Investor Presentation

Transcription

1 Investor Presentation 3Q10 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 Ranking overall in Brazilian insurance industry Top 5 Network of 30,000 independent brokers a key advantage #1 Net income growth last 4 years ( ) 40% CAGR 2

3 SULAMÉRICA TODAY With a Strong, Multiline Growth Platform Line Health % of Total Insurance Premiums (1) 62.6% Positioning 2.0M members across the country Auto Insurance 24.9% 1.3M vehicles insured Other P&C Life & Pension Asset Management 5.7% 6.8% NA Expertise in commercial and individual lines Focused on independent institutions R$18.5B AUM, strong institutional focus 3 Note 1: Nine months to September,

4 SULAMÉRICA TODAY Positioned in an Undersized, Rapidly Expanding Market Brazilian economy in the world Brazilian insurance market in the world Growth in Brazil insurance market since th largest 15 th largest 15% CAGR 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) 14.0% CAGR % M2009 6M Note 1: Includes P&C, Life, Health, Auto Sources: SUSEP, FENASEG and ANS

7 Despite the Insurance Market Growing 50% Faster than the Economy Growth Rates (CAGR ) 13.9% 9.5% Insurance market growing 50% faster Insurance market 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 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 Thousands of operators +39% -40% Q Q2010 Industry Consolidation 9

10 A CLOSER LOOK AT HEALTHCARE: OUR LARGEST SEGMENT Well-Positioned as the Industry Continues to Consolidate 1,200 Operators Market Share of Top 6 Operators Amil + Medial 12% Bradesco 10% Top 6 40% SulAmérica 9% 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 13.6 Members as % of Population (2Q10) 29.8% % Q2010 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) 16.3% CAGR 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 Market Shares 9M10 Other, 17.7% Porto Seguro +Azul+Itaú, 26.9% HDI, 6.4% Banco do Brasil, 7.8% Mapfre, 8.0% Liberty, 8.0% #3 Sul América, 10.5% Bradesco, 14.7% 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 + Industry Innovator 15

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

17 2. Leading Positions in Growth Markets Segment Market Size Market Growth YTD Our Market Position Health Insurance ~R$62B 21% * Top 3 63% of revenues Auto ~R$17B 15% ** Top 3 25% of revenues 17 * Until June 2010 ** Until September 2010

18 3. Largest Brokerage, Distribution Network Brokerage, Distribution Network 30,000+ brokers 14 branches in main cities More than 100 points of presence 21 auto service centers Partnerships Over 20 partnerships 26M client potential 16,000 bank branches Mainly auto, residential products 18

19 4. Industry Leading Franchise Top 3 brand in insurance industry Extensive advertising campaigns Radio SulAmérica stations in Rio de Janeiro and São Paulo Strong Brand Award winning call centers serve 5.5M customers High FCR (First Call Resolution) at 93% High customer loyalty Focus on Quality 19

20 5. SulAmérica: The Industry Innovator First to develop exclusive insurance product for heavy trucks, tow trucks First to adopt digital certification for health documents First to use water-based paint in auto shops First to introduce 24-hour assistance service 20

21 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 21

22 Continuing Our Solid Growth Record Total Insurance Premiums ($RM) Net Income ($RM) 6,869 7,723 8,680 6, M M2010 YTD Q up 14% YTD Q up 2% 22

23 Increased Focus on Operating Efficiency Administrative Expense Ratio (% of retained premium) Headcount (FTE) 12.8% 12.8% 11.4% 5,582 5,506 5, % 4, M M

24 Will Improve Our Efficiency Ratios 99.4% 99.1% 1.3% 3.1% 2.1% 1.6% 11.3% 11.8% 11.4% 8.8% 73.3% 73.8% Key Issues Health loss ratio at 80% in 9M10 set to improve Implementing wide range of initiatives for health claims M2010 Loss ratio Administrative expenses Acquisition cost Tax expenses Other operating income (expenses) 24

25 Pension Reserves Continue to Increase Pension Contributions R$ million Pension Reserves R$ billion % % M2009 9M M2009 9M

26 Wealth Management Assets Continue to Grow Assets Under Management (R$B) Third-party Proprietary M

27 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 27

28 Key Growth and Profit Drivers Strong secular growth Improve operating efficiency Grow share in core markets Deploy excess capital 28

29 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 29 Source: Goldman Sachs, March 2010

30 2. Improve Operating Efficiency 2009 Actual 9M 2010 Analysts Consensus Company total premiums 12% 14% +27% Company loss ratio 73% 74% 73% Combined ratio 99% 99% 99% ROE 17% 14% 18% 30

31 3. Grow Share in Core Markets Health Gaining Share Targeting SME and dental insurance plans Dental members up 66% (9M10) SME members up 22% (9M10) Group members (61% of total) up 18% in 9M10 Auto Focus on Regaining Scale, Growing Wide range of initiatives including leverage brokerage network new distributors and partners 31

32 4. Deploy Excess Capital Strong balance sheet with excess capital of ~R$1.3B Dividends in 2009 doubled to R$199M Payout policy in % Dividend yield ~5% Excess funds available to support selective M&A opportunities 32

33 Appendix Growth for the next 115 years

34 Private Healthcare: Profile Total revenue R$33.6 billion (2Q10) Membership by type 44 million (2Q10)* HMO 30% 20% Insurance 77% Group Health 36% 14% Other (1) Individual Health 22% Cooperatives (2) Source: ANS Source: ANS 1) Other: ASO, self-managed plans, dental, non profit institutions * Does not include 14 million members of dental only 34 2) Medical and dental Cooperatives 34

35 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 35 Only operational companies 35

36 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 36 Latest update: October 2010 (1) Management and Affiliated Shareholders 36

37 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 Industry relations 37 37

38 Investment Policy Driven by ALM Investment strategy ex-pension and VGBL Total R$4.0B Investment allocation ex-pension and VGBL Total R$4.0B Selic/CDI 43% IPCA 30% Fixed income government securities 75% Corporate bonds and CDs 22% Equities 1% Other 3% Indexed 23% Equities and equity funds Other 1% 2% Investment strategy Total R$6.4B* Investment allocation Total R$6.4B* 38 IGPM 12% IPCA 19% Equities 4% Other 2% Indexed 14% (*) Including pension and VGBL operations Selic/CDI 49% Fixed income government securities 75% Corporate bonds and CDs 19% Equities and equity funds 4% Other 2%

39 Average Volume SULA11 Growing Liquidity Volume R$ 1000) ADTV LTM 11,000 10,000 9,000 8,000 7,000 6, , ,000 3,000 2,000 1,000 - Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 $Volume #Trades * until November 2010

40 Summary Financials Growth for the next 115 years

41 SulAmérica: Earnings Highlights 3Q10 3Q10/3Q09 9M10 9M10/9M09 Insurance premiums (R$ billion) R$ % R$ % Combined ratio 95.5% -6,1 bps 99.1% -170 bps Return on investments (ex-pension and VGBL) (R$ million) Average yield (ex-pension and VGBL) (% of the CDI) Net income (R$ million) R$ % R$ % 99.4% bps 112.0% 1950 bps R$ % R$ % ROAE 20.0% 660 pbs 13.7% -90 bps 41 Recurring figures when applicable

42 Operational Results Insurance premiums R$ million 3Q10¹ 3Q09² % 2Q10 % 9M10³ 9M09² % Health insurance 1, , % 1, % 3, , % Health insurance (adjusted) 1, , % 1, % 3, , % Group health insurance % % 2, , % Group health insurance (adjusted) % % 2, , % Individual health insurance % % 1, , % Individual health insurance (adjusted) % % 1, , % Auto insurance % % 1, , % Other property & casualty insurance % % % Life & personal accident insurance % % % Total 2, , % 1, % 6, , % Total adjusted 2, , % 1, % 6, , % 42 ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, and to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1.

43 Operational Results Earned premiums R$ million 3Q10¹ 3Q09² % 2Q10 % 9M10³ 9M09² % Health insurance 1, , % 1, % 3, , % Health insurance (adjusted) 1, , % 1, % 3, , % Group health insurance % % 2, , % Group health insurance (adjusted) % % 2, , % Individual health insurance % % 1, , % Individual health insurance (adjusted) % % 1, , % Auto insurance % % 1, , % Other property & casualty insurance % % % Life & personal accident insurance % % % Total 2, , % 1, % 5, , % Total adjusted 2, , % 1, % 5, , % ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, and to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1. 43

44 Operational Results Loss ratio % 3Q10¹ 3Q09² (bps) 2Q10 (bps) 9M10³ 9M09² (bps) Health insurance 76.6% 80.4% % % 81.4% -170 Health insurance (adjusted) 76.3% 80.4% % % 81.4% -60 Group health insurance 74.6% 76.7% % % 78.6% -20 Group health insurance (adjusted) 74.1% 76.7% % % 78.6% -30 Individual health insurance 82.1% 89.0% % -1, % 87.6% -480 Individual health insurance (adjusted) 82.1% 89.0% % -1, % 87.6% -20 Auto insurance 62.1% 63.0% % % 62.7% -150 Other property & casualty insurance 56.9% 103.8% -4, % % 77.4% -1,860 Life & personal accident insurance 48.7% 52.5% % -1, % 60.7% -710 Total 70.9% 76.0% % % 76.1% -290 Total adjusted 70.7% 76.0% % % 76.1% -230 ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, and to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1. 44

45 Operational Results Acquisition cost ratio % 3Q10¹ 3Q09² (bps) 2Q10 (bps) 9M10³ 9M09² (bps) Health insurance 6.5% 6.0% % % 5.8% 50 Health insurance (adjusted) 6.4% 6.0% % 0 6.3% 5.8% 50 Group health insurance 8.7% 8.2% % % 8.0% 50 Group health insurance (adjusted) 8.4% 8.2% % % 8.0% 40 Individual health insurance 0.9% 0.9% 0 0.9% 0 0.8% 1.0% -10 Individual health insurance (adjusted) 0.9% 0.9% 0 0.9% 0 0.9% 1.0% -10 Auto insurance 22.8% 23.1% % % 23.2% -10 Other property & casualty insurance 21.8% 22.8% % % 20.9% -20 Life & personal accident insurance 26.2% 24.4% % % 22.8% 160 Total 12.0% 11.5% % % 11.2% 60 Total adjusted 11.9% 11.5% % % 11.2% 60 ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, and to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1. 45

46 Operational Results Gross margin % 3Q10¹ 3Q09² (bps) 2Q10 (bps) 9M10³ 9M09² (bps) Health insurance 16.8% 13.6% % % 12.8% 130 Health insurance (adjusted) 17.3% 13.6% % % 12.8% 10 Group health insurance 16.8% 15.1% % % 13.4% -30 Group health insurance (adjusted) 17.5% 15.1% % % 13.4% 0 Individual health insurance 17.0% 10.0% % 1, % 11.5% 500 Individual health insurance (adjusted) 17.0% 10.0% % 1, % 11.5% 20 Auto insurance 15.1% 13.9% % % 14.1% 160 Other property & casualty insurance 21.4% -26.6% 4, % % 1.6% 1,880 Life & personal accident insurance 25.1% 23.1% % 1, % 16.5% 550 Total 17.1% 12.6% % % 12.7% 240 Total adjusted 17.4% 12.6% % % 12.7% 160 Combined ratio % 3Q10¹ 3Q09³ (bps) 2Q10 (bps) 9M10² 9M09³ (bps) Combined ratio 95.9% 101.6% % % 100.7% -220 Combined ratio (adjusted) 95.5% 101.6% % % 100.7% -170 ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² Pro-forma information, excluding Brasilveículos Companhia de Seguros from the consolidated financial statements. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, and to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1. 46

47 Net Income and Return on Average Equity (ROAE) R$ million 3Q10¹ 3Q09 2Q10² 9M10³ 9M09 Net income % % % Net income adjusted % % % ROAE 19.1% 13.4% 570bps 14.5% 460 bps 16.7% 14.5% 210 bps ROAE adjusted 20.0% 13.4% 660bps 8.1% 1,180 bps 13.7% 14.5% -90 bps Earnings per share (R$)* % % % Earnings per share adjusted (R$)* % % % Earnings per unit (R$)* % % % Earnings per unit adjusted (R$)* % % % * Parent company ¹ In 3Q10, adjustments were made to the provisioning methodology of Brasilsaúde, which generated non-recurring effects in the lines premiums, retained claims, acquisition costs, other operating income and expenses, administrative expenses and provision for income tax and social contribution. ² In 2Q10, the effects from the sale of the real estate property in São Paulo where the company s head offices are located were eliminated. The gain from this transaction was R$130.0 million, generating net proceeds of R$41.1 million. ³ In 9M10, adjustments were made related to the exclusion of Brasilveículos from the consolidated financial statements as of January 1, 2010, to the effects from the issue of R$60.6 million in complementary individual health insurance premiums to policyholders in the state of Bahia in 1Q10, which impacted the lines revenues, claims (due to the comparison basis), other insurance operating income and expenses (bad debt provision of R$16.8 million), tax expenses, income tax and social contribution and all ratios based on premiums or net income, to the adjustments in the provisioning methodology of Brasilsaúde mentioned in Note 1, and to the effects from the sale of the property located in São Paulo mentioned in Note 2. 47

48 Income Statement Summary (Pro-forma*) R$ million 3Q10 3Q09 % 2Q10 % 9M10 9M09 % Insurance premiums 2, , % 1, % 6, , % Premiums ceded to reinsurance, retrocession, consortiums and funds (38.7) (84.2) -54.1% (41.1) -5.9% (130.3) (306.8) -57.5% Retained premiums 2, , % 1, % 6, , % Changes in insurance and retained technical reserves (186.9) (100.9) 85.3% (73.3) 155.1% (303.8) (266.4) 14.0% Earned premiums 2, , % 1, % 5, , % Retained claims and benefits expenses (1,438.0) (1,277.8) 12.5% (1,444.9) -0.5% (4,224.4) (3,679.0) 14.8% Acquisitions costs (241.9) (192.7) 25.6% (223.1) 8.4% (677.0) (541.4) 25.0% Gross margin % % % Other insurance operating income (expenses) (68.8) (16.7) n/a (42.4) 62.0% (183.6) 4.8 n/a Net operating income from private pension business % % % Net operating income from ASO business % % % Net operating income from asset management business % % % Administrative expenses (180.4) (203.6) -11.4% (184.5) -2.2% (532.9) (590.4) -9.7% Tax expenses (36.7) (32.8) 12.1% (22.6) 62.4% (93.0) (101.8) -8.6% Net financial income % % % Equity income from nonconsolidated subsidiaries n/a % n/a Income before income tax, social contribution and profit Sharing % % % Income tax and social contribution (88.8) (27.9) 218.0% (35.2) 152.4% (148.7) (94.3) 57.7% Profit sharing (12.3) (2.3) 436.5% (9.7) 27.1% (29.8) (17.5) 70.4% Minority interest 0.9 (0.0) n/a % % Net income % % % * Excluding figures from Brasilveículos Companhia de Seguros 48

49 Balance Sheet Summary Assets R$ million.5 9M % Current assets 7, , % Cash, cash equivalents and marketable securities 5, , % 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 11, , %

50 Balance Sheet Summary 50 Liabilities R$ million 9M % 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 % Technical reserves private pension 1, , % Accrued liabilities for contingencies % Minority interest % Shareholder s equity 2, , % Total liabilities 11, , %

51 Investor Relations Department +55 (21)