Mutua Madrileña makes cash. The insurance group has closed the market sale of its 1.6% stake in CaixaBank’s capital at an agreed price of 3.23 euros per share. That is, the insurer will receive 405 million euros, with a capital gain of 128 million compared to what it paid in 2016 (then it paid 277 million, at 2.20 euros per title). The operation, announced this Wednesday in the presentation of results by Ignacio Garralda, president of Mutua, is carried out through a equity-swap —financial product through which the yields of certain securities are exchanged for an interest rate— which will be settled in April.
In this way, the sale is made at a price higher than that quoted by the Catalan entity these days (below 2.8 euros) after the slump suffered by the Russian attack on Ukraine. Until the exchange is executed, the group retains its political and economic rights of the participation it owns. “This investment, made in September 2016, yields a positive result of 128 million euros for Mutua, which represents a 46% return,” the company said in a statement.
“This operation is independent of our collaboration agreement with CaixaBank, which is untouchable,” Garralda stressed. In other words, it will continue its alliance with the Catalan entity through which it exclusively distributes non-life insurance to the bank’s private customers through SegurCaixa Adeslas (integrated into the Mutua group and 49.9% owned by CaixaBank). The funds from the exit of the bank’s capital, said the president, will be used to finance the operation carried out by the group with El Corte Inglés, which amounts to 1,105 million to enter the capital of the department store chain and stay with half of its insurance business.
Garralda also explained that the agreement with the El Corte Inglés Group has included going public within a period of six years. “Before our entry they already had that intention. In six years that IPO would be carried out with a series of incentives. Because if it does not come out there should be a consideration, such as a premium for the illiquidity that it supposes ”, he has acknowledged. Despite this, he has clarified that the decision depends only on El Corte Inglés, which will be the one who must evaluate the operation, although he considers it reasonable in the medium term.
On the results of the 2021 financial year, the group obtained a net profit of 378.5 million euros, 24.5% more than the previous year. This increase was based in part on the growth in revenue from premiums: they climbed to 5,715 million, 3.4% higher than in 2020. In non-life in Spain, these revenues increased by 2.9%, to 5,573 million . That is, 97.5% of the total.
This has been achieved despite the impact of measure 12+2, which has cost the group more than 160 million. With this option, Mutua extended the validity of auto insurance to its customers for two months at no cost, for which almost 90 million revenues in accrued premiums from the branch are moved to this year. This caused auto premiums to drop by 1.5% to 1,554 million in 2021. “If this extraordinary and unique initiative had not been applied in the Spanish market, Mutua Madrileña’s growth in this line would have been 4%”. So far, two million customers have been welcomed.
He knows in depth all the sides of the coin.
“The increase in profit is mainly explained by the good non-life insurance results, its main area of activity, the contribution of international business, unlisted investments and Centauro, the driverless car rental subsidiary. Grupo Mutua is located, for the fourth consecutive year, in the first position of the national ranking of non-life insurance, when a little more than 10 years ago it occupied the seventh position”, assures the firm in the statement.
The company, part of the Mutua Group and owned by CaixaBank, had a turnover of 4,156 million euros last year, 4.6% more than in 2020, and obtained a net profit of 421.4 million euros, 3.3% less. This is due, according to the company, to the increase in the accident rate caused by the pandemic, which has already led to the hospitalization of more than 15,000 policyholders.
In the health insurance branch, through Adeslas, it registered a volume of premiums of 2,959 million euros, 3.6% more than the previous year. Thus, it already has a market share in this field of over 30%.
Regarding the behavior of multi-risk-home, the turnover grew to 695 million, 12.6% more than in 2020. In addition, the number of policyholders increased by 6.9%, so that the group’s client portfolio in multi-risk-home it was consolidated above two million.