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    BBSE3   BRBBSEACNOR5

BB SEGURIDADE PARTICIPAÇÕES S.A.

(BBSE3)
  Report
End-of-day quote. End-of-day quote Bolsa de Valores de Sao Paulo - 10/15
21.68 BRL   +1.74%
09/06BB SEGURIDADE PARTICIPAÇÕES S A : Comunicado ao Mercado
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08/02BB SEGURIDADE PARTICIPAÇÕES S A : Dados Econômico-Financeiros
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08/02BB SEGURIDADE PARTICIPAÇÕES S A : Comunicado ao Mercado
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BB Seguridade Participações S A : Comunicado ao Mercado

08/02/2021 | 06:02am EDT

MD&A

2nd quarter 2021

  • P R E S E N T A T I O N

The Management Discussion and Analysis - MD&A presents the economic and financial status of BB Seguridade Participações S.A. (BB Seguridade). Directed to financial analysts, shareholders and investors, this quarterly report provides an analysis of economic and financial

indicators of BB Seguridade, stocks' performance and other aspects considered relevant for the assessment of the company's

achievements.

The consolidated financial statements were prepared in compliance with the International Financial Reporting Standards - IFRS.

All the analyses in this report are based on IFRS Financial Statements, but are occasionally supplemented by managerial data, besides other information calculated based on accounting principles determined by the Superintendência de Seguros Privados - SUSEP (the regulator of the insurance industry in Brazil).

In the investees, since the fourth quarter of 2020, the financial statements are prepared in compliance with the accounting standard of the respective regulator, except when mentioned in a different accounting standard.

  • O N - L I N E A C C E S S

This MD&A is available at BB Seguridade's IR website, where additional information about the Company is also available such as: corporate

structure, corporate governance, historical data, among other important information for shareholders and investors. The company's website can be accessed through www.bbseguridaderi.com.br.

This report makes references and statements about expectations, expected synergies, growth estimates, earnings forecasts and future strategies regarding BB Seguridade. Such statements are based on current expectations, estimates and projections of the Managementabout future events and financial trends that may affect the businesses that the company is involved in.

These forward looking statements are not guarantee of future performance and involve risks and uncertainties that could overextendthe control of the management, and thus can result in balances and values different from those anticipated and discussed in this report. The expectations and projections depend on market conditions (technological changes, competitive constraints on products, prices, etc.), on the country's macroeconomic performance (interest and exchange rates, political and economic changes, inflation, changes in tax rules, etc.) and on international markets.

Future expectations based on this report should consider the risks and uncertainties that involve BB Seguridade's businesses. BBSeguridade has no responsibility to update any estimate contained either in this report or in previously published reports.

Tables and charts in this report show, in addition to the accounting balances, financial and managerial figures. The relative variationrates are calculated before the rounding procedure in R$ million. The rounding method used follows the rules established by Resolution 886/66 of IBGE's Foundation: if the decimal number is equal or greater than 0.5, it increases by one unit, if the decimalnumber is less than 0.5, there is no increase.

BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q21

2

2Q21 Earnings Conference Call

August 2nd, 2021

Portuguese with simultaneous translation into English

Time: 11:00 AM (Brasilia time) 10:00 AM (EST)

Live stream via ZOOM platform

To register for the event and receive the connection information, access: https://tinyurl.com/m9svpfunor

the investor relations website www.bbseguridaderi.com.br/en

Contacts

Investor Relations

  • +55 (11) 4297-0730
  • ri@bbseg.com.br

IR Website: www.bbseguridaderi.com.br/en

Rua Alexandre Dumas, 1671 - Térreo - Ala B Chácara Santo Antônio - São Paulo - SP CEP: 04717-903

Index

1.

Summary

5

2.

Earnings Analysis

15

3.

Balance Sheet Analysis

19

4.

Underwriting and Accumulation

23

4.1

Brasilseg

26

4.2

Brasilprev

47

4.3

Brasilcap

60

4.4

Brasildental

74

5.

Distribution

77

5.1

BB Corretora

79

6.

Definitions

87

BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q21

3

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BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q21

4

1 . S U M M A R Y

  • A D J U S T E D N E T I N C O M E A N A L Y S I S

Table 1 - Income statement of the holding

Quarterly Flow

Chg. %

Half-Yearly Flow

Chg. %

R$ thousand

2Q20

1Q21

2Q21

On 2Q20

On 1Q21

1H20

1H21

On 1H20

Equity income

979,049

971,349

754,070

(23.0)

(22.4)

1,847,277

1,725,419

(6.6)

Underw ritting and accumulation

523,805

474,285

235,438

(55.1)

(50.4)

917,650

709,723

(22.7)

businesses

Brasilseg

278,612

245,079

178,468

(35.9)

(27.2)

521,380

423,547

(18.8)

Brasilprev

209,656

191,874

38,631

(81.6)

(79.9)

330,854

230,505

(30.3)

Brasilcap

30,193

32,244

14,217

(52.9)

(55.9)

55,440

46,461

(16.2)

Brasildental

5,344

5,088

4,122

(22.9)

(19.0)

9,976

9,210

(7.7)

Distribution businesses

455,711

506,371

523,629

14.9

3.4

933,843

1,030,000

10.3

Other

(467)

(9,306)

(4,997)

969.9

(46.3)

(4,216)

(14,304)

239.3

G&A expenses

(4,183)

(4,274)

(4,582)

9.5

7.2

(10,997)

(8,856)

(19.5)

Net investment income

8,375

12,514

4,015

(52.1)

(67.9)

37,207

16,529

(55.6)

Earnings before taxes and profit

983,240

979,589

753,503

(23.4)

(23.1)

1,873,487

1,733,092

(7.5)

sharing

Tax es

(1,427)

(2,527)

199

-

-

(8,953)

(2,329)

(74.0)

Adjusted net income

981,813

977,062

753,702

(23.2)

(22.9)

1,864,534

1,730,763

(7.2)

In the 2Q21, the net income of BB Seguridade reduced R$228.1 million (-23.2%) YoY. Notwithstanding the strong growth of the result of the distribution segment (BB Corretora, +R$67.9 million) YoY, the worsening of the health crisis and the volatility of the net investment income negatively impacted the result arising from the other segments, as follows:

  • Brasilprev (-R$171.0 million): justified by the drop of the net investment income, as consequence of the differential in the inflation indexes that adjusted the assets (IPCA and IGP-M of the current period) and liabilities (IGP-M with lag of one month) of the defined benefit plans;
  • Brasilseg (-R$100.1 million): mostly impacted by the worsening of the sanitary crisis, which reached the peak of Covid-19 deaths in the 2Q21 since the beginning of the pandemic, raising the loss ratio by 19.7 p.p.;
  • Brasilcap (-R$16.0 million): due to the retraction of the net investment income, partially offset by the drop in the G&A expenses and in the acquisition costs; and
  • Result of the holding (-R$2.9 million): impacted by the lower average balance of financial investments, due to the capital reduction held on April 2020.

In the 1H21, the net income fell R$133.8 million (-7.2%). In the first half of 2021, BB Corretora was also the positive highlight, with a solid growth (+R$96.2 million), due to higher brokerage revenues in the mains business lines, and the expansion in the EBIT margin. On the other hand, the adversities arising from the Covid-19 pandemic impacted the results of the other segments, as follows:

  • Brasilprev (-R$100.3 million): despite the robust increase in the operating result (+12.9%), the net investment income was down, due to the spike in the IGP-M which led the raise in the yield on bearing liabilities of the traditional plans;
  • Brasilseg (-R$97.8 million): impacted by higher frequency on reported claims related to products with death coverage, due to the increase in the number of deaths related to Covid-19;
  • Brasilcap (-R$9.0 million): due to the retraction of the net interest margin, partially offset by the growth in the revenues with load fee and the drop in the G&A expenses and in the acquisition costs; and

Figure 1 - Non-interest operating results¹

Chg. On 2Q20

Chg. On 1H20

Brasilseg

(48.0%)

(25.4%)

Brasilprev

10.0%

12.9%

Brasilcap

-

126.4%

Brasildental

(22.8%)

(6.0%)

BB Corretora

14.6%

10.5%

Total

(1.2%)

3.1%

¹Non-interest operating results before taxes, weighted by the equity stake

Figure 2 - Impact of Brasilprev's net investment income to the adjusted net income (R$ million)¹

1,883

1,773

1,865

982

977

1,731

968

877

896

754

14

100

(143)

(18)

(42)

2Q20

1Q21

2Q21

1H20

1H21

Adjuste d net in co me

IGP-M lag

Adjuste d net in co me e xclud in g the im pact o f one -m onth lag in the IGP-M

¹Impact of the one-month lag in the IGP-M accrual on liabilities.

  • Result of the holding (-R$13.6 million): justified by both the reduction in the average balance of financial investments and the lower average Selic rate, partially offset by the fall in G&A expenses.

BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q21

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

BB Seguridade Participações SA published this content on 02 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2021 10:01:05 UTC.


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Financials
Sales 2021 5 640 M 1 023 M 1 023 M
Net income 2021 3 960 M 718 M 718 M
Net cash 2021 3 954 M 717 M 717 M
P/E ratio 2021 10,9x
Yield 2021 6,40%
Capitalization 43 288 M 7 954 M 7 853 M
EV / Sales 2021 6,97x
EV / Sales 2022 5,90x
Nbr of Employees 173
Free-Float 33,6%
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Technical analysis trends BB SEGURIDADE PARTICIPAÇÕES S.A.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 12
Last Close Price 21,68 BRL
Average target price 29,88 BRL
Spread / Average Target 37,8%
EPS Revisions
Managers and Directors
Ullisses Christian Silva Assis Chief Executive Officer & Director
Rafael Augusto Sperendio Chief Financial Officer
Marcelo Cavalcante de Oliveira Lima Chairman
Pedro Bramont Director-Strategy, Technology & Clients
Isabel da Silva Ramos Kemmelmeier Independent Director
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