Linea Directa Aseguradora Aktie

Good morning, everyone, and thank you for joining us today. We are pleased to welcome you to Linea Directa's First Half 2026 Results Presentation. I am joined by our CFO, Carlos Rodriguez Ugarte, who will take you through the main highlights of the period, followed by the Q&A session. Carlos, over to you.

Thank you very much, Beatriz, and good morning to everyone on the call. We are pleased to present a strong first half for Linea Directa, combining growth, improved technical margins and a robust solvency position. Let me start with the key numbers for the period shown on the first slide of the deck. Gross written premiums reached EUR 609.3 million, up 9.2% year-on-year, with all business lines contributing to our growth. The portfolio stood at 3.86 million risk, 7.8% higher than in June 2025. After adding close to 278,000 risk over the last 12 months. Technical profitability continued to improve with a combined ratio of 91.1%, 1.2 percentage points better than in the first half of 2025.

Net profit increased by 19% to EUR 52.1 million, supported by higher volumes, better underwriting performance and efficiency. Return on equity stood at 23.3%, while the Solvency II ratio fortified to 196.3%, already reflecting the EUR 18 million first interim dividend for the year. I will now go through the main drivers of this first half performance.

On Page #7, premiums increased by 9.2%, supported by growth across the group. The customer portfolio also expanded by 7.8% year-on-year with around 60,000 additional risks added in the second quarter alone. This growth was accomplished by an even further improvement in technical profitability. The combined ratio stood at 91.1% and improved further to 90.6% in the stand-alone second quarter. The expense ratio improved to 20.2%, reflecting scale benefits, operating discipline and continued efficiency gains.

The investment result reached EUR 21.8 million, driven by higher income from both the fixed income and equity portfolios. As a result, profit after taxes reached EUR 52.1 million, up 19% year-on-year. Turning to volumes, Motor remained the main contributor to growth, while health and emerging businesses continue to show a strong momentum. Moving to Page #9, the combined ratio reflects the balance between underwriting discipline, claims frequency control and a large operating base.

On the loss ratio, performance remained well controlled across the main business lines, supported by an excellent second quarter performance in both Motor and Home. On the expense ratio, the improvement reflects increasing scale, operating leverage and productivity gains while maintaining investment in the capabilities that support future growth. Efficiency remains a structural strength of the model and a key lever for protecting profitability as the business continues to grow. Now, I would like to move on to a more detailed breakdown by line of business.

In Motor, premiums exceed EUR 490 million, growing by 9.8% year-on-year. The portfolio added more than 222,000 policies over the last 12 months, including 59,000 in the second quarter stand-alone. Technical profitability remained excellent with a combined ratio of 91.1% in the first half, 0.9 percentage points better year-on-year and 90.8% in the stand-alone second quarter. The Home line delivered moderate growth with premiums up 2% and the portfolio increasing 3.7% year-on-year.

Profitability in the segment was particularly strong with a combined ratio of 86.6% in the first half, improving by 2.3 percentage points, and 83.9% in the stand-alone second quarter. Let's move to Page #12. Health maintained a strong commercial traction. Premiums increased by 17.7% to EUR 28.9 million, while the portfolio reached more than 128,000 policies, 10.4% above June 2025. We continue to shift toward more comprehensive products with complete and specialty products now accounting for almost 68% of the portfolio.

From a technical perspective, the combined ratio improved by 8.6 percentage points to 125.1%, showing gradual progress towards technical breakeven. Moving to next page, the financial investment result increased by 5.2%, mainly driven by higher income in both the fixed income and equity portfolios. By contrast, the real estate contribution reflects the temporary impact of the renovation of one building. Works are expected to be completed by year-end 2026, with rental income resuming in June 2027 under updated market conditions.

Taking both effects together, the net investment result declined by 1.8%. Excluding this one-off of impact, it will have increased by 5%. Turning to Page #14. The investment portfolio remains heavily balanced in fixed income with a measured reduction in equity exposure during the period. This allocation reflects the group's disciplined investment approach, focused on preserving financial strength while maintaining a prudent risk profile.

The portfolio delivered a return of 275 basis points (sic) [ 2.75% ], while the fixed income portfolio duration stood at 3.5 years. Turning to solvency, the Solvency II ratio stood at 196.3% at the end of June, reflecting a very strong capital position. Own funds increased mainly as a result of solid organic capital generation during the first half and the positive revaluation of the investment portfolio through equity. This increase was partially offset by the deduction of the EUR 18 million interim dividend.

On the SCR, market risk reflects lower equity exposure, offset by the increase in the symmetric adjustment, while non-life, health and operational risk evolved in line with business growth. Counterparty risk also increased mainly due to higher health receivables and reinsurance recoverables. To conclude, first half results show that Linea Directa continues to combine growth with technical discipline, efficiency and a very strong balance sheet. Looking ahead, our priorities remain crystal clear: maintaining profitability growth, protect technical margins and continue leveraging efficiency as a core competitive advantage.

So thank you, Carlos, and thank you all for joining. The Investor Relations team remains available for any further information.

Thank you very much, and have a safe summer.

Good morning, everyone, and thank you for joining us today. We are pleased to welcome you to Línea Directa's First Half 2026 Results Presentation. I am joined by our CFO, Carlos Rodriguez Ugarte, who will take you through the main highlights of the period, followed by the Q&A session.

Carlos, over to you.

Thank you very much, Beatriz, and good morning to everyone on the call. We are pleased to present a strong first half for Línea Directa, combining growth, improved technical margins and a robust solvency position.

Let me start with the key numbers for the period shown on the first slide of the deck. Gross written premiums reached EUR 609.3 million, up 9.2% year-on-year, with all business lines contributing to our growth. The portfolio stood at EUR 3.86 million risk, 7.8% higher than in June 2025 after adding close to 278,000 risk over the last 12 months. Technical profitability continued to improve with a combined ratio of 91.1%, 1.2 percentage points better than in the first half of 2025.

Net profit increased by 19% to EUR 52.1 million, supported by higher volumes, better underwriting performance and efficiency. Return on equity stood at 23.3%, while the Solvency II ratio fortified to 196.3%, already reflecting the EUR 18 million first interim dividend for the year. I will now go through the main drivers of this first half performance.

On Page #7, premiums increased by 9.2%, supported by growth across the group. The customer portfolio also expanded by 7.8% year-on-year with around 60,000 additional risk added in the second quarter alone. This growth was accomplished by an even further improvement in technical profitability. The combined ratio stood at 91.1% and improved further to 19.6% in the stand-alone second quarter.

The expense ratio improved to 20.2%, reflecting scale benefits, operating discipline and continued efficiency gains. The investment result reached EUR 21.8 million, driven by higher income from both the fixed income and equity portfolios. As a result, profit after taxes reached EUR 52.1 million, up 19% year-on-year. Turning to volumes. Motor remained the main contributor to growth, while health and emerging businesses continue to show a strong momentum.

Moving to Page #9. The combined ratio reflects the balance between underwriting discipline, claims frequency control and a large operating base. On the loss ratio, performance remained well controlled across the main business lines, supported by an excellent second quarter performance in both Motor and Home.

On the expense ratio, the improvement reflects increasing scale, operating leverage and productivity gains while maintaining investment in the capabilities that support future growth. Efficiency remains a structural strength of the model and a key lever for protecting profitability as the business continues to grow.

Now I would like to move on to a more detailed breakdown by line of business. In Motor, premiums exceed EUR 490 million, growing by 9.8% year-on-year. The portfolio added more than 222,000 policies over the last 12 months, including 59,000 in the second quarter stand-alone. Technical profitability remained excellent with a combined ratio of 91.1% in the first half, 0.9 percentage points better year-on-year and 19.8% in the stand-alone second quarter.

The Home line delivered moderate growth with premiums up 2% and the portfolio increasing 3.7% year-on-year. Profitability in the segment was particularly strong with a combined ratio of 86.6% in the first half, improving by 2.3 percentage points and 83.9% in the stand-alone second quarter.

Let's move to Page #12. Health maintained a strong commercial traction. Premiums increased by 17.7% to EUR 28.9 million, while the portfolio reached more than 128,000 policies, 10.4% above June 2025. We continue to shift toward more comprehensive products with complete and specialty products now accounting for almost 68% of the portfolio. From a technical perspective, the combined ratio improved by 8.6 percentage points to 125.1%, showing gradual progress towards technical breakeven.

Moving to next page. The financial investment result increased by 5.2%, mainly driven by higher income in both the fixed income and equity portfolios. By contrast, the real estate contribution reflects the temporary impact of the renovation of one building. Works are expected to be completed by year-end 2026, with rental income resuming in June 2027 under updated market conditions. Taking both effects together, the net investment result declined by 1.8%. Excluding this one-off of impact, it will have increased by 5%.

Turning to Page #14. The investment portfolio remained heavily balanced in fixed income with a measured reduction in equity exposure during the period. This allocation reflects the group disciplined investment approach, focused on preserving financial strength while maintaining a prudent risk profile. The portfolio delivered a return of 275 basis points, while the fixed income portfolio duration stood at 3.5 years.

Turning to solvency. The Solvency II ratio stood at 196.3% at the end of June, reflecting a very strong capital position. Own funds increased mainly as a result of solid organic capital generation during the first half and the positive revaluation of the investment portfolio through equity. This increase was partially offset by the deduction of the EUR 80 million interim dividend.

On the SCR, market risk reflects lower equity exposure, offset by the increase in the symmetric adjustment, while non-life health and operational risk evolved in line with business growth. Counterparty risk also increased mainly due to higher health receivables and reinsurance recoverables.

To conclude, first half results show that Línea Directa continues to combine growth with technical discipline, efficiency and a very strong balance sheet. Looking ahead, our priorities remain crystal clear: maintaining profitability growth, protect technical margins and continue leveraging efficiency as a core competitive advantage.

I will now hand the call over to Beatriz to begin the Q&A session.

Thank you, Carlos. Our line is now open for questions.

[Operator Instructions] The first question comes from Maks Mishyn from JB Capital.

Three questions from me, please. The first one is on Motor. What drove such a notable improvement in claims quarter-on-quarter? And do you expect any impact from Madrid forest fires in the third quarter?

The second is on average premiums. They seem to continue slowing down. According to my estimates, they increased less than 2% year-on-year in the second quarter. Does inflation worry you? And how can you comfort us that inflation will not hurt profits?

And then the third one is on Home insurance. Similar to Motor, what drove the spectacular combined ratio in the quarter?

Thank you very much, Maks. On the first question, well, it's kind of difficult to explain what happened in the second quarter, even in the first quarter. I think we need to look at the numbers on a yearly basis, I mean, the evolution of frequency and average cost. I think frequency behavior in the second quarter was very much in line as we expected. Average cost was a little bit lower than we expected. So probably that is the result.

But again, on the claims side or on the entire business, I think we have to take a look on a yearly basis, and we have some seasonabilities impacts that might happen on the second quarter and the third quarter. But again, I mean, frequency was fine for the quarter. It's been fine for the year. And in terms of average cost, even with the worries on inflation, it's lower than we expected.

On the average premium, it is true that if you do the numbers, we are talking about an average increase in the neighborhood of 2% in the book on the new business. Well, we are concerned about inflation, and we monitor inflation -- not only inflation, but we also monitor all the collateral impacts on the repair side of our business, especially on the repair side of cars, and we monitor that. So if we need to adjust more, we will do so.

As of today, I mean, we have an average premium upside of 2%, and we will monitor, we will need more or less. At the end, this is a matter of price risk. This is a matter of technical margin, and our technical margin is keeping on improving every quarter-on-quarter. So we are very comfortable on the situation right now. But again, if inflation becomes an important issue, we will adjust average premiums.

And then on the Home insurance, well, Home is performing in terms of technical result very well for the last 1.5 years or something like that. Even the market as a whole is performing quite well. It's a matter of having less atmospheric events that we expected, good risk profiling on the book. And the combination of that puts that combined ratio in the neighborhood of 80%.

My expectation looking forward is that probably we will have to wait until the climate issues on autumn and see what happens with atmospheric events and whether we will adjust the combined ratio. So far, so good.

And regarding the latest fires in Madrid and in Castellon, Well, we are concerned. I think nowadays, we are much more concerned on helping our clients, potential affected people, trying to reach them to see that everything is fine besides covering the resort.

I think the important thing nowadays is being on the side of clients more than concerning about the impact that it might have on the P&L that, as you know, we have a lot of insurance programs that account for these issues. But again, I think today, the thing is to be in the side of the clients and very close to the clients to help them.

The next question comes from Carlos Peixoto from Caixa Banco.

Hello? Are you hearing me now?

Yes, we can hear you, Carlos.

So a couple of questions on my side -- a couple of questions from my side as well. So on the combined ratio on the Home business, well, you mentioned that you have -- the market is benefiting from low levels of atmospheric events. But should we take that as something -- so in the medium term, you don't see this level of combined ratio as something sustainable? Or do you think it's something that can be upheld into the medium term? Just to get a bit of your sensitivity on that front.

Then also on the payout policy, I was wondering considering the evolution on the P&L, whether we could see some changes on that front, whether this year you consider paying for interim dividend or for quarterly dividends basically or not? Just some views on the expected payout policy.

Thank you, Carlos. On the Home insurance side, I don't have the crystal ball to see what's going to happen by the end of the year in the combined ratio. What I always said is that atmospheric events, they have a big, big impact on this business. It's been a very mild year in terms of atmospheric events because the rains that we had on the beginning of the year, mostly they were covered by reinsurance or consortia. So it has been a very good year in terms of that.

Again, I mean, let's see what happened after summer. Normally, October is not a very good month in terms of atmospheric, although last year was very good. But I see this combined ratio very powerful. And of course, we expect to be in that line. But I don't know if it's going to be an 83% or it's going to be closer to 90%.

Again, I mean on those grounds, I think it's a very, very good number and a very solid number for the company. And in terms of the payout policy, now you should expect 2 quarters payments throughout the year and complementary after the year-end. And in terms of the dividend payout, well, it is true that we have 196.3% solvency ratio.

Very happy on that coming from 183% on the first quarter. Again, solvency ratio also has a lot of seasonability effects with the premium provision and other adjustments such as renewals and so on. So we have to wait and see. Very happy on 193%. And on those grounds, I mean, we will see what the Board decides in terms of payout.

The next question comes from Juan Pablo from Santander.

I got 2 questions. First one is regarding solvency. Solvency ratio performed very well this quarter. You mentioned that one of the reasons is the revaluation of the portfolio, recognizing equity. If you could elaborate a bit on that one. And also, I see that the diversification benefit performed well in the quarter. If you could also elaborate on that.

My second question, sorry if I missed this one, it's regarding digital sales. If I remember right, in the previous quarter, you mentioned around 9% of the new production, new sales were done through digital channels, 100%. If you could update that for us, that would be helpful.

Thank you, Juan Pablo. Regarding the first question, well, one of the positive or negative adjustments that you have on own funds when you calculate the solvency ratio is the evolution of the unrealized capital gains or losses of the portfolio. I think as of March, our portfolio had unrealized gains -- losses of EUR 1 million or gains of EUR 1 million. And on this quarter, I mean, the unrealized gains were very close to EUR 10 million.

So when you put solvency points on top of that, that is the -- that has a lot of income. I think the impact of the investment portfolio has been in the neighborhood of 400 basis points on the solvency ratio.

Regarding the second question, what was the second question?

Digital sales.

Yes. Well, I think it's going quite well. If you take a look at these numbers that we started to post 2 years ago, it is true that on the first quarter, we were in the neighborhood of 9%. And I think we are in the neighborhood of 13%, 14%, 1-4. So the evolution is very good.

I mean, again, I repeat, these are sales that they don't have any human interaction. I mean they are completed by the client, the entire process. And the intention of the company is to keep on doing that and keep on fostering digital sales, not only because of the savings that you might have on the expense ratio, but also because I think it's much better for -- in terms of customer satisfaction and so on.

There are no further questions at this time. I will now hand back to Beatriz Izard, Head of Investor Relations. Beatriz, now your line is open.

Thank you. We have some questions received through the platform. The first one is coming from [ Paco Riquel. ] So can you explain basically the differences in between the loss ratio in local and IFRS 17?

Well, I assume that you want to understand why the combined ratio on one side is one number on the other side. It's kind of difficult because you have a lot of adjustments. I mean you have the statistical adjustment, which is not exactly the same on IFRS 17 as in local. Then you have the adjustment of the risk margin, which is not exactly the same as the percentile. So there are different, different adjustments.

If you take a look at backwards, there have always been those difference between the combined ratio in local and in IFRS. Having said that, I mean, the combined ratio in local, I think year-to-date is 92.4%, which I think is the best combined ratio you might find here in the insurance sector in Spain. So very comfortable on that. It is true that on IFRS, it is better.

But again, I mean, our official numbers are on IFRS 17 and the case is that we have a very competitive combined ratio. Again, on local is 92.4%, which I'm very comfortable on that. And the mismatch or the difference are -- different adjustments that you have to do in the 17 regulation.

So the next question comes from BofA from Nimrat Kaur. The first question is, you mentioned continued pressure on claims cost in the press release. And are you seeing an ongoing increase in claims inflation? And your second quarter 2026 loss ratio of 69.2%, how much that improvement is supported by better claims frequency versus the continued sustainable improvement?

Well, inflation is something I think that we follow very much. I mean, indeed, we have an internal observatory of inflation where not only look at the inflation itself, but also the impact that has in different materials, raw materials that impacted our business, especially on the repair side of the business.

As of today, I mean, the evolution of the average repair cost or the repair price index, which is something that we follow is more or less contained. So we are concerned, but it's not evolving bad. We'll see what happened if the Brent price is still on the 90s and things like that, we need to monitor that. Again, I always say the same thing, if the risk premium of the company, which is a matter of frequency times cost increases, we will need to adjust average premiums as we did back in 2022 and 2023. So we monitor very much that.

And then the split, I don't have the split between frequency and average cost. It's something that probably we can share later with you. But again, I mean, frequency is performing quite in line as we budgeted at the beginning of the year. Some deviation may be on the bodily injury frequency, better on the materials frequency. But in general terms, the performance up to now, it's very much in line as our expectations.

Thank you, Carlos. So the second question from Nimrat says your Home expense ratio is 30.5% in the second quarter of '26. So this is the first time it's gone above 30% since the second quarter of '23. So could you explain what is driving that? And how we should think about it going forward?

Well, going forward, I mean, in the medium and long term, you should expect the expense ratio of the Home insurance going down because at the end, it's embracing in the total expense ratio of the company, and our objective has always been becoming more efficient and more efficient. If you take a look at the company as a whole, I mean, the expense ratio keeps on improving every quarter.

What has happened in this quarter? Well, the Home insurance is still a very thin business. I mean, whenever you put a little bit more pressure on marketing, that expense ratio goes up. And I think we put a little bit more pressure on marketing trying to help the upper lines of the company. But again, the strategy of the company is improving that expense ratio. And it is true that having a combined ratio below 90%, you can afford to spend a little bit more on marketing.

Thank you. And the third question is, could you please explain why the real estate rental income continuation has been pushed out to June 2027 from November 2026?

Well, it's not something that we -- you should take by -- something that's going to happen again. We have a big building in Prime Madrid, which we are renewing the entire business. We don't have any rentals nowadays. We are talking about a 10,000 square meter building, which provides quite a bit of real estate income. We pretend or we intend to finish the works by the end of the year, we will find a tenant that given the fact that it's in Prime Madrid and there is very few competitors in that, it will be not very difficult to find a tenant.

But then you have to negotiate with them when they start -- they need to do their implementation in the building and so on. So we are kind of conservative in getting numbers on the first half of 2027. But again, I mean, you shouldn't take that by granted because it's basically trying to be conservative as we always are. The good thing is that the asset that we have is first quality asset. The rentals on that will be very high because, again, we are talking in the center of Madrid. And whether it will be in the first half of '27 or in the second half is not very relevant.

Thank you. And now the last question comes from Marisa Mazo from [indiscernible]. And she's asking about the investment in technology. What's the total investment? How much are compulsory? And how much is about enhancing capabilities? So -- and what are the estimated future savings as well?

Well, on the future savings, I think it's too soon to tell you. I don't think we do things based on saving money or saving expenses. I think that is not the real strategy. The real strategy is putting technology towards get a much better customer experience, get a much better customer knowledge so we can offer different products to our clients at the right moment, but not because of the expense savings. I mean we are a very efficient company, and we will always be with investment in technology or not.

The company is really embracing in improving productivity. And to do so, we have to invest money in providing tools in order to know much better our clients, CRMs, things like that. So that's going to -- something that's going to -- we are going to do on looking forward for the next 3 years. But in terms of numbers, I think it's kind of difficult to share with you numbers nowadays.

So thank you, Carlos, and thank you all for joining. The Investor Relations team remains available for any further information.

Thank you very much, and have a safe summer.

Good morning, everyone, and thank you for joining us today. Welcome to Línea Directa's First Quarter 2026 Results Conference Call. My name is Beatriz Izard, Head of Investor Relations. Joining me today is our CFO, Carlos Rodriguez Ugarte, who will lead this presentation. This will be followed by a Q&A session.

With that, I will now turn the call over to Carlos.

Thank you very much, Beatriz, and good morning to everyone on the call. We are very pleased to report another excellent set of results.

Please let me guide you through the financial highlights presented on the first slide of the deck. We delivered top line growth of 10.2%, nearly 2x the non-life market growth of 5.36%. This solid momentum was achieved while maintaining an excellent combined ratio at 91.7%. Our customer portfolio reached 3.8 million clients, adding 72,000 in the first quarter in 2026, representing a 9.9% quarter-on-quarter increase. Net income grew by 12.3% to EUR 23.4 million, reflecting a strong combination of growth and profitability. Return on equity stood at 22.5%, underscoring the efficiency of our business model. And finally, solvency ratio was very strong, reaching 190.6%.

Now let's move on to a more detailed review of the quarterly results. As shown on Page 7, the message remains consistent with prior quarters, a strong top line growth of 10.2%, supported by high retention, reflecting increased customer loyalty and continued new customer acquisition. Technical result was up 20.1% to EUR 22.9 million. The combined ratio was very solid for the first quarter at 91.7% with an exceptional expense ratio. The financial result was affected by mark-to-market movements in equity mutual funds in a volatile market environment, although the overall impact was limited to less than EUR 1 million. And all of this resulted in a profit after taxes of EUR 23.4 million, up 12.3%.

In terms of business volumes and customers, all lines of businesses reported significant growth by adding 72,000 new clients in the quarter. Motor and Health, together with the developing new business lines stood out during the period. Moving to Page 9. The combined ratio remained very solid. On the loss ratio side, results were influenced by a temporary increase in the windshield replacement frequency, reflecting the impact of poor road conditions following the first quarter storms. On the expense ratio, continued improvements were driven by greater scale and enhanced operating productivity, demonstrating disciplined efficiency rather than cost reduction. That said, some seasonality benefits this ratio in the first quarter, which should be taken into account when interpreting the performance.

From 2026 to 2028, we will continue to invest in technology capabilities that will improve both operational efficiency and customer experience. The expense ratio remains a key source of competitive advantage and a central pillar of our operational strategy. Now I would like to move on to a more detailed breakdown by line of business. In Motor, the year delivered excellent results with premium increasing 10.6%. We outperformed the market by 3.2 percentage points. We added more than 60,000 clients in the quarter, reflecting continued growth momentum. The combined ratio improved by 0.5 point, well ahead of the latest industry figure of 99.3% in the last quarter of 2025. The Home line of business delivered a steady growth with premiums increasing by 2.6%. Performance in this segment remains exceptional with the combined ratio at 89.4% in the quarter, an improvement of 0.5 percentage points.

Moving to Page 12. The Health line delivered a strong growth of 20.1%. The portfolio increased by 8.7% with particularly strong momentum in the more comprehensive coverage, which grew by 9.6%. From a technical perspective, performance improved significantly with the combined ratio down 9 percentage points year-on-year. Underwriting discipline remains strong and loss ratio continues to be well contained. Moving to the next page. Financial results declined by 7.2%, primarily reflecting mark-to-market movements in investment funds accounted for through the P&L. Excluding this market-related volatility, financial results will have increased by 3.4%. Turning to Page 14. The composition of the investment portfolio remained largely stable during the first quarter with the exception of a slight reduction in equity exposure. The portfolio, excluding cash, increased to EUR 1.2 billion, supported by continued business growth. Average portfolio return stood at 278 basis points, while the average reinvestment yield of the fixed income portfolio reached 258 basis points. Portfolio duration remains well balanced at 3.79 years.

Turning to our solvency position. The solvency ratio remained very strong at 191% despite the negative impact from fair value movements in the available-for-sale portfolio during the quarter. In addition, higher average premiums on passive renewals provide support to the premium best estimate liability, complemented by the increase in the risk-free discounting curve during the period. Moving to the next page. The SCR is primarily driven by underwriting risk, which is almost fully offset by a reduction in market risk. This reduction reflects lower equity exposure and a decline in the regulatory symmetric adjustment.

To conclude, first quarter results continue the momentum seen throughout the year 2025, delivering exceptional growth and strong profitability. As we progress through 2026, our focus remains on delivering future growth that is both profitable and efficiency driven.

I will now hand the call over to Beatriz to begin the Q&A session.

Thank you, Carlos. Our line is now open for questions.

[Operator Instructions]

Our first question comes from Maks Mishyn from JB Capital.

Two from my side. The first one is on the expense ratio of Motor, as you mentioned, it was exceptional. Can you please walk us through what drove the year-on-year decline? Do you expect it to decline further in the year? And also, you mentioned the seasonality impacting the combined ratio in the first quarter. Could you just give us a bit more color of this seasonality?

And the second question is also on Motor and on pricing. Some surveys suggest that average premiums started to decline year-on-year in February. Can you kindly discuss pricing trends you see in the market competition? And what are your expectations in terms of pricing and growth for the remainder of the year?

Thank you very much, Maks. Well, the expense ratio of the Motor business is true that has been exceptional in the first quarter, I think it was in the neighborhood of 17% which should be like that throughout the entire year. I mean I do look for a target in that number, but I think it's too soon still to be in those levels. I mean digital -- our digital proposition is working very well. The number of clients that they interact with the company without human interaction is very high, almost 12% of the policies that we sign are fully online. But again, I mean, we have to look at the expense ratio on a yearly basis more than on a quarterly basis.

My intention is that we have always said that the company is very focused on efficiency. But again, I think it's only 1 quarter, we'll see where we go. Having said that, I mean, we are very happy about that expense ratio, not only on the motor business, but also on the company as a whole that I think we posted a 19%, which is a very good number. In terms of the combined ratio, well, combined ratio was very good in all the businesses, that 91.4% that we have on the Motor business is very good. It is true that if you look at a little bit of the loss ratio, we have some windshield impacts because of the road situation in terms of -- after all the rains and so on. But very comfortable on the combined ratio, very comfortable on the loss ratio. I mean, the risk profile of our clients is very much in line with last year. I mean, so you should expect a strong combined ratio.

Again, I mean, we have always said that we should be a company in the low 90s, and we are there. So happy about that. Regarding average premium, well, the market, I think it closed last year in the neighborhood of 6% increase. I expect that the market will keep on rising average premiums as a general strategy. I mean, at the beginning of the year, I was expecting in the neighborhood of 4%. We'll see what happens with all the -- all these geopolitical situations that we are having, and that has an impact also on inflation.

So we monitor very much inflation. We monitor very much our average premiums. Just in case the situation in terms of inflation comes worse, probably we have to take action.

Our next question comes from Francisco Riquel from Alantra.

I wanted to start with a follow-up on expenses. If you can please share more details on this performance, for example, what's acquisition costs, marketing expenses versus overheads and IT spending. So what is driving the reduction in the expense ratio?

Second question is also a follow-up on the average premium, which in Motor for you is growing less than 2%, so below inflation. We have recent memories from the Ukraine war and the impact in your company and in the sector of the spike in inflation that we might now see after the Iran war. So I wonder if you are planning to update the tariffs or to adapt to a higher inflation environment or you will continue to prioritize market share gains in the coming quarters?

Thank you very much, Paco. I mean on the expense ratio, it is true that the number is very good, but it's nothing different as what we have seen from the company in the many, many years. It is true that probably this quarter, we have a little bit less marketing expenditure. Our acquisition cost is historical lows nowadays. We have a little bit less on investment on media and so on. And then on IT, the evolution, I mean, you should expect the increase on expenses more than decreases. I mean we are in a very transformational process on the company. And what you should expect looking forward is that technology expenses will rise.

Again, I mean, a little bit less of investment this quarter, but nothing I mean we manage marketing expenditure when we see an opportunity, when we increase our expenses, then we retrench a little bit. It's an evolution of the strategy of the company. But we haven't done anything just to have that 17% expense ratio. I mean you should expect the company to be below 20s for sure for the year, and that's going to happen. In terms of the inflation, I think we learned quite a bit, not only in but in the market of the impact of inflation in our business 2, 3 years ago. We monitor inflation evolution on a daily basis. We monitor what happens in Iran and all these places because it does have -- it will have an impact on inflation for sure, not on the short term, but in the medium term, it will come out with higher inflation.

And in the case of Línea Directa, we tend to price policy by policy on an individual basis, and we will do so. I mean, at the end, we have always said that our intention is to be an efficient company with a very competitive combined ratio. And if the situation comes to a point that we need to do something on pricing, we will do so. I think so far, our average premium increase has been in the neighborhood of 2% more or less, both in the new book and in the portfolio. And again, if we need to do it because inflation comes wrong, we'll do it. What we do is on an individual basis. I mean, I remember when inflation was 8%, we had some clients that we didn't increase their average premiums. And we have some clients that we have increased average premiums above that. It depends very much on the risk premium.

Our next question comes from the line of David Barma from Bank of America.

Firstly, on solvency, the ratio is supported by some reversal of the premium reserving done, I guess, last year. The typically happens later in the year. So can you give us some context on your reserving level and what gives you the confidence to have released that in Q1? And then on capital return on the dividend, you've paid a little over 50% in 2025. Going forward, how should we think about your dividend paying capacity considering that new business strain will likely remain quite high in 2026? And linked to that, do you aim to move to a more structured time line for dividend announcements?

And then lastly, on kind of AI threats and distribution. So with the improvement in AI and automation, the cost of operating omnichannel networks at your competitors is likely to go down materially in the future and perhaps close some of the expense gap you have with the market. How do you think about these changes in distribution? And can you give us some examples of things that Línea Directa is doing to ensure it stays ahead of the pack on this topic?

Well, thank you very much. Beginning with the last question, I think if there is any company that is going to be really, really a winner in terms of using artificial intelligence, I think that is Línea Directa. I mean it fits very well in our model. We don't have any legacy in terms of direct distribution. So I think it works very well for the company. We are already putting in place some strategies on artificial intelligence on the side of the -- claims side of the business, I mean, we are working very much on chats with artificial intelligence. We are working in all the claim management of the business is starting to work on the front side of the business, I think we have a lot of opportunities in unifying information and making the process at the telephone much more efficient, and that means much better expense ratio.

And then, of course, on the pricing, there's always opportunities to gather more data and the way we analyze the data. So again, I mean, we are in the beginning of using artificial intelligence. But clearly, I think it's a big, big opportunity for Línea Directa because it fits very well with the business model that we have. In terms of dividends, well, it's true that last year, I think we paid in the neighborhood of 60%, 56% of dividends. I mean, again, our objective now is to grow as much as we can. That double-digit growth in the business is very good for Línea Directa, and we are continuing on that front. That means that the consumption in terms of capital requirements is higher and probably is much more difficult to be on the 90s in terms of dividend payout.

Again, we are a company that have always had that spirit of being a dividend payer, and we will do so as far as we are able to maintain that 180% solvency ratio. And regarding the solvency ratio, no voluntary releases. That's clear. I mean it's basically the risk premium, the evolution of the risk premium that at the beginning of the year, it is a little bit better than on the last part of the year. And if you take out prior years, you will see that first quarter, second quarter, the performance of the risk premium, which at the end is your expected claim cost looking forward is a little bit better than on the third quarter and fourth quarter, and you have some adjustments on the third quarter, especially. So -- but again, I mean, we are in 190%. We have always said that we have to be in 180%, and that's the idea of the company. Sometimes it's a little bit better, sometimes a little bit worse.

Yes. David, I just would like to clarify that the premium reserve is a reserve looking forward. It's not something about releasing anything from prior years. This is a forward-looking provision and contains premiums minus losses and expenses. So it's encompassing the increase in average premiums for renewals, and this is what you have over there, but it has nothing to do. This is a forward-looking reserve. It's not backward looking.

Yes. Again, I mean, we are -- we have always said that we don't use our reserving to help the P&L. I mean we manage our reserve based on our claim costs and the runoff or releases on the reserves come because of the closing of claims. I mean that's clear.

Our last question comes from Carlos Peixoto from Caixa Banco BPI.

So just a follow-up on the combined ratio for the group. So basically, in the previous call, if I remember, you had mentioned between 93% to 93% -- sorry, 92% to 93% guidance for the full year. The first quarter came already below those levels. you had an exceptionally good quarter in the expense side, but also there was some one-off on the loss ratio side. So I was just wondering whether you see this as too early to lower the guidance that you had given before or indeed, you can beat the 92%, 93% ratio guidance that you had mentioned? And then the second question would be regarding the insurance -- health insurance, sorry. Basically, you see -- when do you expect to reach technical breakeven on this segment?

Thank you, Carlos. I mean, regarding the combined ratio, I maintain what I said at the end of last year. I mean, we should be a company in those levels of 93s, 94s. First quarter numbers are very good. I mean there's a lot of year to come, but I feel very comfortable that the company is doing the right thing in terms of risk profiling and in terms of expense management. And if we keep on doing that and gathering clients with good profile, gathering clients with a price accordingly to the risk and managing our digital proposition, evolving our digital proposition that will put the combined ratio in the levels that I said in the past. So I'm very confident on that.

And then in terms of the health business, Well, first of all, I think the health business is performing very, very well. I mean it is true that it's still a loss-making business, but the evolution of the business in terms of loss ratio, in terms of number of clients, in terms of growth in the upper lines is very, very good. I think we are very close to breakeven. I cannot put a date there, but I think we are doing the right things in all the levels of the business, in all the aspects of the business. And I think it's very short term to make that breakeven.

There are no further questions at this time. I will now hand it back to Beatriz Izard, Head of Investor Relations. Beatriz.

Thank you. We have also received questions through the platform. We have some questions coming from Will Hardcastle from UBS. Okay. So the first one is how sustainable is your lower expense ratio this quarter?

Well, looking forward, medium, long term, it should be better than the number we posted in this quarter. Again, I mean, the company is embracing a digital transformation, trying to move towards less human interactions in the management of our clients. And that if we do the homework that we need to do, we will put that expense ratio even better than that. It is true that on the first quarter at 17% in motor or 19% in the company is very good. I mean, but we feel that the company needs to keep on improving the expense ratio looking forward.

The second question is whether you can give us an idea of how your fixed income reinvestment yield has changed quarter-on-quarter? And how sensitive is your P&L to a 50 basis points rise in fixed income yields?

Well, on the last part of the question, I think it's much more affected our unrealized gains on the portfolio and the impact on the P&L. The reinvestment that we have this year is not very high. So it won't have a lot of impact. And in terms of the evolution of the yields, I think we -- last quarter, we were in [ 280 ], something like [ 280 ] plus, and we are almost in [ 280 ]. There is not that very negative evolution nor a positive evolution. Keep in mind that our book is very prudent. I mean 80% of our book are fixed income instruments, of which around 50% of that is government. We tend to sit on the investment and rely on coupons and dividends. I mean we don't do a lot of trading. So you should expect very much in line with what we have seen in this quarter in that neighborhood of [ 280 ]. We are trying to decrease a little bit the duration. I mean we are in below [ 4%.] We used to be in [ 4% ] by the end of last year, but very, very prudent investment phases and very stable throughout the year.

And the last question from Will is, I saw that a large mutual competitor recently raised its targeted combined ratio in order to be more competitive. Have you already seen this in action? What is your response to combat this?

Well, from Línea Directa point of view, I mean, your combined ratio has to be competitive through the expense ratio. We feel very comfortable in our loss ratio. Even if the loss ratio deteriorates a little bit more, we can manage that with a much better expense ratio. So the idea of the company is not to deteriorate the combined ratio in favor of growth, volume growth or retention of clients. We have been able with a combined ratio in the neighborhood of 92% to grow more than 60,000 clients in our Motor business to being able to retain our portfolio very, very well with a churn rate very close to 14% on the book.

So I don't think you need to deteriorate your combined ratio to grow. I think you need to manage your combined ratio in terms of efficiency to be able to provide a very competitive price to clients while maintaining the combined ratio.

So thank you. Thank you, Carlos, and thank you all for joining us today and for your questions. As always, the Investor Relations team remains available should you require any additional information.

Thank you very much.

Good morning to all of you, and thank you for joining us today. Welcome to Linea Directa's Full Year 2025 Results Conference Call. My name is Beatriz Izard, and I'm Head of Investor Relations. Presenting today will be our CFO, Carlos Rodriguez Ugarte. After the presentation, we will open the call for a Q&A session. I will now hand the floor over to Carlos.

Thank you very much, Beatriz, and good morning to all of you. 2025 has been an exceptional year for Linea Directa. Please let me guide you through the financial highlights presented on the first slide of the deck. Net income increased by 33.5%, reaching EUR 86 million. This strong result reflects a combination of growth and profitability. We delivered top line growth of 11.3%, an improvement of 2.1 percentage points in the combined ratio compared with last year, that is a combined ratio of 92.6%. Our customer portfolio increased by a superb 8.5%, reaching 3.73 million clients. We added more than 290,000 clients to our portfolio, making the highest annual growth in our history. Return on equity rose to 22.9%, underscoring the efficiency of our business model.

Finally, the strong results and solid solvency position have led the Board to propose a complementary dividend of EUR 50 million to the upcoming AGM. After accounting for this dividend, the solvency ratio stands at 182.6%. Now if we move to the next slide, we consistently emphasize the importance of efficiency in our business model. It enables us to offer more competitive prices to our customers to operate with healthy combined ratios. And lastly, efficiency is a critical driver of service quality. The digitalization of service continued to deliver outstanding results with all indicators surpassing the levels achieved at the end of last year. This includes strong growth in digital roadside assistance requests, online claims submissions in both Motor and Home and the use of digital supplements.

Another key KPI is the traffic generated through our app and website, which increased by 17%. Digital interactions now represent 2.7x more contacts than traditional telephone calls. The digital chat launched in 2024 has grown by 68% and AI now resolves more than 64% of incoming inquiries. Digital sales have grown exponentially, reaching 9% of all new business at the end of 2025. It is important to highlight that these sales are fully digital and complete without any human intervention. These results differ from digital origination, which represents more than 2/3 of our overall portfolio. Finally, 91% of our customers interact with us digitally at least once a year. This journey is also driven a broader transformation to unlock the full potential of our direct model. We continue to strengthen our multiproduct offering while keeping the customer firmly at the center, delivering quality, service, transparency and competitive pricing. Through simple, user-friendly and comprehensive new digital assets, we aim to make our customers' life easier and to reinforce Linea Directa as the brand people choose and want to stay with.

Now let's move on to a more detailed review of the 2025 results. On Page 9, the message remains fully aligned with what we have been highlighting in previous quarters. We continue to deliver excellent top line growth complemented by strong retention levels. This performance reflects our increased customer loyalty and our ability to attract new clients to the brand. The combined ratio was very solid for the full year at 92.6% and exceptionally strong in the fourth quarter at 19.4%. Financial result was up 5.4% with higher income from the bond portfolio and the revaluation of investment funds. And all of this resulted in a profit after tax of EUR 85.7 million, an increase of 33.5% compared with 2024. In terms of business volumes and customers, all line of businesses reported significant growth with Motor standing out by adding more than 215,000 new clients during the year. Growth was solid across the board, and our newer products also expanded considerably.

Moving to Page 11. The evolution of the combined ratio remains solid. The loss ratio improved by 1 point, supported by prudent risk underwriting. At the same time, we continue to enhance operational efficiency through digitalization leading to a further 1.1 point reduction in the expense ratio. We continue to invest in data and technology capabilities that enhance both efficiency and customer experience. We view the expense ratio as a key competitive advantage, and it remains a central focus of our operational strategy.

Now I would like to move on to a more detailed breakdown by line of businesses. In Motor, the year delivered excellent results, with premiums increasing 11.8% year-on-year and 12% in the quarter. We outperformed the market by 3.5 percentage points. The combined ratio improved by 2 points, supported by a notable correction in the fourth quarter. The sector, however, deteriorated its combined ratio to 98.2%, 99.3 % on a stand-alone basis in the fourth quarter. For its part, the Home line of business delivered a steady growth with premiums increasing by 6.3%. In 2025, the line achieved an all-time high profitability, posting combined ratios below 90% in every quarter, including an exceptional 84% in the last quarter of the year. Moving to Page 14. The Health line delivered a strong growth of 14.7%. We continue to make steady progress in improving the product mix with specialists and comprehensive products now accounting for 67% of the business compared with 62% in December 2024.

On the technical side, we saw a very strong improvement in the combined ratio, down 14.6 percentage points, bringing it closer to target levels. Underwriting remains prudent with claims frequency well contained. The loss ratio for the year was 79.6%, broadly in line with the sector average of 79.7%. The financial result increased by 5.4%, supported, as I mentioned before, by higher income from bonds and a positive mark-to-market performance of our investment funds. Regarding the investment portfolio, its composition remained largely stable throughout the year with the portfolio, excluding cash, increasing to EUR 1.2 billion, supported by business growth. Average return stood at 312 basis points, while the average investment yield of the fixed income portfolio reached 241 basis points. Portfolio duration is 3.86 years.

On our solvency position, the solvency margin stood at EUR 183 million, taking into account the complementary dividend that the Board will propose to the upcoming AGM. Moving to the next page. The SCR is mainly driven by underwriting risk, which increased in line with business growth by market risk reflecting interest rate and spread movements. And finally, by the significant rise in the symmetrical adjustment during the year. To conclude, the 2025 results reflect exceptional growth and strong profitability. We entered 2026 from a very robust position, fully focused on driving future growth in a profitable and sustainable manner. I will now hand the call over to Beatriz to begin the Q&A session. Thank you very much.

Thank you, Carlos. We are now making with the questions received from the conference call.

[Operator Instructions]

Our first question comes from the line of Maks Mishyn from JB Capital.

Two questions from me. The first is on Motor insurance. We observed a slowdown in average premium growth for the sector. Do you think this means companies are back to the levels of profitability they want to be? What do you expect for 2026 in terms of competition? And do you think you can keep the growth momentum into the next couple of years? The second question is on health insurance. It's surprised with the growth of new customers. I was wondering if you have changed something in your commercial approach. And do you see you think we can reach a breakeven soon in this segment?

Thank you very much, Maks. Well, I mean, if we look at the market in the Motor business, I mean the market is still, I think, adjusting its combined ratio. The last number that we have from the market is that on the last quarter, the combined ratio was close to 99%. So I think they still need to do some homework on the average premium. Average premium for the sector, I think, for the year was in the neighborhood of 6% increase. And my expectations looking forward is that next year, they should need to keep on increasing average premium to adjust the profitability of the portfolio.

In Linea Directa, my expectation for this year is that we should keep on growing. Difficult to give you rates or numbers. But the idea is that we have an opportunity to grow, and I think the company should keep on growing. I mean, once we have a very competitive combined ratio. We have a very competitive business proposal to our clients. So I think you should expect growth for 2026.

And regarding the Health business, I mean, more I think is evolution of many, many things that we have been doing throughout the years. I mean, we have focused very much on cross-selling the health business to our clients. We have focused very much on changing the portfolio mix of the products that we were selling, trying to sell products much more sticky. We keep on being very prudent on the underwriting. And I think all things together have put the Health business in the pipeline to break even. The question on when it's going to come to breakeven, it's difficult to say, but I think we are very close to it.

The next question comes from the line of Francisco Riquel from Alantra.

Yes. So my first question is about digital sales that you have increased to 9% of the total in '25. If you can comment on the loss experience with digital-only clients? And how does it compare to the group average? And my second question is on the expense ratio in Motor, which has fallen to 16% in '25 under IFRS 4. My question is how low can it go in '26 and over the medium term?

And then related to all these digital issues, just a follow-up on the artificial intelligence that you have been mentioning during your presentation, your views you have commenting about the opportunities, but also about the potential threat if you see any?

Thank you very much, Paco. On the digital front, well, I think it's too soon to give a message on the behavior of our digital clients, pure digital clients. I think so far so good. I mean, in terms of profitability, in terms of risk profiling, they are very similar to the clients that they come to the telephone. So we are very happy about the evolution. I think it's too soon to give numbers on that. I mean we are talking about 9% of customers purely, purely digital with no human interaction that is in the neighborhood of 80,000, 90,000 clients. So I think it's too soon to give a profile of those clients.

Some surprises from this approach is that the risk profile of this client was even better than some of the clients that we have in the portfolio, which is good. Other learnings that we have is that in terms of average premium is very similar to the telephone clients. So I think so far, so good. I mean, very positive on that. The second question was on the expense ratio. While the expense ratio is true that it has reached almost 16% in the Motor business, well, I mean, I tried to explain this through the call. I mean our focus on efficiency and our focus on being the most efficient company in terms of operational is there. It's always a target. And I think it's key for a company like Linea Directa, and I think it's key for the sector. I mean I think the winners in the sector in the short term or long term, sorry, will be those that they are most efficient, and that's the way we do it.

Of course, the business model that we have, I mean, being direct, being digital and so on helps very much. So where I see the efficient expense ratio looking forward, I don't have a number, but if I were to improve my combined ratio probably will be more on the expense side of the combined ratio than on the loss ratio. That's how we see things.

And finally, in terms of artificial intelligence, which is the million-dollar question nowadays. Well, I think it's an opportunity for Linea Directa. Clearly, I think using this technology in a direct business model as Linea Directa is clearly an opportunity. We are working on that. We want to be prudent on that as well. I mean, I think it's too soon to give numbers the evolution of artificial intelligence on the P&L of the company. But clearly, I think it's an opportunity for Linea Directa. We are using already artificial intelligence in chats, in the operation. But again, we are working on that. But what I want to be very clear is that I think it's adjust very well to the business proposal of Linea Directa being sold direct.

The next question comes from the line of David Barma from Bank of America.

Firstly, coming back on the combined ratio. So you published a combined ratio in Q4 that's the level that not so long ago, you were saying was too good to be true. So can you please give us some color on the quarterly performance? And to what extent weather and frequency might have supported Q4 and how you see that developing in '26, please?

Secondly, on solvency, I was expecting the solvency ratio to be supported in the quarter by a reversal of some of the premium reserving done early in the year, but it doesn't seem to have come through. So can you comment on that, please? And whether it's something we should expect in coming quarters?

And then lastly, on capital return, we've paid a little over 50% in '25. Going forward, how should we think about your dividend paying capacity considering that new business strain is likely to remain high in '26 as you were alluding to earlier?

Well, in terms of combined ratio, it is true that the combined ratio in the last quarter has been exceptional. I mean it has been very good. I think it has been on the 90s. Probably that has been driven by the expense ratio who has improved, as I explained before, but also because of the frequency in our business. I mean frequency was lower than in the third quarter, and that helped the combined ratio going to those 90s%. Where do I see the combined ratio of the company? I think we -- I mean, last year, I think we put a target of getting close to 94% by the end of the year. We've reached that. So we delivered the numbers, I would say.

Looking forward, I'm not very much concerned about improving more my combined rates. I think my combined ratio in the neighborhood of 92s, 93s, it's a very good combined ratio. Again, if I were to improve my combined ratio, it would come from the expense ratio more than the loss ratio. But in the levels that we are nowadays in terms of 92%, 93%, I think the company feels very, very comfortable. Your second question was on solvency. Well, solvency is above 180%, which is very good. It is true that on the third quarter, we have this hike in the premium reserve.

The problem is that we keep on growing very, very much. And when you grow very much your SCR amongst quite a capital, and that's the thing with the solvency ratio at the end of the year. Very comfortable if we are able to maintain that 180%, which is really the target of the company, always on those 180%. And then on the dividend payout, we don't have a payout policy. As you know, we have a solvency policy, which has been around 180% as far as we are there, then the Board will decide.

But it is true that when you grow your revenue side by 11%, 12%, SCR demands quite a bit of capital, and that has some pressure on the dividend. I mean -- but I think we -- with this EUR 50 million complementary dividend, our payout is 56%, I think, which is quite high.

The next question comes from Carlos Peixoto from Caixa Bank.

Just a quick follow-up from my side. So just going back to the fourth quarter combined ratio. I was just wondering whether there was any release of provisions in the quarter. I'm not sure you answered to that before. Then the second part -- sorry, second question would actually be on premium growth. So for this year, how do you see evolving? Do you expect to see any sort of slowdown or actually an acceleration in the pace of growth? And also, I saw that the expectation for the [indiscernible] is a 2.7% increase. Do you expect to fully pass on that clients through prices? So basically, this will be the main points that I was looking for?

Well, I'm going to try to answer because I have some difficulties in understanding your questions. Regarding the combined ratio Carlos, no reserve releases. I mean the reserve releases that we put on the quarter are the ones the ones with -- on the managing on the claims. I mean we don't do reserve releases, voluntary reserve releases. I mean we manage the business and more or less it's the same. So nothing extraordinary on the combined ratio in the fourth quarter, even though it's a very good combined ratio. I mean it's business as usual.

Regarding premiums, well, we don't have a target in what should be the growth for the premiums in 2026. Probably the only target that we have is trying to grow more than the market. I think we have reached that goal in 2025, and that should be the goal for next year growing more than the market. We are very confident in the opportunity that we have. We have put more than 200,000 new clients on the company, on the Motor business. We are looking at the market, and we still see that the market is having some trouble with the combined ratio. So I think there's an opportunity for Linea Directa, and we will take that opportunity.

The last question is from the line of August Marcan from UBS.

Just 2 for me. One, your Home combined ratios seem very strong throughout the whole of 2025. I was just wondering if we kind of normalize for weather and everything, what is your expected normalized level for that segment? And second, for the Motor you touched on it at the start of the call, I think. But if you could expand a bit further, how do you see pricing and inflation trends in Spain year-to-date in 2026 so far?

Thank you. Well, it is true that the Home combined ratio has been superb this year, I mean, in the low 90s, even below 90s, some quarters. It has also been very good for the market as a whole. So it's difficult to say where do I see the combined ratio home insurance looking forward. I think it should be in the neighborhood of 91%, 90%, something like that. I don't see the combined rate below 90s. I think it has been a very, very good year. It depends very much on atmospheric vents. I mean, for example, the first 2 months of the year has been terrible in terms of rains in Spain. So it depends so much on atmospheric events, the evolution of the combined ratio that it's very difficult to give you a target.

Having said that, I mean, we are a company with very competitive combined ratios. The Home insurance should be a business with a very competitive combine ratio compared to the market. Maybe below 90s is too good to be true. And the second question on pricing and inflation. I think the market closed with our average increase of 6% premiums more or less, which I think 5% is increasing premiums and the other one is on new cars. I think the market will keep on rising average premiums above inflation. I think they should because they are very close to 100% combined ratio. In the case of Linea Directa, you should expect individual prices, you should expect always adjusting our average premiums to CPI increases more or less.

There are no further questions at this time. I will now hand back over to Beatriz Izard, Head of Investor Relations.

Thank you and thank you, Carlos, and thank you all for joining us today and for your questions. As always, the Investor Relations team is here to support you should you need any additional information.

Thank you very much. Have a nice day.

Good morning to all of you, and thank you for joining the call today. Welcome to Línea Directa's Third Quarter Results Conference Call. My name is Beatriz Izard, and I'm Head of Investor Relations. Presenting today is Carlos Rodriguez Ugarte, our CFO. And as usual, after the presentation, we'll open up the call to Q&A.

And with these words, over to you, Carlos.

Thanks a lot, Beatriz, and good morning to all of you. I will start, as always, on the first slide by commenting on the financial highlights for the quarter. We are reporting premiums of EUR 844 million, which is an exceptional growth of 11.4%. By line of business, Motor grew by 11.8%; Home, 7.3%; and Health, 13.9%. The portfolio of customers recorded an outstanding growth of 8.1%, reaching 3.65 million clients as of September 2025.

Despite a few high severity claims experienced in the quarter, combined ratio was a solid 93.4%. Our highly efficient capital model translated into return of equity of 22.3%, and solvency stood at 189%, which is supportive, of course, of future capital distributions.

Moving to Page 6. Here, the message I would like to convey is consistent with what we said in previous quarter, further acceleration in the top line and sound retention levels by increasing the loyalty of our customers and attracting new ones to our brand.

We accelerated commercial digital initiatives, aiming at improving top line development and efficiency in the coming years. It is always important to remember that growth can easily be achieved in our industry, but disciplined growth is a different story, and we only seek the latter.

We posted a worse underwriting result in the third quarter from a few high severity claims and still, combined ratio was a sound 93.4% for the first 9 months of the year. Expense ratio posted a further improvement. Financial result was up 18.9% with higher income from the bond and equity portfolio and the revaluation of investment funds. And all of this led us to a profit after tax of EUR 60 million, up 46% over the 9 months of 2024.

As with regard to business volumes and clients, all line of businesses reported significant growth, particularly in the Motor line of business with more than 53,000 new clients in the quarter. We are very pleased with this progress.

In Health, we resumed growth, even considering the extraordinary dental campaigns of 2024. Excluding this effect, clients will have grown by 9.8%.

Moving to Page 8. The evolution on the combined ratio was solid despite a seasonable adverse quarter with a handful of high severity claims. We continue to invest in data and tech capabilities that will improve efficiency and customer experience. We consider the expense ratio to be a key competitive advantage and remain very focused on this.

Now I would like to move to a more detailed explanation by line of business. In Motor, we further accelerate growth with premiums up 11.8% year-on-year and 13.3% in the quarter stand-alone. We were able to see the market growth by more than 3 percentage points. The combined ratio stood at a solid 93.4% for the 9 months. For the quarter stand-alone, a handful of high severity claims in the summer months added 2.3 percentage points. Excluding this effect, the underlying combined ratio stands at 94%.

For its part, the Home line of business posted significant growth with premiums up 7.3%. Profitability for the year continues to be remarkable with combined ratios below 90s. The quarter stand-alone stood at 87%.

Moving to Page 11. Health posted growth of 13.9%. The figures are benefiting from more comprehensive products, specialists and complete products now account for more than 65% of the portfolio. Very importantly, we will also resume customer growth. On the technical side, combined ratio posted a further improvement.

Moving to the financial results. We posted higher income on bonds and equity instruments. The mark-to-market of investment funds was very positive in the year, particularly in the first half and less in the third quarter. The investment property result declined due to the temporary loss of rental income from a building under renovation at the city center. Completion is expected by the end of 2026, after which, an updated rental income will resume.

As with regard to the investment portfolio, its composition remained pretty much stable in the third quarter with the portfolio, excluding cash, increasing by EUR 1.2 billion on the back of business growth. The underlying return stood at 313 basis points. Average reinvestment yield for the fixed income portfolio was 249 basis points. Its duration is currently 4 years.

On our solvency position, solvency margin stood at 189%. As we anticipated last quarter, a more consistent calculation has been performed in parallel with the development of our internal model for premium risk. Given the quarterly volatility, while we calibrate the tool, it is more appropriate to look at it on a yearly basis.

Moving to the next page. SCR is mainly driven by underwriting risk, increasing as a result of business growth, and market risk on the back of interest and spread risk and a significant increase in the year of the symmetric adjustment. The second dividend, if the Board decides to do so, is expected to be announced before year-end.

To conclude, September results posted exceptional growth. Underwriting remains very prudent. Combined ratio was also solid in the quarter despite headwinds from a few severe accidents. We continue developing the necessary basis for our future ambitions and remain very focused on efficiency.

I will now hand the call over to Beatriz to begin the Q&A questions.

Thank you, Carlos. We'll begin with the questions received from the conference call.

[Operator Instructions] The first question comes from David Barma from Bank of America.

Firstly, on the Motor profitability in the quarter, the 94% underlying you flagged is still deteriorating a bit compared to the last several quarters. Can you talk about that level and what you're seeing in terms of underlying frequency and severity?

And then secondly, on the reserve adjustments and solvency that you talked about. Can you please come back on what you did there? And whether that's mostly a model change one-off, taking back part of what you had done in the previous quarter?

And then lastly, on average premium growth. It seems like it's starting to slow a little bit in Q3, both in Motor and in Property. So if you could give us an update on pricing trends.

Thank you very much, David. In terms of the Motor business profitability, which is very much linked to the combined ratio, it is true that our combined ratio on the stand-alone quarter is in the neighborhood of 96.2%, I think. But I think we need to take the picture on the entire year, which is very close to 94%.

What happened on the third quarter, which is something that happened usually historically, if you take a look at the history of our combined ratio, I think almost all the third quarters were 1 or 2, I mean, our combined ratio is worse than the second quarter.

What happened on this third quarter, frequency was more or less in line with what we expected. Average cost was also very much in line, although average cost has been increased by a handful of severe claims, especially bodily injury claims, which I must say is sometimes they come, sometimes they go. What we did is we took a look at these claims, whether they are very much impacted by the new business or not. And we see that basically those severe claims, most of them are on the portfolio, so very comfortable in terms of how we are gathering clients in terms of risk profiling. But again, I mean, when you have a handful of severe claims in the neighborhood of EUR 5 million, it has an impact of 2 points on our combined ratio.

Looking forward, our expectation is still that we are doing things on the track we wanted, gathering clients with good risk profile. Frequency is still very much in line with our expectations. And if the last quarter of the year performs well in terms of severity, we should be shooting for a combined ratio, which is more close to low mid-95s than above 95%. That's my expectations.

In terms of solvency, it is true that we've been calibrating a new platform, which is not a change in the model. I mean, it's basically calibrating the model. I think it's a one-off. Of course, you also have to take a look to the premium provision, which has a lot of seasonability throughout the year. It's very positive on the second quarter, and then it's a little bit worse on the third quarter.

Looking forward on the year-to-date picture, I mean, that premium provision is very positive for the capital, and it should be that the case for the end of the year. Again, I mean, we are talking about a company which still has 190% solvency ratio, which is very good. And third quarter solvency is a little bit of a seasonal effect. And I think we need to look at the solvency risk on a daily basis, more or less.

And on the average premium, well, there is not a change on the strategy. I think the evolution of the company in terms of pricing is very much linked to the premium risk, and we focus on that. I mean so we adjust premiums on that. If we take a look at the year, our average premium for the new business and for the portfolio are very much in line in the core business in the bulk of our business, individuals is very much into the 2% to 2.2% increase and it's adjusted on an individual basis. So it's not a strategy that we will start to lower average premiums.

Indeed, if you take a look at the CPI increase in Spain, it's picking up a little bit, now it's in the neighborhood of 3%, 2.3% on the underlying CPI. And we will adjust premiums on that ground looking forward next year, again, on an individual basis. But still, I think we need to keep on adjusting our premiums to CPI increases.

The next question comes from Francisco Riquel from Alantra.

My first one is a follow-up on this Motor combined ratio. So you printed 92% combined ratio in the first half of the year in Motor. So excluding the large loss claims that you mentioned and also the adverse seasonality in the Q3 due to the summer season, shall we expect a combined ratio in Motor back down to 92% in the fourth quarter? If not, how can you reassure us that the fast growth in Motor policies is not coming at the expense of underwriting risk?

And my second question is, I wonder if you can also share the weight of digital in the Motor business, both in terms of the total revenues and in the new business. I understand you are not using the sector database for claims in the digital business. So I wonder if that is having an impact in the risk that you are taking through the digital channels and if you plan any change at all in the digital strategy?

Thank you very much, Paco. Since you follow our numbers on a quarterly basis, probably you can go back to my script on June, and I was saying that 92% on a quarterly basis was too good to be true. I mean we are a company, with that, we should be more in line to that 94% or something like that.

My expectations looking forward for the year is that we should stand in that level. I mean it's kind of difficult to give you a number, but I always said that 92% was very good, and we are very happy to be on 92%, but I think the company should maneuver in the neighborhood of 94%, especially in an industry that, as you know, combined ratio is still on 99% as of June, 98.7%. So our positive gap is still there.

And looking to the third quarter, Well, I tried to explain that. I think we have like 2 points, 2.3 points on the combined ratio on the third quarter that are basically due to severe claims that are very difficult to manage. Again, it's very important to say that we do look at the short frequency of the new business. We look at the 30-day, 60-day and 90 days frequency of the business, and that is performing quite well.

Second of all, the main severe claims that we have on the third quarter are assigned to the portfolio and the 2 business. So the combination of those 2 things tell us that we are gathering clients with the risk profiling that we like. We will keep on monitoring that, but there's no concern on the company on those grounds.

So looking forward, fourth quarter, things should perform quite well on the portfolio. Things should perform quite well on the new business. My aim is that we should be in the neighborhood of those mid-90s that I always said should be the target for this year for the company.

The second question, I think, was on the digital side of the business. Well, the digital side, the pure digital side, and when I say pure digital side, I say the online real-time digital business, which is opening the interaction with the company and closing the deal without human interaction is still small. I mean we are talking about 10% of the gathering of new clients, I mean, in the neighborhood of 70,000 clients. So the impact of and not using SINCO, which is what you are saying, is not very important.

I must say that, of course, we follow very much not using that database. And really -- and surprisingly, the risk profiling of the pure online clients is much better than the -- well, I wouldn't say much better. It's better than the risk profiling of the clients that they use our call center. So we are very happy on that. I don't think that is an area to be worried. I mean we will keep on fostering our digital proposition to clients. We have more than 3 million transactions on a monthly basis of our clients. Almost 100% of our clients are direct. And I think for us, that is key and it's nonnegotiable. I mean, of course, we do look at the risk profiling, and we are very happy on the profile of those 70,000 clients that we have got on the year through our digital proposition.

The next question comes from Carlos Peixoto from CaixaBank.

A follow-up actually from my side. So you mentioned an expectation of combined ratio around 94% for 2025, if I understood correctly. I was just wondering if you could clarify whether this is for the Motor business standalone for the company?

And then on the second part of the question, looking into 2026 and beyond, do you see the 94% as a combined ratio as, let's say, a normalized level for Línea Directa? Or how do you -- where do you see it over the coming years basically?

On the combined ratio by the end of the year, again, I mean our expectation is to be in those mid-90s, below mid-90s. Of course, I don't have a crystal ball. I mean it depends on a lot of many things. I mean what we have to do is to manage our risk profile as we do, and that should put the company in those rounds.

In terms of company, overall company combined ratio, well, it's very much driven still by the motor business. I mean, indeed, I mean, our combined ratio year-to-date is very similar, 93.4% in both Motor and overall company should -- I mean, overall company is very still -- is driven by the motor business.

Of course, if we take a look at the other 2 main business that we have. Home insurance performed superb throughout the year with a combined ratio below 90%. Of course, we are very happy about that, and we look forward to maintain those levels by the end of the year. We will see what happened with the atmospheric events. I mean the year has been kind of mild throughout the year, and we'll see what happened, but very happy with that business, growing almost 8% in the gross written premium, and we have a very good combined ratio.

Health business, also the combined ratios keep on improving. Again, we still are a loss-making business, but we are very happy with the growth on the upper lines, growing above the market quarter-on-quarter. So very happy on that. But combined ratio should be very much in line with the motor industry if we take a look at the company.

And looking forward on 2026, I don't have a target on the combined ratio. Currently involved in my budget for next year, so I don't have still numbers for that. I think the company is always -- has always said that we should be a company with the best combined ratio in the sector and one of the best on a pan-European picture. And that should mean that we have to be on those grounds, on 94s, 95s.

It depends very much also on the evolution of our expense ratio. Expense ratio has improved, again, almost 100 basis points, which is a very good number for the quarter, should keep on improving with our digital proposition. And that in the medium term should keep on putting pressure downwards on the combined ratio for the company.

The next question comes from Maksym Mishyn from JB Capital.

I have two. It's on the new production, given the strong numbers you are posting in Motor, I was wondering, what's your ambition for the market share in the segment in the long term?

And then the second question is, if you could share a bit of more color on what kind of customers you are adding? Are there mainly first-time buyers that come from other companies? And what type of coverage do you sell the most? That would be super helpful.

Thank you very much. Going on the last, our portfolio mix is very much similar to what we have. I mean, we are a company more focused on third parties than in fully comprehensive. And that is more or less the trend with the new gathering of clients.

What type of clients are we gathering? Well, we are very strong on the new business, on new buyers of cars and secondhand cars. I mean we have always been very, very powerful on those grounds. I mean our market share there is well above our natural market share, which is in the neighborhood of 7%. I think our share of new business, new cars is in the neighborhood of 10%. So we are there, and we are gathering clients from there. But then we are gathering clients from the competition. I mean if you take a look at competition, and I know you do, I mean, they are losing portfolio and some of those portfolios is coming to the company.

The second you were asking -- the first question you were asking is, well, in terms of gathering of clients, my ambition, no targets on that. I think our ambition is being able to grow more than the market, and it's something that we are doing in terms of gross written premium. Our gross written premium is well above 11%. Market is in the neighborhood of 8.98%, and that is a trend. I mean what we want is to be a company that we are able to grow more than the market, and that growth will realize in gathering a good number of clients. We have been gathering 50,000 clients more or less on a quarterly basis, and it's something that you should expect by the end of the year.

The next question comes from Juan Pablo Lopez Cobo from Santander.

My questions were already answered.

There are no further questions at this time. I will now hand back to Beatriz Izard, Head of Investor Relations. Beatriz, now your line is open.

Thank you. Thank you, Carlos, and thank you all for joining us today and for your questions. And as always, Investor Relations team is here to help you should you have any further needs.

Thank you very much and have a nice day. Thank you.