Mapfre, S.A.

Hello, everyone. This is Natalia Núñez, Head of Investor Relations of MAPFRE.

We would like to welcome you to MAPFRE's Results Presentation for the First Nine Months of 2019. As in previous quarters, our CFO, Fernando Mata will take you through the main trends and figures of the year.

Just as a reminder, during the Q&A, we will answer all questions received at Investor Relations e-mail address. Afterwards, the IR team will be available to answer any pending questions you may have.

With no further ado, let me hand the call over to Fernando.

Hello, everyone. It is a pleasure to be here with you for the presentation of our third quarter results.

Looking at the key figures for the period, our top line is growing at a good pace. Revenue is up 6.5%, mainly due to the rising premiums and higher financial income on the back of the rally in financial markets as well as positive exchange rate differences.

Overall, premiums are up 2.5% with Non-Life growing nearly 4% and Life premiums down around 1%. Our combined ratio has improved 170 basis points.

The net result of almost €463 million has fallen 12.5%, largely driven by goodwill write-downs at MAPFRE ASISTENCIA. Excluding these write-downs, the net result is in line with last September.

Before we move on, I would like to take a few minutes to comment on what we are doing in the ASISTENCIA business. As result of the performance in our units in the U.K.

affected by the current socioeconomic context in this country and the business restructure in the U.S., we wrote off close to €66 million of goodwill from companies in both countries. In addition, we will be restructuring our operations in six countries and these expenses have also been fully booked this quarter with a negative impact on attributable result of €11 million.

Shareholders equity is up 12%, mainly as a result of the falling interest rates as well as currency appreciation. The ROE excluding the goodwill write-downs will have been slightly over 8%.

And our capital position continues to be strong with the Solvency II ratio at 198% at the close of June, in line with our target. Just as a reminder, the goodwill write-downs booked this quarter will have no impact on our cash position, nor on regulatory Solvency ratios, maintaining our strong capacity to pay dividends.

On the next slide, we'll take a look at the key figures by unit. On the right side, you can see the main figures, regarding attributable result.

I would like to highlight the contribution from our insurance units that reached €568 million, up nearly 8%. Iberia continues to be the largest profit contributor with a net result of close to €350 million, very much in line with last year's results.

There were strong improvements in Brazil, up €31 million with the implementation of a new business model and the absence of extraordinary impacts. In North America, profit is up nearly €44 million on the back of improved underlying performance after the exit from five states.

LatAm North and South continue contributing to results, which is reflected in their combined ratios and all countries contributing positively to the group's results. Lastly, Eurasia continues facing profitability challenges in Turkey where we are managing the business with a defensive approach.

MAPFRE RE continues to be an important profit contributor, with a net result of year €102 million. Results have been affected by Typhoon Faxai and the drought in Brazil, as well as two industrial claims which had a large impact on the Global Risks segment, while the Reinsurance business has been proven resilient.

In the ASISTENCIA business excluding extraordinary items, there was a net loss of €9 million. Regarding premiums, growth is very strong in Brazil and LatAm North, the latter fueled by a large multiyear policy in Mexico, which we already mentioned in last quarter's presentation.

In Iberia, premiums are slightly up with strong performance in Non-Life offsetting the fall in the Life business. In addition, appreciation of the U.S.

dollar and other Latin American currencies have also supported premium growth, while the Brazilian real is still a drag on premiums, but to a much lesser extent than previously. On Slide 4, we will look at the adjusted attributable result.

Let's look at extraordinary events. Regarding weather-related and NatCat claims, this quarter, Iberia was affected by the heavy rain and storms in Spain, with a net impact of around €10 million while their insurance business was affected by Typhoon Faxai, with an attributable impact of €30 million.

There had been a few other large events both on MAPFRE RE as well as the impact of the drought in Brazil, but we're considering these events business as usual. The reorganization of our U.S.

operations has had a positive net impact of $5 million this year compared to a $7 million loss in 2018. And there were two important real estate transactions last year for approximately €30 million, but we have not completed any transaction this year, but some units are currently in the final stage of sales.

As for the actively managed portfolios in Europe, gains have been quite stable. The adjusted attributable result, excluding all these impacts, is up by around €4 million.

Regarding the Life business, we've seen a strong performance in Iberia. The result is up over €21 million, stemming from Life-Savings due to higher realized gains driven by asset sales from surrenders.

Life-Protection premiums are up 8% with improving combined ratios. As we already commented in June, we have been gradually provisioning for the new actuarial tables for longevity based on an estimated impact of around €50 million.

Excluding prudence margin at the end of September, the outstanding provision is negligible. Nevertheless, the Spanish supervisory body is currently carrying out an impact study based on more prudent actuarial tables.

The result of this study and the decision regarding the final tables to be enforced and the transitional period, if any, will be announced by year end. The fall in Brazil is explained by the nonrecurring reversal of a provision in 2018.

There has also been an increase in acquisition expenses this year in the bancassurance channel in order to boost sales. And in LATAM South, the fall is mainly driven by the gains realized in September 2018 from the sale of a property in Chile, with a €10 million pre-tax gain.

There were negative adjustment in Colombia affecting annuity runoff portfolios, which were offset by the strong performance in Peru and Uruguay. Please turn to next slide.

On the left you can see the breakdown of the capital structure which amounted to €13.3 billion. Our credit metrics remain quite strong with leverage around 22%, which we feel comfortable with.

Interest coverage is around 18 times earnings before interest and tax, quite stable as well. And in the next slide we'll take a look at our equity position.

Shareholder's equity is up over 12%, reaching nearly €9 billion. The most relevant changes are first and almost €891 million increased of unrealized gains on available for sale portfolio, net of shadow accounting driven by the sharp fall in rates in Europe.

Second the appreciation of the U.S. dollar and to a lesser extent the Mexican peso, which have helped offset the fall in the Brazilian real.

And finally, the decrease of €447 million corresponds to the 2018 final dividend already paid in June as well as the 2019 interim dividend to be paid in December. On the bottom right, you can see the details of the available-for-sale portfolio in Iberia, which represents three quarters of MAPFRE's total available for sale portfolio.

There are currently €4 billion of unrealized gains in these portfolios, practically the entire amount at group level. The largest share of unrealized gains are in immunized portfolios, with a €2 billion followed by the actively managed and conditioned portfolios, which are mainly products with profit-sharing elements.

Net of shadow accounting adjustments and after taking into account policyholders’ participation, there are €1 billion of net unrealized gains and the majority are in actively managed and free portfolios. These are new information and hopefully you can see that are quite interesting.

Please turn to the next slide to take a look at the investment portfolio. On the right side, you can see that assets under management are up over 10% driven by improvements in the stock and debt markets after important correction at the end of 2018 as well as currency affects.

The breakdown of the investment portfolio is on the left. Asset allocation has been relatively stable throughout the year and exposure to government and corporate debt remains mostly unchanged.

Our cost position is up to €2.7 billion and includes short-term investments and temporary cash balances. The largest exposures correspond to the Spanish sovereign debt, with a nearly €19 billion and Italian debt with €2.9 billion.

As we have mentioned in the past, the majority of this investments are in immunized portfolios. On the next slide, we will look at our actively managed investment portfolios.

Yields are still relatively high, given the current market context, 1.9% in Non-Life and 3.6% in Life. Nevertheless, the downward trend continues hurting our financial income.

We're mitigating this trend by allocating part of reinvestment to alternative assets, as well as keeping duration around eight years. Realized gains in the euro area reached nearly €84 million during the first nine months of the year, around €7 million less than previous year.

The fall in Iberia is explained by the real estate gains in Portugal last year, which were around €11 million pre-tax. We have been cautious with asset sales as we prefer - as we mentioned last presentation to protect the recurring yield of our fixed income portfolio.

Regarding our portfolios in other geographies which is as well new information on the right, you can see diversification is playing an important role in protecting recurring financial income with accounting yields well above those in Europe. On the following slides, we will look at divisional performance in more detail.

Let's start with Iberia on Page 10. In Spain, Non-Life premium's growth has been excellent and we are outperforming the market in our main lines of business.

On the other hand, the low interest rate environment has been a drag on growth of the Life business. In motor, premiums are up 1.7%, with a 1.4% growth in retail lines and 4% in fleets.

They are small and medium-sized fleets. General P&C growth was mostly driven by homeowners and condominiums, which were up by around 5% and 9%, respectively.

Regarding profitability in motor, the combined ratio is 93%, an excellent ratio in a very competitive market. We've seen rising claims cost affecting property damage and a slightly rising frequency trends in full coverage products, but both in line with our expectations.

In general P&C, we have seen 2 percentage points improvement. Thanks to homeowners and commercial lines.

There was a negative impact on the quarter as a result of the severe rains and storms in the Mediterranean area. It was the worst for the last eight years.

The last heavy rains in Spain was in 2012. But these losses was partially offset by the excellent performance in other regions.

Regarding other business activities, our asset management business, MAPFRE INVERSIÓN, continues as a strong contributor with a net result of over €30 million, helping offset expenses from the launch of our digital health initiative. The strong reduction in the combined ratio in Portugal is also worth highlighting mainly in workers compensations.

Let's take a look now at Brazil. Premiums grew 5% in local currency especially in the Life-Protection, Agricultural, and Multi-Risk segments.

There was a fall in motor premiums as a result of greater underwriting discipline and cancellation of lossmaking policies. The attributable results amounting to €70 million, up over €30 million and the Non-Life result is up €52 million due to the absence of extraordinary negative adjustments, but also the underlying result is improving.

The largest profit contributor was general P&C. Losses in motor are down with 14 percentage point reduction in combined ratio.

Thanks to stricter claims management, greater underwriting discipline, and new pricing tools. We're now on track to meet our 105% motor combined ratio target for year-end.

Financial income is up mainly in the Life business due to opportunistic realized gains mainly during the first quarter, as well as a resilient portfolio deal. We already discussed the main drivers of the result of the Life business earlier in the presentation, so please turn to next page.

LatAm North, I would first like to comment on the solid local currency growth trends and the extraordinary combined ratio, which stands at 95.8% in a better currency environment. Excluding the multiyear Pemex policy, Mexico has had strong local currency growth of 12%, driven by motor and life segments.

The motor combined ratio improved over 7 percentage points to below 94%. Thanks to tariff and risk-solution measures.

Central America continues to contribute significantly to results in the region. In Panama, we are applying stricter underwriting guidelines and tariff increases to correct recent negative trends.

The loss ratio in health is improving, which mitigates the uptick in motor and general P&C. Technical measures are underway in motor as well.

And Honduras, Guatemala and El Salvador are all seeing solid growth and profitability trends. In the Dominican Republic, premiums are up over 15% in local currency and the combined ratio continues improving.

Please turn to next slide. Regarding LatAm South, we've seen excellent local currency trends, but with some volatility.

Average exchange rates for the Argentine, Chilean and Colombian pesos are down year-on-year, while the Peruvian sol is up over 4%. Local currency growth is good in most of our main markets, and we continue developing bancassurance operations across the region, as well as our agreements with carmakers.

Peru shows excellent premium growth and ratios, maintaining the same positive trends as the last five, six years. In Colombia, the result has been impacted by negative adjustments in the annuity runoff portfolios as a result of updating long-term financial assumptions.

The investment portfolio was restructured in July, improving ALM significantly, and we don't expect a further negative adjustment in the fourth quarter. Chile saw local currency growth of 8% and the fall in results is explained by the 2018 real estate gains.

Excluding this impact, underlying results have been rather stable despite a higher combined ratio in motor. Argentina saw decline in premiums, driven by currency depreciation, and the fall in results is due to hyperinflation adjustment in 2019, which were applied only in December last year.

Let's move to North America. The appreciation of the dollar has positively impacted both premiums and results.

Premiums are down around 9% in local currency, as a result of the exit from five states in 2018 as well as the cancellation of non-performing business. The attributable results is up over €39 million in the U.S.

and last year was affected by extraordinary winter weather, as well as the cost of the exit of five states. Excluding extraordinary items, underlying results have improved significantly over €15 million.

Further, 2019 results are also benefiting from a €5 million net positive adjustment already discussed last quarter. We continue reducing the exposure to unprofitable business segments and as we announced last quarter, we have stopped commercial line renewals in all states but Massachusetts.

This business represented around $44 million in premiums in 2018 and had a combined ratio over 128%. Going forward, this move will help profitability.

Outside Northeast, we've seen a reduction in losses and combined ratios across the regions. Finally, positive profitability trends continue in Puerto Rico, and this unit is contributing €15 million to the group's results, up over €4 million compared to last year and an excellent combined ratio below 92%.

Please turn to next slide. Italy experienced a strong premium performance driven by the dealership channel and a strong improvement in the combined ratio, down over 5 percentage points.

It is also important to mention that Italy is already delivering profit at €2.3 million on a stand-alone basis by which I mean excluding consolidation adjustments. As we announced last quarter, we're working on the process of transforming our Iberian entity into a VERTI Spain branch under EU regulations.

The plan is moving forward behind schedule, unfortunately, and year-end is going to be a very challenging deadline. In Turkey, we are still seeing a drag from exchange rates and we continue with a defensive business model in this market, with premiums up around 9% in local currency, below current inflation.

We continue reducing our MTPL exposures in a defensive strategy, as I mentioned. The attributable result has moved back into positive territory in September, €0.6 million compared to over €20 million last year.

There are several drivers behind the fall in results. First, inflation and currency depreciation is having a negative impact on spare parts and other claims costs, partially offset by investment in euros.

And second, MAPFRE's participation in the compulsory high risk MTPL pool has had a negative impact of €5.1 million, mainly booked in the second quarter. In Germany, premium trends continue to be positive with an improving attributable result and resilient combined ratio.

Please turn to the next slide to discuss MAPFRE RE. Premiums are up over 7%, fueled by the reinsurance unit and the Non-Life business.

Growth is also benefiting from currency movements especially the U.S. dollar.

On the other hand, we continue working on the nonrenewal of an unprofitable business in the Global Risks segment, which explained the fall in premiums. We also recently announced the discontinuation of facultative underwriting business in our London office.

In 2018, this business represented €115 million and €39 million gross and net premiums respectively. As for the Life business, the fall is due to timing differences in policy issuance.

The combined ratio has proven resilient especially in the reinsurance segment up 95% in line with its historical average. Year-on-year, we have seen an increase in large losses which affected especially the Global Risks segment.

Particularly, there were two large industrial claims, one in Asia in the first quarter, and another this quarter. The total net impact was €29 million, of which €21 million in the Global Risks segment.

Typhoon Faxai had an over €32 million net impact based on preliminary estimates. Regarding Hagibis, it is still too soon to have an estimate, but we don't expect the combined impact of both cat losses to be higher than Jebi and Trami last year.

Finally, the impact of the Brazilian drought had a €10 million net impact. Please turn to next slide, where we cover MAPFRE ASISTENCIA.

On this slide, you can see results from MAPFRE ASISTENCIA as well as the breakdown of extraordinary items and underlying results by business region product line. This is new information as well.

We have been monitoring the ASISTENCIA business very closely and have exited seven countries since 2015, with relevant restructuring expenses in 2016 and 2017. As a result of that the majority of countries in LatAm and Eurasia are currently contributing with profits.

On the other hand, the U.K., France and roadside assistance in the U.S. are still running losses as the first round of restructuring was carried out in a different context and also with a different expected outcome.

Margins have been going down in these businesses and products have been gaining in complexity which has made us more selective. Furthermore, the complex socioeconomic context in the U.K.

with uncertainties surrounding Brexit and our business scenario in the U.S. with the lack of scale in roadside assistance and the streamlining of operation in this country were about lower expectations of future profits in both countries.

Following MAPFRE's prudent approach we wrote down goodwill amounting to €66 million for the full disclosure by company you see on that slide. In addition, we will continue streamlining the organizational structure in six additional countries.

We have already fully booked our provision for restructuring with a negative impact on our attributable result of €11 million. Going forward, the assistance business will be sure simpler.

Let's turn to next slide. The Solvency II ratio increased to 198% at June 30 in line with our 200% target and evidence our strong Solvency position.

87% of eligible own funds are high quality and restricted Tier 1 capital and the remainder is Tier 2. On the right, you have a breakdown of the variation of the different components of eligible own funds and more detailed information regarding Solvency II figures can be found in our financial report.

Please turn to the next slide for closing remarks. In conclusion, we have had a good start to a new strategic plan which is being temporarily eclipsed by first the assistance unit restructuring; second, the unexpected increase in global risks losses; and third, the unusual frequency of typhoons in Japan.

Nevertheless, business fundamentals are stronger with a clear turnaround in the U.S. and Brazil where improvement should gain momentum in the coming quarters.

In Iberia, both premium and profitably performance have been excellent and are in line with our expectations, even in a very competitive market. MAPFRE RE has had resilient results and continues to be an important contributor to our earnings.

Right now, the focus is on reducing exposures in the global risks business in order to lower P&L volatility. Growth trends are very good in Latin America with all 17 countries contributing profits.

All 17 means also Venezuela and Argentina, an astounding performance in Mexico and Peru. MAPFRE continues to boast a solid capital position and a high degree of financial flexibility which should guarantee dividend stability and allow us to continue to meet our commitments with our shareholders.

And now, we will hand the call back to Natalia to begin the Q&A session.

Okay. Thank you very much, Fernando.

Now, we can start with one of our main regions, Brazil. Sofía Barallat at CaixaBank BPI; Ivan Bokhmat at Barclays; and Rahul Parekh at JPMorgan have the following question.

Could you elaborate on the drivers of the combined ratio in Brazil in the quarter? The combined ratio in motor insurance stands at 107% in the nine months 2019.

Do you rate it at the 105% guidance for the full-year 2019?

Thank you, everyone. As you may remember, measures were implemented starting just when we finished, updated our agreement with Banco do Brasil last year.

And we're starting first with strict measures for claims management, it is the first thing we have to do trying to reduce average costs. And this year, we're focusing on underwriting, also a new coverage, new policies, and also new tariff tools.

Obviously, I mean these changes requires longer period in order to deliver performance. But we're quite satisfied with the measures already implemented.

Has been a slight uptick during the quarter, but it is down over 14 percentage points year-on-year and it starts due to technical measures, portfolio cleanup as well and the cost containment. We're happy with our new business model and management team that as I told you, we changed practically every position at the organizational chart.

And Brazil is clearly on the right path to reach the motor cut target of 105% combined ratio for year-end.

Okay. Thank you.

Also, Rahul Parekh at JPMorgan has the following question. The combined ratio overall for non-life was 91.1% for the nine months, which is substantially better than the full-year 2021 expected target of below 96%.

Could you please comment on this?

Yes. This 91.1% is supported by the reduction in motor, obviously, reduced by 14% as we already mentioned, but also by the general P&C which has improved by 7 points to 75.5%.

I mean this is an extraordinary combined ratio, 75%. And frankly, we would like to have it sustainable in the future, but we consider it extremely difficult to keep this low level.

I mean whenever we said our overall targets, we do it with a long-term view. The main non-motor lines basically include agricultural and industrial rigs, which can be more volatile due to climate change and obviously depending on the currents or weather related or large claims.

Okay. Thank you.

Next set of questions are regarding MAPFRE RE. Rahul Parekh at JPMorgan would like to know if we have any indication about the impact of Typhoon Hagibis.

Yes. Thank you, again.

Hagibis, as we disclosed in our financial reporting at the caption of subsequent events, there is no estimate right now. I mean, it's too soon to say.

And we're waiting still for communication from certain entities and we will have it very soon. But so far, we have not any indication - no indication, of course, regarding Hagibis.

We know that damages caused by winds although less than previous events, but also by unprecedented heavy rains and floods. This in the sense has very special characteristics, so more rain than winds.

But as I mentioned, we expect a combined impact of Faxai and Hagibis to be lower than the combined ratio - sorry, the combined effect of Jebi and Trami happened last year.

Okay. Thank you.

So Ivan Bokhmat at Barclays asks, what industry loss does the €30 million loss from Typhoon Faxai correspond to? It's early days, but do you believe the impact from the two Japanese typhoons might exceed the €87 million you've booked for Japanese losses in 2018?

Thank you, Ivan. The estimation made and is very well disclosed in our financial report for, if Faxai was a top-down approach and based on our estimation, also the portfolio data and information.

But let me tell you that we estimate this amount just for the closing of the financial statement. That's the third quarter, but the communication we're receiving currently in October from the seating entities, they're quite similar to this estimation.

So whatever we will lack or we will very well experience in the treatment of this cat losses, but the estimation, the top-down estimation is quite similar to the current communication from the seating entities. And as I said, we expect the combined ratio of both typhoons to be in a similar or lower than reported in 2018.

Thank you. Also, Alfredo Alonso at BBVA would like to know what measures are you taking to reduce the negative impact from global risks.

Thanks, Alfredo. I mean this is global risk a bad experience.

I mean it's a worldwide trend, it's a global trend, not affecting only in MAPFRE, but the entire business segment. For the last two years, we are canceling number forming business and focus on those that they are more profitable.

But the best example is that as we unveil at this presentation the discontinuation of the facultative business driven through our London office, because we believe that this segment, which is a loss-making portfolio doesn't feed our current risk appetite nor our business' strategy. On the other hand, the proportional treaty reinsurance business in London remains unchanged and we will continue providing comprehensive insurance solutions for our clients in aviation, oil, gas, and other risk segments in London as well.

In general, we're confident as the measure we're taken and we're in the right path and this is - what we're doing is what we have to do. And also with the integration of reinsurance and global risk business will be positive and performance will be better in the coming quarters.

Okay. Thank you.

Now there is a question regarding investment portfolio and assets under management. It comes from Rahul Parekh at JPMorgan and is the following question.

Realized gains came in €62 million for the first nine months of 2019. And you mentioned that MAPFRE would aim for roughly €100 million for the full year.

Does the target is still hold?

Yes. The €100 million target, I mean basically is the average for last periods as well and it's a target in a quite standard economic scenario.

I mean it's been challenging but we have a prudent approach, as we mentioned to gain and prefer not to touch our fixed income portfolio in Europe to protect our ordinary deals. As I mentioned in the presentation, our unrealized gains are exceeding €1 billion but capital gains, I mean, we will have a worse financial income performance in the coming years.

In any case, our investment team continues working hard to meet the €100 million target in capital gains that has been budgeted for this year. It is important to keep in mind that we have not completed any real estate transaction in 2019, but there are several units in the market to a medium size and other smaller, which they're currently in the final stage of sales and hopefully and we were really this transaction where some of these transaction were not completed in the last quarter.

Okay. Thank you very much.

Now, regarding North America. Ivan Bokhmat, Barclays, has the following question.

U.S. motor profitability appears to have deteriorated for many of your larger U.S.

peers, including both commercial and personal auto. Can you talk about the market trends and whether this can become a headwind to the improvements you are seeing in the business?

What are the trends like in Massachusetts?

Yes. Thank you, Ivan.

A couple of things. First, I mean this trend of deteriorating the combined ratio of auto lines in the U.S.

is not new, and it has been discussed for many, many presentations that - and there is a combinational risk affecting auto business in the U.S. and they are still valid.

But in any case, our performance in motor and the evolution has been excellent and underwriting measures are being implemented including tariff increases. And I don't remember, but we discussed in previous presentation nearly 20% increases in tariffs across the U.S., and also cancellation of non-profitable business and also the exit of five states.

Regarding market as a whole, as I mentioned, the same main trends with higher frequency and severity, as a result as I mentioned, distracting driving, the cost of technological and sophisticated spare parts, and also higher mileage and gas consumption, which point to higher frequency. So, in conclusion, tariff increases will continue to be necessary to keep up with the cost or decrease of cost of risk.

Overall, we're happy with the execution of our strategy so far. The decision to leave commercial lines outside of Massachusetts where profitably has been challenging, it will also be a positive driver going forward, in that case for commercial auto.

Thank you very much. Next set of questions are regarding ASISTENCIA business.

Rahul Parekh at JPMorgan and Ivan Bokhmat at Barclays, Alfredo Alonso at BBVA have the following questions. Goodwill write-down.

Could you please let us know the goodwill left on the ASISTENCIA books mainly the goodwill amount is left in the U.K. ASISTENCIA unit?

What are your comments on the likelihood of any further write-downs provisions at ASISTENCIA?

Yes. First of all, the units that had goodwill write-downs this quarter have no remaining goodwill as they were write-offs.

It means that we wrote-off the entire goodwill booked in our accounts. But there are two other units in ASISTENCIA with remaining goodwill.

Roughly talking we wrote-down approximately two-thirds of the goodwill at the opening balance at the beginning of the year. The two other units in ASISTENCIA will remain in goodwill is one in Italy and in the U.S.

with around €32 million. And also, we have projected a business plan for the future.

And so far, we do not expect any additional write downs in the following quarters. So we're quite satisfied and confident say with these two good-wills that remain in our balance sheet.

Okay. Thank you.

Also Rahul Parekh, regarding this unit wants to know in your presentation you mentioned on Slide 17, upgrading of business forecasts for the assistance and special risks business. Could you please elaborate on your outlook for the business going forward?

If you could provide any numbers guidance, also have you consider disposal of the U.K. assistance, yes, unit?

Yes. Thank you, Rahul.

Over the last five years, we've been monitoring the assistance business very closely, even exiting so far seven countries with relevant restructuring expenses in 2016 and 2017. I mean the accumulated losses for the last five years they are huge and we have to recognize that our strategy wasn't the proper one, I mean, in this business.

We grew quite quickly, quite rapidly. And then we have to streamline our operations in order to keep the pace of profitable growth.

As I explained in the presentation, most countries in Latin America and across Eurasia are currently delivering profits. That means that the first way of restructuring was for these countries successfully.

And there's also, there's always but - the U.K., France and roadside assistance in the U.S., there are still currently running losses. There have been profitability challenges in this MAPFRE ASSISTANCE has had difficulties due to its lack of scale and a strong restructuring measures have already been taken, but after the current macroeconomic and geopolitical situation in Europe and especially in the U.K., we have realized that further measures will be necessary in line with the strategic plan of profitable growth where profitability particularly in the U.K.

is not predictable so far. So further restructuring could be either natural and global reduction for exposure, closing offices or sale of business.

I mean, when I said restructuring means perhaps reduction of exposure, because we're selling as we did in the U.S., selling right renewals or just selling portfolios, but also it could mean the shutdown of countries or even the sale of business. So let's say the restructuring is a quite comprehensive concept and any decision could be taken in the future.

So, all options are on the table and also this measure will affect operation in six countries. This is still under analysis.

There is only two countries that the processes have already started mainly in France. But for now, I mean we can't provide any further details on other countries since the restructuring have been unveiled and could deteriorate our position.

Regarding InsureandGo in the U.K., I mean this is an strategic segment of business for MAPFRE, has a strong market position in the U.K., and what we have to analyze is really in dip, I mean, the both business, I mean, the B2C and the B2B to B2C segment of business in order to get profitability in both. Let me tell you that also InsureandGo is quite profitable in other countries such as Ireland or Australia.

So my conclusion is that the business model is good. The operational structure is good as well.

The way we'll reach our clients works well, but we have a problem in the U.K. and we have to solve it.

Okay. Thank you very much.

Also Ivan Bokhmat wanted to know if we can remind him of the breakdown in goodwill by business units. I can tell you, Ivan, that regarding the breakdown in goodwill units, you can find it in our annual accounts in page 148.

If you need further assistance, so you have further comments, we can talk later on. But we have understood that you wanted to know this disclosure.

So, it's on our annual accounts 2018.

Yes. But the largest is the U.S.

and also life operations in Spain. But we're quite comfortable with the goodwill that we currently keep in our books.

All right. Thank you.

Also, Andrew Sinclair from Bank of America Merrill Lynch asks, even after stripping out the ASISTENCIA write-downs, results from other activities is a much bigger loss than would typically be expected in Q3. Why has this line jumped so much?

Yes. Thank you, Andrew.

I expected this question. This is a very smart question.

And basically what we're unveiling is the net effect of the rest of the rain impact in our profit and loss account, which is €11 million. If we split into gross and net, the gross figure is much bigger, it amounts approximately to €30 million.

But since we have some tax relief, because we didn't book deferred tax assets from previous losses in this country. So if we sell this operation, we shut down operation, it will a big tax relief that will somehow lower the gross figure, which is, I mean, higher than €11 million obviously.

Okay. Thank you.

So now we are going to talk about Iberia. Sofía Barallat at CaixaBank BPI has the following question.

Could you elaborate on the evolution of motor insurance premiums in the 3Q? What are your expectations on motor insurance premium growth in Iberia going forward?

The motor insurance combined ratio reached the top of the 92%, 94% combined ratio guidance. Do you maintain this guidance or foresee further deterioration going forward?

In this sense, Alfredo Alonso at BBVA has also asked about the motor combined ratio going forward and ask, we're seeing much pressure in motor business in Iberia.

Yes. Thank you, everyone.

Regarding motor premiums, we're seeing good trends both in retail, with a 1.4% increase, and in small and medium fleets, which grows 4%. Insured units are also growing 3%.

It means I mean that you do the numbers that the average premium is decreasing. It is a change of trend from previous year, in which we keep an average premium well above the market.

It was basically due to our different strategy, I mean to focus on more experienced drivers, are leaving down drivers, which obviously average premium is smaller. Let's say that overall, going forward, motor premiums should continue to be supported by economic growth in the Spanish economy.

But assuming that there is a slowdown of economy and also the profitable growth strategy has been a decrease in the growing trend of insure units, which is currently up, September is like 1.8% increase, I mean much smaller than previous quarter. Motor combined ratio for MAPFRE is slightly above 93% in an excellent figure, which is the midpoint of our guidance.

And as we've run a combined ratio below 90%, we mentioned that it wasn't sustainable. On our guidance for combined ratio, we feel very comfortable in a range between 92% and 94%.

What else, let's say, that the MAPFRE gain and we're outperforming the market and we maintain a more or less 1.5 percentage gap with the industry figure. Recent trends, both claims inflation particularly in garage because of the increase of salary in Spain and higher frequency as well because more gas consumption, more temporary than structural and it's now something that we shouldn't worry about.

Uptick has been offset in auto by improvements in other general P&C lines of business, we already mentioned in previous presentations particularly condominiums and homeowners. We combined ratio of well above 95% and there are relevant reductions for both line of business.

So, overall, let's say that both things were somehow predicted, a slight deterioration of automobile combined ratio and a relevant improvement in combined ratio for both condominiums and homeowners.

Thank you very much. Now, from Caxia BPI Sofía Barallat asks about the revision of the DGS of the biometric tables.

Could you also update us on the revision of the mortality tables, expected impact and the amount booked, so far? Also, Carlos Peixoto from Caixa BPI would like to have more color on the sensitivity on the impacts from change in mortality table, for instance, what would be the impact for one-year increase in the mortality tables across segments.

Yes. Thank you, both.

First of all, a couple of things before going through your two questions. What MAPFRE is doing is what we did with the topic and what we're trying is to anticipate the effect of this updating or this expense that was already schedule I mean for this year.

So practically, I mean, the amount to be expensed this year was fully booked practically June, and also at the third quarter. I mean the outstanding balance to be book practically is negligible.

Second thing, for MAPFRE this exercise is the best example of the MAPFRE commitment to transparency in this market. Probably may I be wrong, but as far as I know MAPFRE is the only entity unveiling this effect to the market and is our commitment to our stakeholders, particularly two groups, policyholders and investors.

Correct me if I'm wrong, but all the leading entities in life savings in the Spain, they haven't published so far, any impact and only MAPFRE again is leading this transparency in Spain. Having said that, let's say that MAPFRE is actively participating at a technical level.

And with UNESPA is the association of insurers in Spain, in the discussion between the sector and the DGS, the supervisory body. The Spanish supervisory body is currently carrying out quantitative impact study based on a more prudent actuarial tables, I mean, the fundamental for the tables are the same but the amount we book was on a pure vanilla tables, while the impact study is being carried out on a more prudent actuarial tables, means that it's margin prudent, buffer, cushion whatever you name is there.

The result of this study is still unknown. And the decision regarding the final tables to reinforce and the transitional period, if any, we don't know yet and hopefully we expect DGS to be announcing by year-end.

Our view is if the DGS decide to say in the end that there is an additional margin to be booked, be applied, then the most likely scenario will be there's a transitional period. The thing is nobody knows the number of years, will be introduced in order to mitigate the impact for the sector.

Meanwhile, I mean, MAPFRE is, I mean, fulfilling our commitment with our policyholders and we fully booked the best estimation in our third quarter accounts. We are comfortable with the current assessment and the majority of the industry is in the same position to MAPFRE.

And in any case, we will keep you update with any further developments.

Thank you very much. Now, there's another question regarding motor in Iberia from Ivan Bokhmat at Barclays.

It's about the Iberia motor combined ratio, which continued to move up a bit from 93% to 94% in 3Q. Is this level it should stabilize on policy growth of 3% year-on-year, appears ahead of premium growth of 1.7% year-on-year?

Yes. As I mentioned, we consider the range 92% to 94% are quite reasonable and sustainable range for the future.

In addition, this year, we sold more polices to more experienced drivers and less to young people. So, in the end - and also as well, we're growing in fleets which only has - fleets only have a TPL cover, so lower average premium.

So, in the end, the final mix results in a lower premium is due to both factors, I mean, average premium for fleets and also average premiums lower for most experienced drivers.

Okay. Thank you.

Also, Ivan regarding Iberia asks, you have had a strong improving result in the Iberia health and accident, but we have also heard that MAPFRE has launched a new large-scale promotional campaign in health insurance in 3Q 2019. Do you think the 95% combined ratio will be sustainable in this segment?

Yes. Thank you, Ivan.

You're right. I mean, we're launching a new health campaign focused on digital breakthroughs and also more features in order to keep them even more satisfied clients, but let's say that this campaign is the traditional one, quite seasonal and focused on renewals and new business for next year.

If you should remain that in Spain I mean, health policies like in Germany, I mean it's from the entire calendar year. So, it means the total renewals are from January 1.

And regarding your combined ratio, we do not expect any significant impact in the -

Okay. Thank you very much.

Alfredo Alonzo from BVBA has sent the following question. How much do you expect lower interest rates to affect life business?

Alfredo, I don't have a crystal ball, sorry. And I guess nobody even the most experienced seniors in this financial market is able not to predict future performance of deals, nor in Europe, nor in the - neither the rest of the world.

But what we know is that this low interest environment is taking longer than the other guys could expect. And as we mentioned and I remember José Luís our CIO is saying in some of these presentations and talking about the Japanization of Europe and also the low dealer scenario is here to stay for longer.

So let's say that we prefer, and our combined - sorry, our portfolio is - we consider it to be very privileged and we increase in order to keep deals. And also is important, we mentioned as well in the past, another €500 million were allocated to alternative investment to keep deals.

And we are encouraging the sale of life protection products, which is showing strong profitability, volume growth growing and also combined ratios improving. We're focused on our asset management business as well as new way to boost profits.

And we're quite happy as we mentioned with the recent agreement with Abante that will put MAPFRE in a different position.

Okay. Thank you very much.

Now, let's talk about dividends. There are several questions on our dividends.

First of all, Ivan Bokhmat at Barclays is asking how should we think about this year - last year, the €0.145 dividend was above the 65% target range and with the nine months results profit run rate, a flat dividend will also exceed that range. Would you consider reducing your dividend for 2019?

Yes. Thank you, everyone.

MAPFRE has shown in the past that we're flexible when we had to do - when we had to have in the past, however, regarding impacts in our P&L that there are noncash items particularly deterioration of goodwill. So, let's say that we will keep in the future this flexibility.

And regarding our main policy, our main target of stable and growing dividends remains unaltered. And as I said, the charges assistance this year have been largely noncash items.

Regarding our financial position and liquidity of capital numbers, they remain quite strong. So therefore, the dividend paying capacity is fully maintained.

Okay. So I guess this answer also the question from Farquhar Murray of Autonomous that wanted to know if whether or not the goodwill write-off will have an impact on the dividend for full year 2019.

You have already answered.

Yes. But I don't like to repeat it.

And I mean the deterioration of the impairment of goodwill wouldn't affect the 50% to 65% payout ratio.

Okay. Thank you very much.

And also, Andrew Sinclair at Bank of America Merrill Lynch asked, you mentioned guaranteed stable dividend. Are you ruling out a dividend increase at full year 2019 results?

It's too early to comment on. And, so far, the board has approved the interim dividend.

We have to wait the first quarter to deliver results and as usual, the final dividend will be approved at the AGM next year.

Thank you very much. Farquhar has one question regarding taxes.

Were there any one-off elements to the tax line this quarter, since the tax rate seemed to be higher than the norm, but equally could be just started by the goodwill write-down?

If I remember well, the only let's say extraordinary impacts on taxes, the one I mentioned regarding the ASISTENCIA restructuring and also has been a reduction in Brazil for agricultural business, is a reduction in the rate from 20% to 15%. But frankly, I don't remember any additional tax input rather than those comments.

Okay. Thank you.

Thank you very much. Now, the next set of questions.

No, we don't have more. Okay.

We don't have more questions. So, thank you very much.

Yes. I was ready to take more.

Me too. Thank you very much, Fernando.

Thank you very much for all and for those living in Spain, hopefully you'd enjoy the long weekend ahead and with a good weather. Thank you, and bye-bye.

Thank you. Bye.