corporate presentation 031014 porto
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Corporate Presentation Porto October 2014TRANSCRIPT
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PORTO SEGURO PRESENTATION
OCTOBER/2014
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Agenda
Insurance Industry Overview
• Market Development
• Competitive Landscape
• Key Growth and Profitability Drivers
Recent Results - 2Q14 and 1H14
• Insurance
• Non-Insurance Businesses
• Financial Results
Porto Seguro at a Glance
• Business Portfolio
• Strategy and Key Differentials
• Long-Term Results
• Stock Performance and Dividends
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INSURANCE INDUSTRY OVERVIEW
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2.7% 2.7% 2.7% 2.8% 2.9% 2.9% 3.1% 3.1% 3.2% 3.6% 4.0%
Brazilian Insurance Market Penetration*
*Overall written premiums as % of GDP, excluding Capitalization and Health Medical Operator segments
Worldwide Insurance Penetration (premiums as % of GDP - 2013)
Japan: 11.1%
Source: Swiss RE/Fenseg
The Brazilian insurance market still offer significant opportunities, despite the fact
that in the last 10 years premiums have been growing steadily (CAGR 15%)
CAGR - 15%
< than 2% ≥ 2% < 5% ≥ 5% < 8% ≥ 8% unanalysed
Brazil: 4.0%
Argentina: 3.6%
Canada: 6.9%
UK: 11.5%
Italy: 7.6% USA: 7.5%
Chile: 4.2%
Russia: 1.3%
China: 3.0%
India: 3.9%
Germany: 6.7%
South Africa: 15.4%
France: 9.0%
Mexico: 2.2% Spain: 5.3%
Australia: 5.2%
Japan: 11.1%
Insurance Industry Overview
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AXA
Allianz Allstate
Progressive
ACE
AIG
ChubbSul América
BB Seguridade
Porto Seguro
Admiral
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
-5% 0% 5% 10% 15% 20% 25% 30% 35%
Brazilian Insurance companies have higher growth and ROAE when compared
to American and European peers
Premiums Growth vs. ROAE
(last 3 years average)
Combined Ratio
(last 3 years average)
Source: investor relations companies websites
Growth
RO
AE
106.2%99.4% 98.1% 97.4% 97.3% 97.0% 94.1% 92.2% 92.2% 89.9% 88.6%
Global Insurance Companies - Operating Results and Returns
Insurance Industry Overview
Brazilian Companies International Companies
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A market of R$ 183 Bi, driven mainly by pension, auto, life and health products
– insurance penetration of main lines does not exceed 30%
Brazilian Premiums by Segment (2012)
10%
25%
12%
30%
6% 10%
0
15
30
45
-7 3 13 23 33 43 53 63 73 83
Pen
etr
ati
on
- %
Premiums (R$ Billion)
Homeowner Health Life Auto Pension Dental
Main Insurance Products - Penetration vs. Premiums (2012 - Estimate)
Source: ANS, SES-SUSEP, CNSEG and Porto Seguro estimate
71%
29% 17%
54%
16%
13%
47%
28%
25%
Life Non-Life
R$ 130 BI
R$ 53 BI Auto
P&C
Other Life Capit.
Health
Pension
(PGBL + VGBL)
Insurance Industry Overview
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12.1
13.413.6 15.3
17.4 20.0 21.324.8
29.4
59.177.4
111.6
139.1
157.3185.9
244.9 242.2228.6
1.7 1.9 2.5 2.8 3.1 3.5 3.6 3.8 3.8
2005 2006 2007 2008 2009 2010 2011 2012 2013
Auto Premiums (R$ billion) Auto Financing Credit (R$ billion)
Car Sales (million)
797
679
607 593 591 584 572519
314 293 275249
200 184 165
Emerging Markets
Developed Countries
8.49.5
10.711.7
12.814.3
16.016.9
19.521.3
22.414.1%
13.1%12.6%
13.4%
13.0%
10.8%9.3%
6.5%
7.4% 6.6% 6.8%
25.0%26.4%
28.4%30.5%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GDP per capita(R$ thousand)¹
Price of carinsurance overincomepercapita²
Auto insurancepenetration³
Higher household income and credit expansion has contributed to Auto
insurance expansion in the last 5 years Brazilian Income and Auto Insurance Penetration (%)
29%
41%
2008 2011
+12 p.p.
Source: Serasa Experian / Booz & Company
% Class C on the Brazilian Auto Insurance Market (2008 vs. 2011)
Vehicles per 1,000 inhabitants
Source: World Bank Data
CAGR: 18%
CAGR: 12%
CAGR: 11%
Source: SUSEP, ANFAVEA and ANEF
Auto Market Growth - Brazil
400
¹Annual GDP perr capita
²Porto Seguro average auto insurance price over annual GDP percapita
³Considering only passenger cars
Source: IBGE / FENSEG / Denatran/ Porto Seguro
Insurance Industry Overview
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8.9
6.8
-2.5
6.4
8.8
8.3
0.4
9.7
12.1
3.2
4.0
6.1
5.2
-0.3
7.5
2.7
0.9
2.3
2005 2006 2007 2008 2009 2010 2011 2012 2013
Auto Premiums Growth GDP Growth
There are no strong correlation between Brazilian GDP and Auto Insurance
growth – competition plays a key role and affects pricing
Brazilian Auto Insurance and GDP Growth (%) - Real
Source: CNSEG/SUSEP/IBGE
Insurance Industry Overview
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2.1%1.4%
0.1%
-3.8%
-5.4%
0.2%
2.7%
0.0%
-0.2%
1.3%-0.8%
-3.1%
71.1% 72.5% 72.6%68.8%
63.4% 63.6% 66.3% 66.4% 66.2% 67.4% 66.7% 63.6%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Competitive environment leads to loss ratio variation regardless of the robbery
and theft frequency
Source: SUSEP
Insurance Industry Overview
9
National Auto Insurance Claims Behavior (Loss Ratio and Variation vs. Previous Year)
National Auto Insurance Loss Ratio Variation vs. Previous Year
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Ma
rke
t S
ha
re
(%)
Concentration of Brazilian Market Share (Top 5 Players and Porto Seguro)
Non-Life Auto Homeowner
P&C (Ex Homeowner) Life (Ex VGBL) Health*
45.2%50.0%
10.5%
16.6%
2005 2013
Top 5 Porto Seguro
51.9%
68.4%
17.0%26.3%
2005 2013
Top 5 Porto Seguro
29.9%
64.3%
5.6%
27.6%
2005 2013
Top 5 Porto Seguro
30.8%
48.5%
2.9%3.8%
2005 2013
Top 5 Porto Seguro
49.4% 51.8%
2.2% 1.8%
2005 2013
Top 5 Porto Seguro
90.5% 93.4%
6.4% 4.9%
2005 2012
Top 5 Porto Seguro
The market is highly concentrated in all segments
Insurance Industry Overview
Source: SUSEP/ANS/Sincor
*Not including HMO
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The Brazilian insurance market is dominated by brokers in the Auto/Health
segments and by banks in Life Products – no clear “universal distribution
model” to be adopted
37
8
63
2034
7
56
37
25
47
47
45
7
12
6
14
8
68
40
31
4
15
1
12
2 4
1124
15
USA UK Germany Mexico S.Africa S.Korea Brazil
Other
Direct
Banks
Brokers
Agents
59 54 52 47
3336 34
33
8 10 14 20
1995 2000 2005 2011
Tied Agent Independent Agent Direct
Auto Insurance Channel Distribution - USA (Premiums %)
Life and Non-Life Products
Channel Distribution by Country (Premiums %)
Source: CEA Insurers of Europe – III On Line/UK-ABI Key Facts / Swiss RE
Global Insurance Overview
Insurance Industry Overview
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PORTO SEGURO AT A GLANCE
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57%65%
Porto¹ Market
Brands Strength Distribution
Channel
Assistance
24/7 Average
ROAE
17% Net
Earnings*
+21%
Total
Revenues*
+19%
Total
Premiums*
+19%
Other
Business
Revenues*
+37%
Recurring
Payout
50%
Profitability (2009-2013)
Overall Combined Ratio (2013)
Auto Loss Ratio (2013)
Porto Seguro At a Glance
*Source: 2012 IBRC and Revista Exame
**2013 Ranking Brand Analytics/Millward Brown
A history of focus, growth and profitability through our 3 brands
1st Non Life Insurance 1st Insurance Customer Service* 4th most valued Insurance brand**
27,000 Brokers 5,000 Itaú Bank Branches
15,000 Service Providers - Roadside - Appliances - Repair - Help Desk - Plumbing - Locksmith
Porto Seguro Portfolio (Revenues - 2013)
¹Including Porto Seguro, Itaú and Azul Brands
Source: SUSEP
Porto Seguro
Brands
-8 p.p.
*CAGR considering recurring results
¹Including Financial Results
58.1%
7.7%
7.1%
4.7%
3.8%
3.8%
2.6%
7.5%4.8%
Auto
Credit Operat. 96.0% 92.5%
Combined Ratio ¹Amplified Combined Ratio
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*Controlled by
Jayme Garfinkel
Free Float
Itaú Seguro de
Auto e Residência
Azul
Seguros
PSIUPAR 70.8%
Porto Seguro
Heatlh Insurance
Porto Seguro
Life and Pension
Porto Seguro
Uruguay
Porto Seguro
Cia de Seguros
Portoseg Consumer
Finance and
Credit Card
Portopar
Asset Management
Porto Seguro
Consórcio
Porto Renova
(Recycle Car Parts)
Porto Faz
(Convenience
Services)
Portomed (HMO)
Porto Seguro
Medical Services
Insurance Financial Services General Services
Porto Seguro
Dental
Porto Conecta
(Mobile Operator) Porto
Capitalization
Itaú
Unibanco 43.0% Porto Seguro
Controllers* 57.0%
29.2%
Porto Call Center Porto Seguro
Surveillance and
Monitoring
Free Float Shareholders Breakdown (August, 2014)
Porto Seguro is composed of insurance, financial and general services
businesses
25%
32%
29%
14% Brazil
USA
Europe
Other
Operational Structure
Porto Seguro At a Glance
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Segmented Value
Propositions • 3 brands to attend different needs and preferences
• Different value propositions – service, price, specific affinity (Itaú)
Strong Relationship
with Brokers and Clients
• High service level
• Focus on long-term relationships, not product transactions
• Retention rate higher than market average
Innovative Products
and Services
• Innovative and synergic product portfolio (cross-leverage)
• Expanded services (for home, car and individuals) – beyond basics
• Services as key for value recognition
Sophisticated Risk
Selection and Pricing
• Conservative, profit driven underwriting
• Leverage of huge database and sophisticated quantitative models
• Loss ratio historically below market average
• Majority of short tail business
We based our strategy on four cornerstones
Our Strategy
Porto Seguro At a Glance
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Focus on Differentiation
High Service Level
Value added products and services
Higher level of
operational flexibility
Sophisticated risk selection and pricing
Brand Loyalty
Specific benefits for
Itaú clients
Convenience
Sophisticated risk selection
and pricing
Price Brand
Lean Products and
Services
“Lean Manufacturing”
Operations
Sophisticated risk selection
and pricing
The Group has three distinct value propositions through its brands - not a “one
size fits all” approach
Segmented Brand Strategy
Porto Seguro At a Glance
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P&C Auto Health Life Homeowner
Market Position
1º 3º insurance only
6° considering Health
Operators
2º 8º 1º 14º
Market Share
26.3% 4.8%* *Data from 2012
8.1% 3.8% 27.6% 1.0%
Premiums (R$ Million)
7,972 1,022 954 366 588 473
% on Total
Premiums
69% 9% 8% 3% 5% 4%
Premiums CAGR
(5 years)
20% 10% 28% 11% 54% 13%
Insured Items (thousand)
4,663 620 2,050 366 1,684 5,969
Main
Insurance
Products (2013)
Source: Susep/Sincor/Porto Seguro
Offering a wide range of insurance products
Ex
Homeowner With
Homeowner
Porto Seguro At a Glance
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Surveillance and
Monitoring Credit Card Consortium
Market Position
13º 8º 2° * 1º *
Market Share
0.7% 3.5% - -
Revenues
(R$ Million)
568 184 81 55
% on Porto Non-
Insurance Lines
45% 15% 6% 4%
Revenues CAGR
(3 years)
51% 11% 12% 239%**
Clients/Items
(thousand)
1,376 111 28 422
Main
Non-Insurance
Products (2013)
Source: Banco Central/Card Monitor/Porto Seguro
Other non-insurance business increases the bottom-line, creating a stronger
customer connection that intensifies loyalty and cross-selling opportunities
Porto Seguro At a Glance
Occupational Safety
and Health
Carro Fácil
(long term rent + services)
Porto Faz
(convenience services)
Mobile Operator
Brand New
Services
* Porto Seguro estimative
** Acquisition of Bioqualynet company in 2013
General Services Financial Services
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First non-life insurance company in Brazil – consistent revenue growth
2.9 3.4 3.9 4.4 5.1 5.87.9 8.6 9.6
11.60.3 0.5 0.6 0.4 0.6 1.0
1.0 1.3 1.51.5
10.6% 10.8% 11.4% 12.3% 11.7%14.3%
17.7% 16.8% 16.7% 16.2%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Insurance Premiums Other Revenues Non-Life Insurance Market Share¹
2.0
2.3
2.4
2.4
3.3
3.3
4.3
4.9
6.5
9.5
Caixa
Zurich
Aliança
HDI
Sul América
Allianz
Itaú
Bradesco
Mapfre + Brasil Veículos
Porto Seguro Group
1.0
0.9
1.4
1.6
2.0
2.1
2.8
3.1
4.4
7.7
Marítima
Zurich
Tokio
Liberty
Allianz
HDI
Sul América
Bradesco
Mapfre + BB
Porto Seguro Group
Source: Susep / Porto Seguro
17%
11%
9%
8%
6%
6%
4%
4%
4%
3% 3%
26%
15%
10%
10%
7%
7%
6%
5%
3%
Porto Total Revenues (R$ Billion) and Market Share (%)
2013 Auto Insurance Premiums
(R$ billion) and Market Share (%)
2013 Non-Life Insurance Premiums
(R$ billion) and Market Share¹ (%)
¹Excluding Life, Health and Pension
Porto Seguro At a Glance
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2010 2011 2012 2013
Porto Azul Itaú
-7.6%
-6.0% -5.8%
-8.2%
2010 2011 2012 2013
Since 2010, our market share remained relatively stable with lower loss ratio (vs
market average) - Azul, our price brand, has grown faster than the other brands
Auto Premiums by Brand
26%
17%
56%
Porto Auto Premiums Consolidated (R$ billion)
and Market Share
Difference Between Porto and Market Loss Ratio on Auto Insurance *
* Market Excluding Porto Seguro Group / Source: SUSEP
25%
22%
53%
5.4 5.7 6.5
8.0
27.1% 26.9% 26.1% 26.3%
2010 2011 2012 2013
Premiums Mkt Share
Porto Seguro At a Glance
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23%
6%
33%
16%
Southeast Other Regions
2004 2013
We are further expanding our national presence - other regions have been
evolving rapidly and we still pursue opportunities to deploy our model outside
the southeast region
24%
22%
54%
Porto Auto Market Share Expansion
44% or 10 p.p.
Southeast 76%
São Paulo 59%
Rio de Janeiro 10%
South 9%
Northeast 8%
Mid West 6%
North 1%
Porto Auto Regional Premiums
(2013)
Brazil Market Share : 26%
Source: SUSEP
North: 20%
Northeast: 19%
Mid West: 22%
South
12%
Southeast: 33%
São Paulo: 37%
Rio de Janeiro: 31%
Porto Auto Footprint
(2013)
167% or 10 p.p.
Porto Seguro At a Glance
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273 569 545 593 578 33
90 71 109 133
306
659 616 702 711
14.8%
19.6%
16.6% 17.3% 16.5%
2009¹ 2010 2011 2012 2013
Total Net Earnings (R$ MM)
Non-Insurance Business Net Earnings (R$ MM)
Insurance Business Net Earnings (R$ MM)
ROAE %
¹ Without Itaú Auto e Residência Company that was incorporated in 4Q09
Source: Porto Seguro
Porto Net Earnings and Profitability (IFRS without Business Combination)
In the last five years, we have posted an average recurring ROAE of 17.0% -
total net earnings has increased steadily through insurance and non-insurance
business (CAGR 23%)
Porto Seguro At a Glance
CAGR: 23%
CAGR: 42%
CAGR: 21%
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34%
12%
PSSA3 IBOVESPA
22%
168%
-1% -41%
55%40%
-25%10%
27%28%33%
44%
-41%
83%
1% -18% 7% -15%
2005 2006 2007 2008 2009 2010 2011 2012 2013
PSSA3 Ibovespa
Annual Variation (%) 7.4
2.1
7.1
11.3
8.6
6.0
8.2
10.010.8
16.1
5.9
2.7
5.47.4
8.9
8.2
11.512
4.0
5.9
8.9
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Porto Seguro Sul América Brasil Insurance
Performance PSSA3 vs. IBOVESPA (Last 12 months)
Stock Annual Variation (versus on previous year)
Stocks Daily Negotiation
(Average - R$ million) *In addition to the positive results in 2006, we highlight the “Follow On”, the sale of
individual Health portfolio to Amil and the PIS COFINS tributary lawsuit gains justifying
the great stock appreciation in this year.
The Company has exceeded the Ibovespa benchmark historically and in the
last 12 months – liquidity reached R$ 16 MM per day (+49% vs. 2012)
Porto Seguro At a Glance
23
Variation 2013 vs 2012 2013 vs 2011 2013 vs 2007 2013 vs 2004
Porto (%) 27 40 35 336
Sula (%) -1 22 82 -
Brasil Insurance (%) -9 7 - -
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30.4%32.3% 32.3% 31.6% 31.4%
40.0%
50.0% 50.0%
60.0%
7.3%9.6%
3.2% 3.8%1.9% 3.0% 4.2% 4.5%
8.8%
2005 2006 2007 2008 2009 2010 2011 2012 2013*
Payout (3) Dividend Yield (4)
Payout has been growing since 2005. Nearly R$ 850 millions returned to
shareholders in 2013
*In 2013 we had a non-recurring income arising from the gain of the tax process (COFINS) of Porto Cia and Porto Vida e Previdência companies amounting to R$ 702 million (net of
tax, profit sharing and attorney’s fees). This amount was being provisioned since 1999 and reverted in the 4Q13. This event increased the payout ratio from 50% to 60%.
PBV (12/30/2013) 1.6
P/E (12/30/2013) 13.8
Porto Payout and Dividend Yield
Porto Seguro At a Glance
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RECENT RESULTS
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2.7 3.1
5.3 6.0 0.5
0.6
0.9
1.3
2Q13 2Q14 1H13 1H14
Insurance Premiums Other Revenues
Porto Revenues Development (R$ Billion)
+16%
Porto Revenues by Segment
Total revenues in 2Q14 increased 16% and total premiums grew 12% mainly
because of auto products growth and higher financial revenues
83.7% 81.3%
3.7% 6.1%
6.8% 7.3%2.6% 2.3%
3.2% 3.0%
2Q13 2Q14
Other Services
Pension
Financial Services
Financial Results
InsurancePremiums
+17%
3.2 3.7
6.2
7.3
Recent Results – 2Q14 and 1H14
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53.8 56.0
19.2 19.5
19.0 19.1
2.5 1.3
2Q13 2Q14
Tax
G&A + O.E.*
Comission
Loss Ratio
Porto Combined Ratio (%) Porto Amplified Combined Ratio
94.5 95.9
+1.4 p.p. -0.9 p.p.
*Administrative Expenses + Other Operational Expenses/Revenues
Porto Written Premiums Distribution
Combined Ratio increased in the quarter due to the rise of auto products loss
ratio (+3.0 p.p.), mitigated by lower health products losses (-3.3 p.p.) and
insurance tax expenses reduction (-1.2 p.p.)
90.6% 89.7%
2Q13 2Q14
67.7% 67.5%
9.2% 9.0%8.8% 8.6%
4.4% 4.2%9.9% 10.7%
2Q13 2Q14
Other
Life
P&C
Health
Auto
Recent Results – 2Q14 and 1H14
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16.9% 16.5% 17.4% 16.6% 15.7% 15.2% 15.4% 15.3% 15.4%
2009 2010 2011 2012 2013 2Q13 2Q14 1H13 1H14
Porto Insurance Administrative Expenses – G&A ratio
Insurance expenses ratio increased 0.2 p.p. in the quarter particularly due to
advertising expenses that were realized in the first semester – excluding this
effect it would reduce 0.2 p.p., as a result of efficiency gains
Recent Results – 2Q14 and 1H14
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51% 55%
15%14%
12% 12%
22% 19%
2Q13 2Q14
Other
Medical Services
Consortium
Credit Operations
32 34
60 52
16 15
20
14
2Q13 2Q14 1H13 1H14
Net Earnings % On Total Net Earnings *
314 376
604
726
2Q13 2Q14 1H13 1H14
22.5 21.6 20.8 18.2
2Q13 2Q14 1H13 1H14
Net Earnings
Revenues Development (R$ Million)
ROAE (%)
Revenues by Segment
* In relation to the Company net earnings without business combination with Itaú and non-recurring effects
-0.9 p.p
+20%
+7%
Non-insurance business rose 20% in the quarter driven principally by credit
operations expansion – ROAE achieved 21.6%, a decrease of 0.9 p.p. explained
by the early results of start-up businesses
+20%
-12%
-2.6 p.p
Porto Financial Services and General Services
(Non-Insurance Business)
Recent Results – 2Q14 and 1H14
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Porto Financial Returns on Investment Assets ¹
Recent Results – 2Q14 and 1H14
In 2Q14, financial results (excluding pension funds) produced a nominal yield of
2.8% (111% CDI) – a strong improvement versus 2013 and more in line with our
historical performance
¹ Since 2009 the return of investment portfolio reached 106% of CDI* on average * CDI – Risk Free Rate (Similar to LIBOR) 30
11.3%10.0%
11.6% 11.2%
6.3%
1.5%2.8%
2.3%
5.0%
117 114
98
159
5528
110
31
102
115103
100133
7982
111
67 101
2009 2010 2011 2012 2013 2Q13 2Q14 1H13 1H14
Nominal yield (ex-pension funds)
% of CDI (pension funds included)*
% of CDI (ex-pension funds)*
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¹ Futures exposures included. ² Brazilian Futures Exchange (BM&F BOVESPA) stress scenarios.
Porto Net Asset Value (R$ Billion) Porto Revenue from Investment Assets (R$ Million)
Porto Assets Allocation¹ (ex-Pension Funds) Porto Risk Exposure² (ex-Pension funds)
Total portfolio of R$ 8.8 BI produced a financial revenue of R$ 239 MM in 2Q14.
Portfolio ex-pension was R$ 6.3 BI, generating a financial income of R$ 176 MM
93 97 115 142 148
4 23 18 11 28
-46
38 6 45
63
2Q13 3Q13 4Q13 1Q14 2Q14
Pension Funds Others Insurance
158
198
51
139
239
6.3 6.3 6.4 6.7 6.3
2.4 2.4 2.6 2.4 2.5
2Q13 3Q13 4Q13 1Q14 2Q14
Pension Funds Other Assets
9.0 8.7 9.1 8.8 8.7
48%
24%
53% 42% 44%
24%
40%
24%
17% 18%
11% 16%
3%
20% 19%
16% 17% 17% 18% 17%
1.1% 2.6% 3.0% 2.7% 2.4%
2Q13 3Q13 4Q13 1Q14 2Q14
Equities
Corporate Bonds
Inflation-LinkedBonds (TIPS)
Fixed Rate
Floating RateNotes
1.0%
0.3%
2.0% 1.7%
1.0% 0.6%
0.62%
0.54%
0.67% 0.71% 0.72%
0.69%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Stress %NAV Annual. Vol
Recent Results – 2Q14 and 1H14
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132.8 132.8103.4 103.4
60.3 68.2 115.6 104.4
193.1 201.0219.0 207.8
Actual 100% CDI² Actual 100% CDI²
193.4 193.4149.1 149.1
108.0 141.2 222.5 213.9
301.4334.6
371.6 363.0
Actual 100% CDI² Actual 100% CDI²
18.1%17.2%
18.2% 18.9%14.8%
14.4%14.0%
15.7%
Porto Net Earnings¹ (R$ Million) and ROAE¹
(without business combination)
Net Earnings ROAE Operational Result Financial Result
2Q13 2Q14
¹Considering the whole Company (insurance and non-insurance). Total Net Earnings and ROAE with Business Combination. Other values without Business Combination
²Result (pro forma) considering a return on investments of 100% of CDI and excluding client’s pension provision.
*From 2006 to 2012 the average return from the financial investment portfolio was 106% of CDI (without pension reserves).
Better financial results have offset a lower operational income, delivering net
earnings of R$ 219 million (+13%) in the quarter – ROAE reached 18.1% (-0.1 p.p.)
1H13 1H14
Recent Results – 2Q14 and 1H14
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87
188162 166
60
19
4462
85
44
39
70 96 58
34
37
6653
35
32
32
2010 2011 2012 2013 1H14
Other Intangible
Furniture/Fixtures/Vehicles
Hardware and Software
Systems Development
Real Estate
25%
52%
47%
25%
39%
Porto Seguro CAPEX (R$ million)
183
369 374 376
Our CAPEX has been driven by geographic expansion, process improvements
and new business development
% of Investments on Cash
Flow Generated
171
Recent Results – 2Q14 and 1H14
Investments Highlights 2014
Real Estate acquisitions and maintenance
(administrative and sales offices)
New Call Center Building
System Development (CRM, SAP, among
others)
New Business (Conecta, Porto Faz , Carro
Fácil , Porto Renova)
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Porto Seguro is well capitalized – around R$1.4 Bi of capital surplus
Recent Results – 2Q14 and 1H14
34
3,421 2,672
749
448
386
62 586
3,869
3,058
1,397
Adjusted Equity¹ Solvency Margin² Sufficiency³
Insurance Companies Financial Companies Holding
Capital Requirements – 2Q14 (R$ million)
¹ Equity adjusted by additions and exclusions according to agencies standardizations (SUSEP, BACEN and ANS)
² Necessity of Capital required according to regulators (SUSEP, BACEN e ANS)
³ Refers to the difference between adjusted equity and necessity of capital requirement
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2Q14 and 1H14 Summary
INSURANCE WRITTEN PREMIUMS, PENSION AND CAPITALIZATION REVENUES 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Porto Seguro – Auto 1,094.8 955.0 14.6 2,167.3 1,874.1 15.6
Azul Seguros – Auto 467.7 391.0 19.6 934.8 776.7 20.4
Itaú Auto e Residência - Auto 492.6 487.4 1.1 958.9 900.2 6.5
Total Auto 2,055.1 1,833.4 12.1 4,061.0 3,551.0 14.4
Health 249.7 237.5 5.1 502.5 471.0 6.7
Dental 13.6 10.1 34.7 26.4 19.7 34.0
Portomed (health care plan premiums) 11.3 2.3 391.3 19.6 3.6 444.4
Total Health (Health + Dental + Portomed ) 274.6 249.9 9.9 548.5 494.3 11.0
Life 128.0 117.9 8.6 240.4 237.8 1.1
P&C - Porto Seguro and Azul Seguros 155.9 124.4 25.3 295.4 233.9 26.3
P&C - Itaú Auto e Residência 105.3 113.0 (6.8) 221.4 206.6 7.2
Total P&C 261.2 237.4 10.0 516.8 440.5 17.3
DPVAT 113.8 73.2 55.5 258.2 180.8 42.8
Financial Risks 97.2 90.6 7.3 185.2 174.7 6.0
Cargo 32.3 32.3 0.0 62.0 60.2 3.0
Porto Seguro Uruguay 34.0 31.6 7.6 73.7 65.9 11.8
Written Premiums VGBL 43.2 39.0 10.8 82.6 84.3 (2.0)
Other 4.8 2.1 128.6 5.7 12.4 (54.0)
Total Written Premiums 3,044.2 2,707.4 12.4 6,034.1 5,301.9 13.8
Total Earned Premiums 2,904.8 2,585.4 12.4 5,756.5 5,021.1 14.6
Total Pension Revenues (PGBL + VGBL) 83.7 84.0 (0.4) 165.3 172.6 (4.2)
Capitalization Total Revenues 2.5 0.8 212.5 4.6 1.4 228.6
OTHER BUSINESS - REVENUES
Surveillance Services 20.5 18.0 13.9 40.4 34.6 16.8
Consortium 50.8 46.9 8.3 100.4 89.7 11.9
Credit Operations 209.2 162.0 29.1 400.5 319.5 25.4
General Services - Porto Services 3.9 8.3 (53.0) 6.8 19.1 (64.4)
Call Center - Porto Atendimento 29.6 26.5 11.7 57.4 46.1 24.5
Asset Management - Portopar 8.1 6.5 24.6 16.5 12.6 31.0
Medical Services 45.0 37.1 21.3 87.2 67.9 28.4
Other 8.4 8.6 (2.3) 16.3 14.1 15.6
Other Business - Total Revenues 375.5 313.9 19.6 725.5 603.6 20.2
Financial Results - Insurance 198.4 113.6 74.6 397.1 201.2 97.4
Financial Results - Other 28.2 4.6 - 39.2 10.6 269.8
Total Financial Results 226.6 118.2 91.7 436.3 211.8 106.0
Real Estate 2.6 2.4 8.3 5.1 4.9 4.1
Total Revenues 3,691.9 3,187.7 15.8 7,288.3 6,211.9 17.3
INDEX (%)
REVENUES (in R$ million)
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2Q14 and 1H14 Summary
INDEX (%)
LOSS RATIO 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Porto Seguro – Auto 55.0 50.7 4.3 55.8 51.1 4.7
Azul Seguros – Auto 61.1 59.3 1.8 63.1 60.1 3.0
Itaú Auto e Residência - Auto 61.1 59.6 1.5 62.7 61.4 1.3
Total Auto 57.9 54.9 3.0 59.2 55.6 3.6
Health 77.6 80.9 (3.3) 74.7 78.6 (3.9)
Dental 50.2 53.8 (3.6) 46.6 48.8 (2.2)
Portomed 86.6 54.2 32.4 87.8 61.1 26.7
Health (Health + Dental + Portomed) 76.6 79.5 (2.9) 73.9 77.2 (3.3)
Life 27.9 31.0 (3.1) 26.4 29.5 (3.1)
P&C - Porto Seguro and Azul Seguros 27.6 33.1 (5.5) 32.6 38.6 (6.0)
P&C - Itaú Auto e Residência 27.0 25.9 1.1 29.8 28.7 1.1
Total P&C 27.3 29.9 (2.6) 31.3 34.1 (2.8)
Total Loss Ratio 56.0 53.8 2.2 57.1 54.8 2.3
INSURANCE COMISSION RATIO
Acquisition costs - Insurance 19.5 19.2 0.3 19.4 19.4 -
INSURANCE - OPERATING AND ADMINISTRATIVE EXPENSES
G&A – Insurance 15.4 15.2 0.2 15.4 15.3 0.1
Tax - Insurance 1.3 2.5 (1.2) 1.2 2.5 (1.3)
G&A and Other Operatinal Revenues/Expenses - Insurance 19.1 19.0 0.1 19.6 19.3 0.3
MARGIN AND PROFITABILITY
Combined Ratio - Insurance - var.p.p 95.9 94.5 1.4 97.3 96.0 1.3
Amplified Combined Ratio - Insurance - var. p.p. 89.7 90.6 (0.9) 91.0 92.3 (1.3)
Shareholder's Equity with Business Combination (R$ million) var. % 5,755.2 5,150.5 11.7 5,755.2 5,150.5 11.7
Shareholder's Equity without Business Combination (R$ million) var. % 4,954.7 4,342.4 14.1 4,954.7 4,342.4 14.1
Net Earnings with Business Combination (R$ million) var. % 217.1 191.2 13.5 367.8 297.6 23.6
Net Earnings without Business Combination (R$ million) var. % 219.0 193.1 13.4 371.6 301.4 23.3
ROAE with Business Combination - p.p. 15.4 15.1 0.3 12.6 11.7 0.9
ROAE without Business Combination - p.p. 18.1 18.2 (0.1) 14.8 14.0 0.8
EPS with Business Combination (R$) var. % 0.67 0.59 13.6 1.14 0.92 23.9
# of thousand shares¹ - var. % 323,293 323,293 - 323,293 323,293 -
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Contact
Investor Relations Department
Alameda Barão de Piracicaba, 618
11th floor
Campos Elíseos
01216-010
São Paulo, SP, Brazil
Phone:
(55 11) 2393-7090
(55 11) 2393-7093
E-mail:
www.portoseguro.com.br
37