Caixa Seguridade Participações (CXSE3) Q2 2024 earnings summary

Executive summary

• Managerial net income for Q2 2024 was BRL 770.3 million, down 6.4% year-over-year due to extraordinary claims from Rio Grande do Sul floods and credit life provisioning; normalized net income reached BRL 928.2 million, up 12.8%.

• New ESG-focused products launched, including Apoio Vida + FUTURO insurance, Prev Juntos + FUTURO private pension, and Life Plus Future, supporting social and environmental projects.

• Gold Seal awarded for the second consecutive year by the Brazilian GHG Protocol Program for climate impact management.

• Humanitarian support and financial relief provided to Rio Grande do Sul catastrophe victims, including claims process enhancements, donations, fee exemptions, and psychological support for agents.

• Interim dividend of BRL 702 million approved, representing 91.1% of adjusted net income for Q2 2024.

Financial highlights

• Operating revenues for Q2 2024 were nearly BRL 1.1 billion, down 0.9% year-over-year, but would have grown 13.7% excluding extraordinary events; H1 2024 operating revenues totaled BRL 2,325.8 million, up 7.1% year-over-year.

• ROE reached 59.7% in Q2 2024; normalized ROE was 61.6%, up 6.2 p.p. year-over-year.

• Written premiums grew across all segments: Mortgage up 10.4%, Home up 18.2%, Credit Life up 11.2%, and Assistance up 36% year-over-year.

• Private pension reserves reached BRL 162.8 billion, up 12.8% year-over-year; credit letters funds raised surged 86.6% year-over-year.

• Distribution (brokerage) revenues up 13.4% year-over-year, with insurance segment up 16%.

Outlook and guidance

• Expectation of strong performance in H2 2024, aiming to offset Q2 extraordinary events and meet annual targets, with continued premium growth driven by credit expansion and digital transformation.

• Loss ratio for credit life expected to normalize between 22%-24% going forward.

• Private pension contributions in Q2 seen as a floor, with moderate improvement expected in H2, but not returning to 2022 levels.

• Ongoing focus on ESG product innovation, digitalization, and channel diversification.