The rise in interest rates cost Grup Catalana Occident (now called GCO) 719 million euros in 2022 due to the loss of value it caused for its fixed income portfolio, as CEO Hugo explained Serra, in a conference organized by the consulting firm PwC and Foment del Treball.
Serra, who presented the company’s 2022-2024 strategic plan, explained that the company closed last year with permanent resources of 4,916 million euros and that the valuation adjustment of its income portfolio fixed income was not relevant due to the great diversification of the group’s investments: only 51% at the end of 2022 were in fixed income securities, mostly short-term, and 20% in treasury and monetary assets, with 13% more in variable income and 13% more in real estate. The value adjustment of the fixed income portfolio was not made in the income statement, which closed with a profit of 211 million euros, but in the value of permanent resources in the balance sheet, as provided for in the accounting regulations .
Serra explained that the group is now immersed in the integration of its traditional insurance companies (Catalana Occidente, Plus Ultra, Seguros Bilbao and Nortehispana), a process that gradually began a decade ago and that now, after having all integrated services, will culminate with the integration of commercial networks “which is where we play the future” and corporate structures. The employment adjustment, of 488 people according to the agreement reached with the unions, will have a cost of 120 million, which the firm already provisioned in last year’s accounts. “Our focus is to gain efficiency”, he acknowledged, as well as continuing to grow.
Serra explained that one of the challenges the group is facing is the drop in profitability of some branches affected by inflation, such as multi-risk insurance and especially that of automobiles. “We have profits, but the sector as a whole operates in car insurance in technical losses”, pointed out Serra; that is to say, that the price of the premium does not cover the costs of the indemnities. The companies suffer from an increase in the cost of repairs but also “the frequency of accidents has increased because the private vehicle has been used more, even when the price of fuel has been very high”, he pointed out. For this reason, he warned, “companies will start raising premiums”. At the other end, he explained, there is the funeral business, in which he is a leader with the purchase of Mémora, “which is profitable and stable”.
