Catalysts
GCO has 3 lines of business: Occidente dedicated to traditional life non-life and multi-risk insurance, Atradius dedicated to commercial credit and Mémora its funeral business line.
Mémora continues with its strategy of inorganic growth through acquisitions of local companies in the Iberian Peninsula. During 2024, it has increased its presence in Spain, specifically in Valladolid and Palencia, acquiring the largest funeral home in the city, and in Portugal by acquiring a funeral home in Lisbon.
Atradius. The global trade credit insurance market size was estimated at USD 10.58 billion in 2023 and is expected to grow at a CAGR of 11.2% from 2024 to 2030. Source: grandviewresearch.com
Atradius has growth potential in Mexico, Brazil and the U.S.
5 companies control 85% of the credit insurance market:
- Allianz trade
- Atradius (Catalana Occidente)
- AIG
- Coface
- FCIA
Occident. GCO has a market share in Spain of 4.5%, occupying the 7th position in the Spanish ranking. The only way to grow in the sector is through mergers and acquisitions.
The segment of pension plans and insured savings products has decreased substantially, and since the government does not favor saving for retirement and public debt rates are expected to fall, I predict an even greater decrease in this segment, since it is a sectoral problem.
In this sense, GCO has a solvency ratio of 241.5%, which is not much either, since the average for the Spanish sector is 250%, so growth must occur in other sectors if it is in the Spanish market (deaths) or in other countries where the company has an interest (surety).
It has €1526.1 million in cash and €623.4 million in bank deposits, mainly in BBVA and Banco Santander.
€1290M allocated to technical provisions, so they have €515M for acquisitions.
Innovation: GCO Ventures: at the end of 2024 with a portfolio made up of 4 direct investment companies and more than 210 start-ups indirectly supported through investment funds.
In 2024, the creation and launch of two start-ups stands out:
- Vivara, a proptech dedicated to the comprehensive management of housing rentals. Its proposal includes everything from the selection of the best tenant and the guarantee of rents to the resolution of procedures during the lease.
- Musky, is a pet-tech company focused on offering pet insurance, providing innovative solutions for a constantly growing sector.
Risks
- Credit underwriting risk, non-life, health, life and death.
- Market Risk
- Counterparty risk
- Operational risk
- Risk Liquidity
- Political, economic and competitive environment risks
- Environmental, social and governance risk
Assessment
Where do you think the business will be in 3 years? 4600M€
What do you think revenue and profit margins will be? 4% and 15%
What do you think the valuation multiple will be in the future? 9x
How well do narratives help inform your perspective?
Disclaimer
Read more narratives
