Investor Presentation

Transcription

1 Investor Presentation 4Q10 Growth for the next 115 years

2 SULAMÉRICA TODAY A Unique Kind of Insurance Company Ranking as independent pure play Brazilian insurance company not owned by a bank #1 Strong brand reputation 115 years of history Network of 30,000 independent brokers a key advantage #1 Net income growth last 5 years ( ) 40% CAGR 2

3 SULAMÉRICA TODAY With a Strong, Multiline Growth Platform Line Health Auto Insurance % of Total Insurance Premiums (1) 62.7% 24.7% Positioning Top 3 in premiums 2.0M members across the country 1.4M vehicles insured Other P&C Life & Pension Asset Management 5.5% 7.1% NA Expertise in commercial and individual lines Advisory and specialization in pension. Differentiated services in life. R$17.5B AUM, strong institutional focus 3 Note 1: year 2010

4 SULAMÉRICA TODAY Positioned in an Undersized, Rapidly Expanding Market 7.5% GDP Growth R$955bi PAC 2 until Olympics US$10bi IMF credit 2014 World Cup Pre-Salt Investment Grade 4 Source: World Bank, Sigma Report, SUSEP and ANS

5 INVESTMENT THESIS SulAmérica: Delivering Sustained Growth 1. Powerful industry growth drivers 2. A unique kind of insurance company 3. Solid performance record 4. Long growth runway 5

6 Positioned in a Large, Growing Market Total Industry Premiums (R$B) (1) 13.2% CAGR 109,5 66, Note 1: Includes P&C, Life, Health, Auto Sources: SUSEP, FENASEG and ANS

7 Despite the Insurance Market Growing 20% Faster than the Economy Growth Rates (CAGR ) 12,5% 10,5% Insurance market growing 20% faster Insurance premiums per capita growth GDP per capita growth 7

8 The Insurance Business in Brazil is Still Underpenetrated Insurance Penetration (premium as % of GDP, 2009) 16,2% 12,9% 12,9% 13,6% 11,0% 7,8% 8,0% 2,3% 3,1% 3,4% 3,9% 5,2% 5,7% Russia Brazil China Chile India Spain Italy USA Hong Kong S. Africa UK Netherlands Taiwan #54 #47 #44 #40 #31 #28 #18 #16 #5 #4 #3 #2 #1 India and China have higher penetration 8 Source: Sigma report #2/2010 (Swiss Re)

9 A CLOSER LOOK AT HEALTHCARE: OUR LARGEST SEGMENT Market Dynamics Play to Our Strengths Private Healthcare Membership is Growing Number of Operators is Declining Millions of members +46% 45 2,0 Thousands of operators -42% 1, M M2010 Industry Consolidation 9 Source: ANS

10 A CLOSER LOOK AT HEALTHCARE: OUR LARGEST SEGMENT Well-Positioned as the Industry Continues to Consolidate Private Healthcare Breakdown In premiums Market Share of Top 6 Operators In premiums 1,200 Operators Amil 11% Bradesco 9% Top 6 40% SulAmérica 8% Unimed Rio 3% Intermédica 3% Unimed Paulistana 3% 40% Major consolidation opportunity 10 Source: ANS

11 A CLOSER LOOK AT HEALTHCARE: OUR LARGEST SEGMENT Dental Market is Particularly Attractive Strong Growth in Members Still Low Penetration Millions of members 13.9 Members as % of Population (9M10) 23,5% +396% 2.8 7,3% M10 Total Healthcare Dental 11 Source: ANS and IBGE

12 A CLOSER LOOK AT AUTOS: OUR SECOND LARGEST SEGMENT Strong Growth in Autos, Still Underpenetrated Growth in New Car Sales (millions) Still Underpenetrated (Inhabitants per vehicle) 16.5% CAGR 3,5 6,9 1,9 4,7 4,0 1, Brazil Argentina Mexico USA 12 Source: ANFAVEA Source: ANFAVEA (Brazilian Automotive Industry Yearbook 2010)

13 A CLOSER LOOK AT AUTOS: OUR SECOND LARGEST SEGMENT SulAmérica: Top 3 in Auto Insurance Total Brazilian Fleet 2010 Market Shares 2010 Insured; 30,0% HDI; 6,4% Other; 18,2% Porto Seguro +Azul+Itaú; 27,3% Noninsured; 70,0% Banco do Brasil; 7,6% Mapfre; 8,1% Liberty; 7,8% #3 Sul América; 10,4% Bradesco; 14,2% 13 Source: SUSEP

14 INVESTMENT THESIS SulAmérica: Delivering Sustained Growth 1. Powerful industry growth drivers 2. A unique kind of insurance company 3. Solid performance record 4. Long growth runway 14

15 A Unique Kind of Insurance Company 1 2 Uniquely positioned + Leading independent insurer Largest broker network + Leading franchise 15

16 1. Uniquely Positioned: Diversified + Pure Play Broad Other bank owned competitors Diverse geography products Porto Seguro Narrow Bank owned Structure Independent 16

17 2. Leading Positions in Growth Markets Segment Market Size Market Growth YTD Our Market Position Healthcare ~R$70B 9%* Top 3 63% of revenues Auto R$20B 15%** Top 3 25% of revenues 17 *Until September 2010 **Until December 2010

18 3. Largest Brokerage, Distribution Network Brokerage, Distribution Network 30,000+ brokers 14 branches in main cities More than 100 points of presence 29 auto service centers Partnerships Over 20 partnerships 26M client potential 16,000 bank branches Mainly auto, residential products 18

19 4. Industry Leading Franchise Strong Brand Top 3 brand in insurance industry Extensive advertising campaigns Radio SulAmérica stations in Rio de Janeiro and São Paulo Focus on Quality Award winning call centers serve 6.3M customers High FCR (First Call Resolution) at 93% High customer loyalty 19

20 INVESTMENT THESIS SulAmérica: Delivering Sustained Growth 1. Powerful industry growth drivers 2. A different kind of insurance company 3. Solid performance record 4. Long growth runway 20

21 Continuing Our Solid Growth Record Total Insurance Premiums ($RM) Net Income ($RM) YTD 2010 up 14.7% YTD 2010 up 3.2% 21 Pro-forma figures for excluding Brasilveículos

22 Increased Focus on Operating Efficiency Administrative Expense Ratio (% of retained premiums) Headcount (FTE) 12,8% 12,8% ,6% 8,9%

23 Will Improve Our Efficiency Ratios 100.0% 97.8% 2,2% 3,1% 1,8% 1,6% 11,3% 11,8% 9,6% 8,8% 75,1% 71,4% Health loss ratio at 78% in 2010 Implementing wide range of initiatives for health claims Auto loss ratio at 60% in Loss ratio Administrative expenses Acquisition cost Tax expenses Other operating income (expenses) 23

24 Pension and VGBL Reserves Continue to Increase Pension Contributions R$ million % 214 Pension and VGBL Reserves R$ billion 23.8% 2, , , , Pension VGBL 24

25 Wealth Management Assets Continue to Grow Assets Under Management (R$B) % ,4 7,0 6,8 4,5 5,2 6,0 10,0 7,5 Third-party +18.9% Proprietary +24.7%

26 INVESTMENT THESIS SulAmérica: Delivering Sustained Growth 1. Powerful industry growth drivers 2. A different kind of insurance company 3. Solid performance record 4. Long growth runway 26

27 Key Growth and Profit Drivers Strong secular growth Improve operating efficiency Grow share in core markets Deploy excess capital 27

28 1. Strong Secular Growth Insurance Premiums as a % of GDP ~3% ~9% Industry growth through % CAGR Brazil today Brazil in 2025 similar to other developed countries 28 Source: Goldman Sachs, March 2010

29 2. Improve Operating Efficiency Analysts Consensus 2010 Company total premiums +9% +15% +13% Company loss ratio 73% 71% 73% Combined ratio 99% 98% 99% ROE 17% 15% 18% 29

30 3. Grow Share in Core Markets Health Gaining Share Targeting SME and dental insurance plans Dental members up 57% (2010) SME members up 24% (2010) Group members (60% of total) up 15% in 2010 Auto Focus on Regaining Scale, Growing Wide range of initiatives including leverage brokerage network new distributors and partners 30

31 4. Deploy Excess Capital Strong balance sheet with excess capital of ~R$1B Proposed dividends for 2010 R$292M Payout policy in % Dividend yield ~5% Excess funds available to support selective M&A opportunities 31

32 Appendix Growth for the next 115 years

33 Corporate Structure Saepar Serviços e Participações Holding Sul América Companhia Nacional de Seguros Auto & Other P&C insurance Sul América Companhia de Seguro Saúde Individual health insurance Sul América Companhia de Seguros Gerais Other P&C insurance Sul América Seguro Saúde S.A. Group health insurance Sul América Investimentos DTVM S.A. Asset Management Sul América Seguros de Pessoas e Previdência S.A. Life, PA and Pension Brasilsaúde Companhia de Seguros Health insurance Sul América Serviços de Saúde S.A. ASO 33 Only operational companies 33

34 World-class Corporate Governance SULASA ING Other (1) 55% 45% SULASAPAR Free Float 6.8% 33.3% 21.5% 38.4% Sul América S.A. BM&F Bovespa: SULA11 Bloomberg: SULA11 EQUITY BZ <GO> 100% tag-along rights, exceeding minimum requirements of the L2 listing segment One-third of independent members in the Board of Directors Advisory committees to provide support on specialized matters Foreign contribution and local expertise to add quality to decision making process 34 Latest update: October 2010 (1) Management and Affiliated Shareholders 34

35 Managerial Structure CEO Health Auto and other P&C Life and pension Asset management Corporate & IR Finance, legal IT & contact centers HR and administration Sales and marketing 35 35

36 Investment Policy Driven by ALM Investment strategy ex-pension and VGBL Total R$4.7B Investment allocation ex-pension and VGBL Total R$4.7B Selic/CDI 49% IPCA 25% Fixed income government securities 78% Corporate bonds and CDs 21% Equities 1% Other 3% Pre-fixed 22% Equities and equity funds 1% Investment strategy Total R$7.5B* Investment allocation Total R$7.5B* IGPM 11% IPCA 16% Selic/CDI 52% Pre-fixed 14% Equities Other 4% 3% Fixed income government securities 76% Corporate bonds and CDs 20% Equities and equity funds 4% 36 (*) Including pension and VGBL operations

37 Preço (4 outubro 2007=100) Stock performance * Ibovespa: 5.8% 230 SULA11: -2.5% Average volume: 210 R$5.9MM Ibovespa: -41.2% SULA11: -47.1% Average volume: R$2.7MM Ibovespa: +82.7% SULA11: % Average volume: R$5.3MM Ibovespa: +1.0% SULA11: +20.0% Average volume: R$7.3MM Ibovespa: -4.5% SULA11: -13.5% Average volume: R$7.7MM % % IBOVESPA SULA11 Until March 10,

38 Average Volume SULA11 Growing Liquidity ADTV LTM Volume (R$ 1000) Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 $Volume #Trades 38 Until March 10, 2011

39 Key multiples P/E 1yr fwd* P/B ,2 5,7 6,9 5,2 7,4 10,5 11,4 8,9 9,5 8, ,8 3,0 1,5 1,2 1,6 2,0 1,7 1,7 1,9 4 3,7 1 1,2 0,9 0, * P/E based on market consensus Note: until March 10,

40 Research Coverage Target Price R$21.50 (end of 2011) R$22.70 (end of 2011) Latest Revision Upside/ Downside* Recommen dation 12/10/ % Hold 12/13/ % Hold TARGET PRICE VS. MARKET PRICE R$21.87 R$ R$19.80 (Dec 2011) 12/15/ % Hold R$21.70 (end of 2011) R$22.70 (end of 2011) R$22.20 (Dec 2011) R$22.50 (end of 2011) 11/24/ % Hold 01/12/ % Hold 01/19/ % Hold 12/16/ % Buy Consenso R$ % - RECOMMENDATION Buy 14% Hold 86% In relation to the stock price as of 03/17/2011=R$18.00 Source: sell side analysts 40

41 Summary Financials Growth for the next 115 years

42 Effects of the non-recurring events on 2010 results Brasilveículos: The sale of SulAmérica s stake in Brasilveículos generated a non-recurring net gain of approximately R$135 million, with effect on October. Brasilveículos: In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated nonrecurring effects in the lines premiums, retained claims, acquisition costs,, administrative expenses and, with a nonrecurring effect on results of R$5.8 million. Sale of property: The sale of property in São Paulo generated a non-recurring net gain of R$41.0 million, with effect on 2Q10 results. Individual health insurance premiums in State of Bahia: The adjustments related to the issuance of complementary individual health insurance were applied to the lines premiums, other operating income and expenses, tax expenses and provision for income tax and social contribution in 1Q10 and 4Q10. Adjustments R$ million 1Q10 2Q10 3Q10 4Q Retained premiums (0.1) (23.9) 36.7 Earned premiums (0.1) (23.9) 36.7 Retained claims (0.1) (23.9) 36.7 Acquisition costs - - (4.4) - (4.4) Other insurance operating income (expenses) - - (2.4) - (2.4) Administrative expenses (17.5) - (2.0) 12.2 (7.3) Tax expenses - - (0.1) (1.5) (1.6) Equity income from non-consolidated subsidiaries (2.8) (1.7) Non-operating income - - (0.6) - (0.6) Income tax and social contribution Net income (16.1) (27.3) 3.9 (85.3) (124.9) 42

43 SulAmérica: Earnings Highlights 4Q10 4Q10/4Q /2009 Insurance premiums (R$ billion) R$ % R$ % Combined ratio 94.3% -370 bps 97.8% -220 bps Return on investments (expension and VGBL) (R$ million) Average yield (ex-pension and VGBL) (% of the CDI) Income before income tax, social contribution and profit sharing (R$ million) Net income (R$ million) R$ % R$ % 129.7% bps 117.2% -80 bps R$ % R$ % R$ % R$ % ROAE 22.1% -130 bps 14.9% -130 bps 43 Recurring figures when applicable Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements

44 Operational Results Insurance premiums R$ million 4Q10 4Q09 % 3Q10 % % Health insurance 1, , , , , Health insurance (adjusted) 1, , , , , Group health insurance 1, , , Group health insurance (adjusted) 1, , , Individual health insurance , , Individual health insurance (adjusted) , , Auto insurance , , Other property & casualty insurance Life & personal accident insurance Total 2, , , , , Total adjusted 2, , , , ,

45 Operational Results Earned premiums R$ million 4Q10 4Q09 % 3Q10 % % Health insurance 1, , , , , Health insurance (adjusted) 1, , , , , Group health insurance 1, , , Group health insurance (adjusted) 1, , , Individual health insurance , , Individual health insurance (adjusted) , , Auto insurance , , Other property & casualty insurance Life & personal accident insurance Total 2, , , , , Total adjusted 2, , , , ,

46 Operational Results Loss ratio % 4Q10 4Q09 % 3Q10 % % Health insurance 70.4% 79.1% % % 80.8% -360 Health insurance (adjusted) 69.2% 79.1% -1, % % 80.8% -300 Group health insurance 68.3% 76.2% % % 77.9% -230 Group health insurance (adjusted) 68.3% 76.2% % % 77.9% -240 Individual health insurance 76.2% 85.9% % % 87.1% -600 Individual health insurance (adjusted) 71.5% 85.9% -1, % -1, % 87.1% -400 Auto insurance 58.4% 54.5% % % 60.4% - Other property & casualty insurance 51.8% 87.7% -3, % % 79.8% -2,280 Life & personal accident insurance 46.8% 52.4% % % 58.4% -640 Total 65.6% 72.3% % % 75.1% -390 Total adjusted 64.9% 72.3% % % 75.1%

47 Operational Results Acquisition cost ratio % 4Q10 4Q09 % 3Q10 % % Health insurance 6.7% 6.1% % % 5.9% 50 Health insurance (adjusted) 6.6% 6.1% % % 5.9% 50 Group health insurance 8.7% 8.3% % % 8.1% 40 Group health insurance (adjusted) 8.7% 8.3% % % 8.1% 40 Individual health insurance 1.0% 0.9% - 0.9% % 0.9% - Individual health insurance (adjusted) 0.9% 0.9% - 0.9% - 0.9% 0.9% - Auto insurance 21.8% 23.3% % % 23.3% -50 Other property & casualty insurance 22.2% 22.3% % % 21.2% -10 Life & personal accident insurance 29.4% 23.1% % % 22.9% 260 Total 12.0% 11.6% % % 11.3% 50 Total adjusted 11.9% 11.6% % % 11.3% 50 47

48 Operational Results Gross margin % 4Q10 4Q09 % 3Q10 % % Health insurance 23.0% 14.8% % % 13.3% 310 Health insurance (adjusted) 24.3% 14.8% % % 13.3% 260 Group health insurance 23.0% 15.4% % % 13.9% 180 Group health insurance (adjusted) 23.0% 15.4% % % 13.9% 200 Individual health insurance 22.9% 13.2% % % 11.9% 610 Individual health insurance (adjusted) 27.6% 13.2% 1, % 1, % 11.9% 400 Auto insurance 19.8% 22.2% % % 16.3% 50 Other property & casualty insurance 25.9% -10.0% 3, % % -1.0% 2,290 Life & personal accident insurance 23.8% 24.5% % % 18.7% 380 Total 22.4% 16.1% % % 13.6% 340 Total adjusted 23.2% 16.1% % % 13.6% 310 Combined ratio % 4Q10 4Q09 % 3Q10 % % Combined ratio 94.8% 98.0% % % 100.0% -250 Combined ratio (adjusted) 94.3% 98.0% % % 100.0%

49 Net Income and Return on Average Equity (ROAE) R$ million 4Q10 4Q09 % 3Q10 % % Net income % % % Net income adjusted % % % ROAE 40.0% 23.4% 1,660bps 17.9% 2,210bps 21.5% 16.2% 530bps ROAE adjusted 22.1% 23.4% -130bps 18.7% 340bps 14.9% 16.2% -130bps Basic earnings per share (R$)* Per preferred share % % % Per common share % % % Diluted earnings per share (R$)* Per preferred share % % % Per common share % % % * Parent company 49

50 Income Statement Summary R$ million 4Q10 4Q09 % 3Q10 % % Insurance premiums 2, , % 2, % 8, , % Premiums ceded to reinsurance, retrocession, consortiums and funds (42.3) (47.0) -10.1% (38.7) 9.3% (172.5) (390.4) -55.8% Retained premiums 2, , % 2, % 8, , % Changes in insurance and retained technical reserves (94.1) (152.8) -38.4% (186.9) -49.7% (397.8) (519.6) -23.4% Earned premiums 2, , % 2, % 7, , % Retained claims and benefits expenses (1,356.7) (1,474.1) -8.0% (1,442.4) -5.9% (5,585.5) (5,699.7) -2.0% Acquisitions costs (248.3) (242.0) 2.6% (244.3) 1.6% (927.7) (880.7) 5.3% Gross margin % % 1, , % Other insurance operating income (expenses) (120.1) (51.2) 134.7% (70.8) 43.4% (323.3) (105.9) n.a. Net operating income from private pension business (23.3) 4.2 n.a % % Net operating income from ASO business % % % Net operating income from asset management business % % % Administrative expenses (198.9) (252.1) -21.1% (180.5) 9.0% (732.0) (943.9) -22.5% Tax expenses (51.6) (52.9) -2.4% (36.7) 137.5% (147.4) (177.9) -17.1% Net financial income % % % Equity income from nonconsolidated subsidiaries n.a. 7.5 n.a n.a. Income before income tax, social contribution and profit Sharing % % 1, % Income tax and social contribution (165.1) 0.2 n.a. (84.9) 94.4% (353.4) (126.3) 179.9% Profit sharing (13.1) (14.5) -9.6% (12.3) 6.9% (43.0) (34.9) 23.0% Minority interest (0.1) (4.8) n.a. 0.9 n.a. 1.1 (36.6) n.a. Net income % % % 50

51 Balance Sheet Summary Assets R$ million % Current assets 8, , % Cash, cash equivalents and marketable securities 6, , % Receivables from insurance and reinsurance operations 1, , % Reinsurance and retrocession expenses % Deferred acquisition costs % Other current assets % Long-term assets 3, , % Marketable securities 1, , % Judicial and fiscal deposits 1, , % Deferred acquisition costs % Other long-term assets % Permanent assets % Total assets 12, , % 51

52 Balance Sheet Summary Liabilities R$ million % Current liabilities 4, , % Loans and financing % Other payable obligations % Insurance, reinsurance and private pension debts % Technical reserves insurance and reinsurance 3, , % Technical reserves private pension % Accrued liabilities for contingencies % Non-current liabilities 4, , % Accounts payable , % Loans and financing % Other accounts payable % Technical reserves insurance and reinsurance 1, % Technical reserves private pension 1, , % Accrued liabilities for contingencies % Shareholder s equity 2, , % Total liabilities 12, , % 52

53 Investor Relations Department +55 (21)