• Net Income (9 months): BRL6.4 billion, growth of 9.7% year on year.
• Managerial Net Income: BRL6 billion, growth of 5.7%.
• Insurance Premiums Written (9 months): BRL13.2 billion, growth of 1%.
• Retained Premiums: BRL11.4 billion, growth of 8%.
• Loss Ratio: Reduced by 3 percentage points to 25%.
• Pension Reserves: BRL422 billion, growth of 11% year on year.
• Net Inflows (Pension): BRL7.9 billion.
• Premium Bonds Collected: BRL4.9 billion, growth of 4%.
• Brokerage Revenue: BRL4.1 million, growth of 11%.
• Net Income (Q3): BRL2.3 billion, growth of 10% year on year.
• Financial Result Decrease: 16% year on year, 19% year-to-date.
• Net Investment Income Drop: 18% year on year, 10% year-to-date.
• Premiums Written (Q3): Decrease of 5% year on year.
• Net Income Growth (Year-to-date): 9%.
• Guidance Adjustment (Premiums Written): Revised from 8-13% to 0-3% growth.

• Warning! GuruFocus has detected 8 Warning Signs with CIGI.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BB Seguridade Participacoes SA (BBSEY) reported a net income of BRL6.4 billion for the last nine months, reflecting a growth of 9.7% year-on-year.
• The company achieved a record high in managerial net income, growing by 5.7% to BRL6 billion.
• Retained premiums grew by 8%, indicating strong performance in more profitable insurance segments such as credit life and crop insurance.
• The loss ratio decreased by 3 percentage points, maintaining historically low levels at 25%.
• The company invested BRL368 million in digital transformation and analytical maturity over the last nine months, enhancing operational efficiency.

Negative Points

• Premiums written only grew by 1% year-to-date, which is below the expected range of 8-13%, leading to a revised guidance of 0-3% growth.
• The financial result decreased by 16% year-on-year and 19% year-to-date, impacting overall profitability.
• The net investment income dropped by 18% year-on-year due to the compression of financial margins.
• Crop insurance premiums were reduced by 32% year-on-year in the third quarter, affecting overall premium growth.
• The average management fee for pension funds decreased due to a higher concentration in more conservative vehicles, impacting revenue growth.

Q & A Highlights

Q: Can you provide insights on the growth potential for life and credit life insurance over the next 12 to 18 months? A: Andre Borba, CEO: The penetration of life insurance is still low in Brazil, at about half a percent of GDP compared to 2% in other emerging markets, indicating significant growth potential. For credit life insurance, 80% of premiums are with individuals, primarily from payroll loans. We see room for growth in life insurance through low-cost products and exploring new niches, such as life insurance with an accumulation factor.

Q: How does the update of participant bases and IGPM adjustments in pension plans work, and will there be more frequent reviews? A: Rafael Sperendio, CFO: The liability adequacy testing is conducted quarterly. When IGPM becomes positive, we adjust the benefits accordingly. This adjustment reflects the positive IGPM at the end of the last quarter, and with the new SOPI rule, this will be done every quarter.

Q: What are the expectations for rural insurance growth and loss ratio trends in the coming quarters? A: Andre Borba, CEO: The agricultural sector is rebalancing post-pandemic, influenced by weather and international factors. We don't foresee major concerns with loss ratios due to favorable weather conditions. For 2025, we expect a stable loss ratio and continued growth in rural insurance, supported by adjustments in underwriting policies.

Q: How do you see the dynamics of premiums written and earned evolving in 2025? A: Rafael Sperendio, CFO: The current dynamic of premiums earned growing faster than premiums written is likely to continue if the credit origination environment remains favorable. We are gradually increasing retention in agricultural insurance, which will contribute to this trend.

Q: Are there any updates on the dividend policy or share repurchase program? A: Rafael Sperendio, CFO: We maintain a policy of paying dividends every six months, primarily from brokerage cash flow. The current repurchase program is nearly complete, and we need to fulfill formal requirements before launching a new one.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.