BB Seguridade Participações (BBSE3) Q2 2024 earnings summary

Executive summary

• Net income for the first half of 2024 reached BRL 4.2 billion, up 11.8% year-over-year, with adjusted managerial profit at BRL 3.7 billion, a 3.1% increase, reflecting resilience amid volatility.

• Insurance premiums written increased 5% to BRL 8 billion, with credit life insurance up 21%, and pension reserves surpassed BRL 410 billion, up 12% year-over-year, with net inflows more than doubling to BRL 5.3 billion.

• Brokerage revenues rose 12% to BRL 2.7 billion, reflecting strong commercial performance.

• Customer base grew by 6% and NPS improved by 1.6 points since December 2023.

• Adjusted net income reached BRL 1.87 billion in 2Q24, up 1.6% year-over-year, driven by strong brokerage and insurance performance despite regulatory impacts on pension operations.

Financial highlights

• Loss ratio improved to 27%, down 1.9 percentage points year-over-year.

• Premium bonds reserves grew 5% to BRL 11.2 billion.

• Investments in IT, cybersecurity, and digital solutions totaled BRL 258 million in the first half.

• Net investment income for 1H24 was BRL 714 million, with a normalized net income adjustment of BRL 324 million in 2Q24.

• Combined net investment income fell 14% YoY in 2Q24 and 20.6% in 1H24, mainly due to higher liability costs and negative mark-to-market effects in pension assets.

Outlook and guidance

• Premiums written are below guidance (5% vs. 8%-13% target) due to delayed Safra Plan and discontinued/co-insurance products, but guidance range is maintained.

• Pension reserves growth (13%) exceeded guidance (8%-12%).

• Expectation for a stronger second half, especially in crop insurance and investment income.

• Non-interest operating result grew 8.8% in 1H24, within guidance.

• No major changes anticipated in loss ratio for the second half; catastrophe impacts are contained.