Conference Call 4Q17 and /07/2018 at 08:00 am (NY time)

Transcription

1 Conference Call 02/07/2018 at 08:00 am (NY time)

2 Disclaimer The forward-looking statements in the conference call are based on the beliefs and assumptions of Porto Seguro s management, and on information currently available. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Porto Seguro and could cause results to differ materially from those expressed in such forward-looking statements.

3 Agenda Principal Accomplishments and Highlights Business Growth Revenues and Premiums Margin and Operational Efficiency Competitive Environment Analysis Return on Investments and Financial Results Net Income and ROAE 3

4 Executive Summary: Principal Accomplishments Porto Seguro increased revenues in the main business lines and improved net earnings the operational result was three times higher (vs. 2016) while the relative performance of financial investments were better than the benchmark (CDI), even considering the adverse macroeconomic scenario The strategy of recovering prices, improvement of underwriting model and geographic expansion has contributed to increase profitability Total written premiums (ex. Health) of the insurance industry increased 6% in 2017 (vs. 2016), reporting growth in the main segments (Source: Susep) The Company s written premiums improved while the loss ratio decreased, both favored by price adjustments Insured fleet decreased mainly due to the industry competition and a weaker demand. However, the automotive industry already shows recovery signs, reporting an improvement of 9% in the brand new vehicle sales (vs. 2016) In the other segments, several products reported growth higher than 10% and improved the clients base (Health, Life, Pension, Credit Card, Financing and Consortium) In 2017, Porto Seguro developed several projects in order to streamline process, modernized the service structure and increased the focus on digital channels Porto Seguro was awarded in 2017 as: Most Beloved Brand (Consumidor Moderno Magazine), Most Reliable Insurer (Ibope + Seleções Magazine), Most Remembered Brand (Top of Mind Premium) and 1st place in the Satisfaction Ranking of Auto and Homeowner Insurance (Estado de São Paulo Journal) 4

5 Consolidated Results Total revenues improved 9% in the quarter (vs. 4Q16) reporting a higher expansion of financial and service businesses in the insurance operation, the premiums increased in the quarter reaching the better performance of 2017 Total Revenues* (R$ Billion) Revenues by Business Lines (R$ Million) % +12% % % % % % % % 0.6 4Q16 4Q Insurance Premiums Other Non Insurance Revenues Insurance and Pension¹ Financial Businesses² 4Q16 4Q17 Services³ * Including insurance written premiums, revenues from financial and service businesses and other operational revenues 1 Considering insurance written premiums and pension gross funding (Total Contributions + Inputs + Incoming Portability) 2 Represents the revenues of Financial Products: Consortium, Credit Card and Financing and Asset Management 3 Represents the revenues of Services: Mobile Operator, Surveillance and Monitoring Services, Medical Services, H4Pet, etc. 5

6 Operational Revenues Evolution In the last 5 years we have been focusing on growing consistently in other insurance and other businesses, but preserving our competitiveness in the Auto segment P&C and Life products has grown double digit Revenues Performance by Segments¹ (R$ Billion) % Products on Portfolio ¹ CAGR: 8% CAGR: 14% CAGR: 9% CAGR: 13% CAGR: 26% 10% 10% 4% 5% 8% 8% 7% 8% 10% 13% CAGR: 8% 61% 56% Auto Financial and Service Businesses P&C Health Life Other Insurance ¹ Insurance Written Premiums 6

7 Operational Results Insurance In a challenging year, the falling interest rates were partially offset by a substantial improvement of insurance operational results, especially due to the loss ratio decrease Insurance Premiums Growth¹ (%) Insurance Profitability Auto P&C Health + Dental Life Pension Total Premiums 2.4% 5.3% 8.0% 23.7% 8.3% 10.7% 16.2% 15.2% 30.4% -1.0% 3.4% 7.7% 2017 x Q17 x 4Q16 14,7 13,7 20,5 +3% 17, % Q16 4Q Net Income (R$ Million) ROAE (%) Combined Ratio 4Q17 (%) Combined Ratio 2017 (%) ¹ Insurance Premiums and Pension Gross Funding/ ² Insurance Combined Ratio/ ³ G&A Ratio/ * O.E Ratio (Total other operational revenues and expenses / earned premium) 7

8 Operational Results Insurance Historical We have been reporting a great operational performance even considering the adverse scenario (stronger industry competition and low interest rates) the amplified combined ratio (including financial results) has been presenting low fluctuation Porto Seguro Operational Performance vs. Interest Rates (%) 106.9% 101.7% 98.5% 99.3% 94.2% 96.0% 96.5% 96.9% 103.9% 93.8% 98.6% 96.2% 99.0% 96.5% 99.1% 90.2% 83.5% 90.0% 90.6% 92.1% 89.6% 91.7% 89.0% 89.8% 91.4% 88.5% 90.3% 90.1% 91.8% 81.4% 23.3% 19.0% % Combined Ratio % Amplified Combined Ratio 16.2% 15.0% 13.2% 14.0% 12.4% 11.6% 9.9% 10.8% 11.8% 9.7% 8.4% 10.1% 8.1% % Average CDI Fonte: CETIP 8

9 Expenses (%) (Loss Ratio + Commission) Auto Insurance Scenario 2017 The auto insurance industry improved 7% in the 2017 with a decrease of 1.2 p.p. of loss ratio the competition was intense in the first semester, but reduced throughout the second semester most of the players that reported an increased growth presented higher expenses Top 10 Auto Insurance Performance* (2017) Zurich Market Premiums and Loss Ratio Variation (2017 vs. 2016) 90.0 Market Mapfre + BB Total Expenses: 83.6% Var. Loss Ratio: -1.2 p.p Var. Comission: +0.1 p.p. Bradesco Sulamérica Porto Auto Porto Consolidated HDI Allianz Sompo Seguros Tokio Azul Liberty Itaú Auto % % 7.3% 7.2% Premiums Growth : +6.5% T17 2T17 3T17 4T17 Var. Premiums (%) Var. Loss Ratio (p.p.) PREMIUMS GROWTH% Porto Seguro Consolidado Bradesco Auto/RE Mapfre + BB Sulamérica Tokio Marine Liberty Allianz Sompo Seguros Zurich HDI Porto Seguro Auto Itaú Auto e Residência * Written premiums growth and expenses (loss ratio + commission / earned premium). Source: SUSEP 9

10 Key Performance Drivers Auto Insurance Despite the economic crisis, the auto insurance segment remained resilient reporting an almost stable penetration - the resumed sales of brand new vehicles will contribute to the market, but expand the insurance access to new customers still necessary Resilience of Brazilian Auto Insurance Auto Premiums (R$ Billion) Brand New Vehicle Sales (Million) Insured Fleet (Million)* Source: Susep; Fenseg; Anfavea *Porto Seguro Estimates for the insured fleet (2015/16/17) 10

11 Historical Performance of Auto Insurance The competitive scenario and the interest rates are key drivers for the industry and must be analyzed together gaining market share without impacting the loss ratio requires sustainable differentials Main Insurers Performance Auto (2017 x 2012) Auto Loss Ratio Evolution vs. Interest Rates¹ 7.3 p.p. Market 5.0 p.p p.p. 3.4 p.p. 2.6 p.p. 2.0 p.p. 1.4 p.p. 1.6 p.p. 1.4 p.p p.p p.p p.p p.p p.p. 0.4 p.p p.p p.p p.p p.p p.p. 70% 18% 71% 19% 64% 13% 65% 10% 9% 62% 12% 64% Loss Ratio Interest Rates ¹Annual average o Loss Ratio and CDI for each 3 years period Market Share¹ Loss Ratio² Market Loss Ratio² ¹ Market Share variation between 2017 and 2012/ ² Loss Ratio variation in 2017 related to the last 5 years average (2012 a 2017) Source: SUSEP / CETIP 11

12 Financial and Service Businesses Results The quarterly net earnings reduced due to the lower results of non-mature businesses, especially Porto Conecta however, the annual result increased mainly explained by the higher revenues and lower NPL of Credit Operations Revenues Evolution Revenues Distribution Credit Operation 14% 17% Consortium 10% 10% Medical Services 3% 6% Surveillance and Monitoring -7% 13% Mobile Operator 7% Other Businesses* 15% 13% Total Revenues 14% 13% 2017 x Q17 x 4Q16 *Represents the services provided to the Porto Seguro group 38% 6% 5% 9% 16% 13% 51% Credit Operation Consortium Medical Services Surveillance and Monitoring Mobile Operator Other Businesses* Net Earnings¹(R$ Million) ROAE¹ (%) p.p % % p.p ¹Without Business Combination 4Q16 4Q Net Earnings % On Total Net Earnings 4Q16 4Q

13 Financial Investments Results The return on financial investments was affected by the lower average CDI* in the period (-46% vs. 4Q16). However, the relative performance of financial investments was better chiefly due to fixed income and inflation-linked bonds the quarterly return was 1.9% (ex. Pension) Revenue from Investments Assets (R$ Million) Insurance Others Pension Funds Pension Funds Net Asset Value (R$ Billion) Other Assets 12,8 13, Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 Quarterly Performance Nominal yield (ex-pension funds) % of CDI (pension funds included) % of CDI (ex-pension funds) % 3.4% 2.1% 3.0% % 3.4% 3.2% 2.4% 3.5% 2.7% 7% 5% 5% 5% 4% 25% 29% 31% 12% 11% 53% 51% Allocation¹ (ex-pension Funds) 19% 42% 22% 18% 51% 22% 7% 65% Equities Corporate Bonds Inflation-Linked Bonds (Tips) Fixed Income Floating Rate Notes 4Q16 1Q17 2Q17 3Q17 4Q17 *CDI Interbank Deposit Certificate 4Q16 1Q17 2Q17 3Q17 4Q17 ¹ Futures exposures included. 13

14 Consolidated Results The recurring net income increased 9% in the 4Q17 and 6% in 2017 while the ROAE reached 16.0% in the quarter and 15.1% in the year the profitability improved mainly due to the lower loss ratio of P&C, Azul and Itaú Auto products and by the performance of Credit Card and Financing operations Recurring Net Earnings (R$ Million) and ROAE (%) Profitability* (R$ Million) and ROAE* (%) % % % % , Q16 4Q Recurring Net Income* ROAE 4Q16 4Q Financial Result Operational Result ROAE (%) Net Earnings *Quarterly Recurring Net Income: Exclude the effect and equalize the tax basis in the periods, due to the payment of interests on capital / Annual Recurring Net Income: Exclude the effects of the sales of IRB shares 14

15 Investor Relations Alameda Barão de Piracicaba, º andar, Campos Elíseos São Paulo, SP, Brazil (55 11) (55 11)