able to fully reflect the increases on cost and VAT changes, that could put a little bit more pressure as we think about the mid-term, no? The second would be something that is outside of our control at this stage, which is how do we see the US and Mexico trade agreements coming to closure, and if we were to see a significant increase on tariffs, especially of those auto spare parts coming from Asia or China specifically, that could drive costs a little bit beyond what we expect.

I think we have historically been very agile to adjust, and hopefully we won't see that happening, but I would call out to be that second risk as we think about the next 18 months.

Oh, this was super super helpful. Thank you very much, Bernardo and Roberto.

Good morning, everyone, and thanks for the opportunity of making questions. Can you provide more color on the profile of the players that are intensifying competition?

You mentioned they are sacrificing bottom line for market share gain, I wanted to check if this could be a strategy for the auto industry, or if they are not specializing in auto and could be trying to acquire clients to then monetize in other products. For my second question, the financial results here have been very resilient despite the low interest rates, I wanted to see what should we expect in terms of the spread versus the reference rate, if we should see an accommodation in the following quarters, or this around 9% return or close to that is still feasible in your view?

Thank you.

Let me take the first, and I'll let Roberto address the financial income. The profile of players, and I just mentioned, no, I think there are three to four that stand out, but they're different in nature.

We believe some of them are seeking to rebalance some of their portfolio and have a more weight towards the auto segment, which has recently proven to be quite profitable, and I think in a large way is because of our results. We also believe that there's some players that, globally, they want to stand out in Mexico, and they're trying just, once again, seek volume to be more relevant and to gain scale.

I wouldn't call out yet to be unique. I think this is part of cycles that we've seen before, and I would say we got to hold a little bit more to make sure that short-term results, such as the quarter results, do not drive decisions that would harm the long term of the business, no?

Again, I would say that at this stage, the cycle has not been different in terms of players or length. It has been a little bit different in terms of depth, but we're yet to see how this evolves in the next 6 months.

Roberto, do you want to take the financial income?

Yes. Hi, Ricardo, good morning.

Thanks for joining us. When you think about the financial side of our business, you're absolutely right.

Our financial income has been quite resilient, and we've been outspoken on this regard. This is not by coincidence.

This has been taking a lot of energy and strategy behind it. As we have seen the interest rates going down, and as they go down, the committee and our board members have been very strategic about lowering and taking advantage of increasing the duration of our portfolio as we can take some of those window of opportunities.

For that same reason, currently we have 2.6 years of our duration. Regarding your question as to what to expect, yes, we should continue to see strong performance in the coming quarters.

Just to give you a sense, for the last three quarters, we've been close to the 1.2 billion pesos when you think about Q4 2025 and Q1 and Q2, it's fairly close to that figure, and we will continue to see somewhere about in the range of 1.1, 1.2 billion on top of any unrealized gains that we see an opportunity to grasp. Into the future, certainly we will keep on reinvesting and taking the lower interest rate, but we will see that gap compared to our benchmark and our yield to maturity to continue to expand.

That's the positive side of our strategy. We believe we've been taking the right actions, and we will keep on delivering a strong performance on this same line item.

Super clear. Thank you very much.

Hi, good morning, everyone. Thank you for the call and for taking our questions.

The first question is a follow-up on the one-time shift in coverage. Would you expect more events of this nature in the near term, perhaps from other large accounts?

Would that bring any risks to your written premium expectation for the year? The second question is on the loss ratio trajectory.

The quarterly loss ratio was at 65%, the year-to-date figure is 64%. This is closer to the high end of your range, 62% to 65%.

We know you discussed this is a very uncertain scenario ahead of you, but trying to think about the rest of the year, the second half usually has rainy season seasonality. Do you still feel confident that the full-year loss ratio range can be met at this stage?

Thank you.

From your first question, we do not expect any other accounts to shift from coverage. It was a large multi-annual, one of the largest.

Very simple, straight answer. No, we're not expecting any additional one-timers.

Roberto?

Yes, in terms of your second question, Tiago, good morning. Yes, you're right.

The 63.7% loss ratio for the first half is going upwards, and as we pointed out, it's not only the VAT, but the earlier rainy season in Q2. For the second half, we know that we're going to be even seeing more of that rainy season and some of those impacts on top of what we already been digesting for the VAT.

It will put more pressure into our range. Still, we do believe that we'll be comfortable with all the action plans and initiatives that we have taken.

Certainly, pricing will play an important role, as Bernardo has pointed out. As we go into the second half of the year and we go through these pricing pressures, we will not jeopardize our profitability.

We're probably going to see additional pressure on that, but hopefully on the second half of the year, we continue to see closer to our high end of the range, but for the full year, we continue to believe that we will be able to deliver in that same range.

Just, Tiago, let me just call out that it's not that we're expecting, but I wouldn't be surprised if a specific quarter goes beyond that long-term target of claim ratio. We've seen it before.

There's usually quarter seasonality, there's sometimes one-timers, there's specific hurricanes or weather-related peaks. I think we encourage everyone to look at year-to-date or what we expecting for the mid to long term, as we could, as we have seen in the past, see outliers in a quarterly basis, sometimes that go well below, as Q1 when it comes to claim ratio, and sometimes they could go beyond that 64% to 66% for specific reasons, no?

I think the key message prevails. From a combined ratio, we still believe we could be at or just slightly off the 94% that we have as the high end of our long-term target.

Perhaps just to complement as well, Tiago, we've been talking about the headwinds and the things that we need to digest, and rainy season and VAT, but some of the things that we've been playing and I want to reinforce some of those is, for example, the recovery rate that we've been exceeding versus our competition, or the fact that the thefts are reducing as a whole, and obviously, Qualitas being seeing some of those. That is certainly good initiatives and good actions that have taking us to be able to compensate.

We will work through the opportunities and the things that are working to make it even more visible, and then we'll take all the headwinds against as we go digest the second half of the year. Hope that answers your question, Tiago.

It did. It was very clear.

Thank you so much.

Tej Karan, always good having you. I think we kind of touched on your questions in prior responses, but yes, most of the accounts we have been able to retain or actually gain some accounts, and that is attested by the number of insured units that we have currently by the end of the second quarter, which continue to post growth despite all the adverse macroeconomic and competitive environment, no?

I would say what has been a challenge is the premium per auto or per account, and that's where we have seen a few accounts that competition does cut us from a pricing perspective. Customer and agents want to be with Qualitas, but they need to be inclined for cost controls, no?

Nothing new on top of what I've said, and I would say, please rest assure that Qualitas knows how to manage this situation. It may have a toll, it may have some implications in the short term, but the way we're managing it's always with the lens of the mid to long run, and always seeking the best decisions for our shareholders, but as well from our agents and even employees, no?

I would say we've already expanded on that.

I think there's different stages, no? El Salvador and Costa Rica, they're growing nicely, and they're profitable.

They're looking for even more innovation that would speed up the growth, no? I think those are mature businesses that are where they need to be.

When it comes to Peru, they're about to shift to break-even. They're growing again more than 20%, 25%, and next year we should expect them to start delivering positive profitability, and that is according to plan.

New businesses such as Qualitas Salud and Colombia, they're still in the ramp-up period. We anticipate that they will continue to lose some funds and to require capital in the next 2 to 3 years still, but that is again according to plan.

That is also why we like to spread them out, no, because as we see businesses coming to a stage of maturity, that means year 5-plus, they should contribute to bottom line and help new businesses coming to that period, no? We plan to continue that in the way we've done so in the past.

We see Qualitas Controladora with line of sight to always have close or at double-digit growth. Sorry, just to complement, I think the one that's an outlier is the US business, but we've touched that at length in prior session.

That is a runoff in most of the business to focus on PPA. Just this quarter, it's down 70%, and I think we should expect that we should have close to 1/3 of the business that we used to have by the end of the year.

That is affecting the top line, mostly offset by the balance of the Latin America businesses. That, I think, it's also important as you see the parent company top-line growth, we're digesting the exit of the US business, which should be, as I said, at the end of the year close to a $50 million bill in the top line.

Hi, can you hear me now?

Perfect. Thank you.

Good morning, Bernardo, Roberto. Thanks for taking my questions.

Two very quick ones from my side. The first one on acquisition ratio: we have continued to see it trend higher.

I know it's in part due to a soft top line, but we've seen acquisition costs outpacing top line due to a financial institution mix. Should we think of the current 25% level as a new normal, or is there room for improvement if business mix stabilizes eventually?

The second one is at your current valuation levels, how do you think about buybacks relative to preserving capital for expansion?

Hi, Daniel. Good morning.

Thanks for joining us. On your first question on acquisition, you're right.

I think it's been communicated that the financial institutions mix has been driving it for particularly this quarter to the 25.1%. This was also driven by the fact that fleet was a significant decline in the quarter and not so much of an increase of growth in individual business.

When you look at the same dynamics, but on the year-to-date, still it's 23.7%. Now it's a little bit more of that mix represented, right?

The written premium is close to the 8%, and therefore, the fleet business, including the boost in Q1, it's up to almost the 9% or 8.9%. That is driving the behavior of that acquisition ratio mix.

When you think about the future, it will depend on how each quarter will play, right? If we would have another quarter with the mix that we're talking in Q2, yes, we'll continue to see that closer to 24%, 25%.

If we're looking into the longer term, my expectation would be to continue managing between the 23%, 23.5% if the mix of the year-to-date is representative for the second half. Hope that answers your question, the first question.

I'll let Bernardo speak for the second one. Yeah.

On the April General Assembly, we got approval for a share repurchase plan of up to 800 million pesos. The main objective of the share repurchase is to make sure our stock continues to have liquidity, and anyone who wants in and out, they have an ability to do so, no?

We also have the ability to use those funds, and in accordance to the board's discussions, if we see opportunity and value to actively buy shares because of the light level of the prices, we will do so, no? Likewise, there is a range where we will be active buyers and we will be active sellers.

I would say overall, the share repurchase program is meant to be there for liquidity purposes, but it's a nice tool to have if we were to see volatility to go and that drives the stock below certain levels, we will certainly activate the share repurchase program. Thank you, Daniel.

Thank you both.