MD&A
2Q22
#Pública
- 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 2Q22 | 2 |
2Q22 Earnings Conference Call
August 8th, 2022
Portuguese with simultaneous translation into English
Time: 11:00 AM (Brasilia time) 10:00 AM (EDT)
Livestream via ZOOM platform
To register for the event and receive the connection
information, access: https://bbseguros- br.zoom.us/webinar/register/WN_LQmaqhZBTz2y- _DO2jqb_Qor 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
BB Seguridade Participações S.A. | Management Discussion & Analysis 2
#Pública
1 . S U M M A R Y
- 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 | 2Q21 | 1Q22 | 2Q22 | On 2Q21 | On 1Q22 | 1H21 | 1H22 | On 1H21 | |
Equity income | 754,070 | 1,179,084 | 1,407,388 | 86.6 | 19.4 | 1,725,419 | 2,586,472 | 49.9 | |
Underwritting and accumulation businesses | 235,438 | 606,122 | 766,748 | 225.7 | 26.5 | 709,722 | 1,372,870 | 93.4 | |
Brasilseg | 178,468 | 262,552 | 546,845 | 206.4 | 108.3 | 423,547 | 809,397 | 91.1 | |
Brasilprev | 38,631 | 301,909 | 172,298 | 346.0 | (42.9) | 230,505 | 474,207 | 105.7 | |
Brasilcap | 14,217 | 35,456 | 42,783 | 200.9 | 20.7 | 46,461 | 78,239 | 68.4 | |
Brasildental | 4,122 | 6,205 | 4,822 | 17.0 | (22.3) | 9,210 | 11,027 | 19.7 | |
Distribution businesses | 523,629 | 575,304 | 631,810 | 20.7 | 9.8 | 1,030,000 | 1,207,114 | 17.2 | |
Other | (4,997) | (2,343) | 8,830 | - | - | (14,304) | 6,488 | - | |
G&A expenses | (4,582) | (5,990) | (5,900) | 28.8 | (1.5) | (8,856) | (11,890) | 34.3 | |
Net investment income | 4,015 | 6,523 | 4,698 | 17.0 | (28.0) | 16,529 | 11,221 | (32.1) | |
Earnings before taxes and profit sharing | 753,503 | 1,179,617 | 1,406,185 | 86.6 | 19.2 | 1,733,092 | 2,585,802 | 49.2 | |
Taxes | 199 | (186) | 186 | (6.6) | - | (2,328) | - | - | |
Net income | 753,702 | 1,179,431 | 1,406,371 | 86.6 | 19.2 | 1,730,764 | 2,585,802 | 49.4 | |
In 2Q22, BB Seguridade reported net income of R$1.4 billion (+86.6% YoY), with a strong growth in sales, loss ratio improvement and higher net investment income. The R$652 million increase was mainly driven by:
Brasilseg (+R$368.4 million): boosted by the drop in loss ratio, with a significant improvement observed in the main business lines (term life, credit life and rural), in addition to the increase in the net investment income, explained by the higher average Selic rate;
Brasilprev (+R$133.7 million): supported by the growth of revenues with management fee and by the lower negative balance of net investment income, which was caused by the expansion of the average balance of earning assets and the decrease in the average yield on interest bearing liabilities related to the technical reserves of traditional plans;
- Corretora (+R$108.2 million): impacted by the growth in brokerage revenues and the evolution of the net investment income, driven by the spike in the average Selic rate; and
Brasilcap (+R$28.6 million): with the increase in the net interest margin, due to the higher average Selic rate and the positive adjustment of the hedged prefixed portfolio classified as available for sale.
Year-to-date, net income increased R$855.0 million (+49.4%), to R$2.6 billion, highlighting Brasilseg (+R$385.9 million), which posted higher net investment income and significant loss ratio improvement.
The result from Brasilprev was R$243.7 million higher than in the 1H21, driven by the improvement in the net investment income, positively impacted by the expansion in the average balance of held to maturity assets and by a smaller gap between the inflation rates that adjusted the assets and liabilities of traditional plans.
Figure 1 - Non-interest operating results¹
Chg. On 2Q21 | Chg. On 1H21 | |||||||||
Brasilseg | 281.7% | 110.3% | ||||||||
Brasilprev | 4.0% | 5.3% | ||||||||
Brasilcap | (27.4% ) | (37.4% ) | ||||||||
Brasildental | 1.3% | 3.0% | ||||||||
BB Corretora | 11.5% | 10.1% | ||||||||
Total | 44.0% | 25.1% | ||||||||
¹Non-interest operating results before taxes, weighted by the equity stake
Figure 2 - Normalized net income (R$ million)
2,609
1,179 | 1,406 | 1,482 | 1,773 | 2,586 | |||||||||||||||||
896 | 1,127 | 1,731 | |||||||||||||||||||
754 | |||||||||||||||||||||
(143) | 52 | (75) | (42) | (23) | |||||||||||||||||
2Q21 | 1Q22 | 2Q22 | 1H21 | 1H22 | |||||||||||||||||
Net income | IGP-M lag | Normalized net income¹ | |||||||||||||||||||
1. Net income excluding the impacts of the one-month lag in the IGP-M accrual on liabilities.
The contribution arising from BB Corretora increased R$177.1 million, supported by higher brokerage revenues and by the evolution of net investment income, while the result from Brasilcap grew R$31.8 million, with the rise in net interest margin.
BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q22 | 4 |
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▪ N E T I N V E S T M E N T I N C O M E A N A L Y S I S
Figure 3 - Consolidated investment income
19.7
11.8
(13.5)
232
166
In 2Q22, the combined net investment income of BB Seguridade
15.4and its investees reached R$166.5 million, compared to a negative
balance of R$101.7 million recorded in the same period of 2021. | ||
399 | The performance is largely explained by the spike in the average | |
Selic rate, which positively impacted all companies, and to the | ||
(2.1) | ||
improvement in Brasilprev's financial result. The IGP-M | ||
deceleration, resulting in lower cost of liabilities related to | ||
traditional plans, combined with the higher IPCA, which on the | ||
asset side partially offset the negative impact of the lower IGP-M | ||
in the returns of held to maturity portfolio, were the main factors | ||
that contributed to the improvement of Brasilprev's net | ||
investment income. On the other hand, the temporal mismatch | ||
in asset and liabilities' adjustments and, mainly, the R$144.2 | ||
million negative result of mark-to-market related to the upward | ||
shifting of the forward yield curve were the main drivers of | ||
Brasilprev's negative financial result in the quarter, explaining the | ||
decline in the consolidated figure compared to 1Q22. | ||
-102
2Q21 | 1Q22 | 2Q22 |
Net investment income (R$ million)
-37
1H211H22
% Net income
In 1H22, the combined net investment income of the group's companies was positive by R$398.6 million, compared to negative result of R$37.0 million in 1H21. The improvement resulted from the higher average Selic rate and the Brasilprev's net investment income growth, which was benefited from a lower impact of the mismatch in the inflation rates that adjust most of the assets (IPCA and IGP-M) and liabilities (IGP-M with one- month lag) of traditional plans and by the expansion in the balance of financial assets.
Figure 4 - Inflation rate (%) | Figure 5 - Average Selic rate (%) | Figure 6 - Forward yield curve (%) |
8.8 | 12.37 | 13.76 | 13.44 | 12.75 | |||||||||||
10.42 | 12.63 | 12.65 | |||||||||||||
jun/22 | |||||||||||||||
5.5 | |||||||||||||||
7.62 | 12.71 | ||||||||||||||
6.3 | 4.6 | 3.7 | 12.06 | mar/22 | |||||||||||
3.0 | 3.0 | 11.39 | 11.21 | 11.20 | |||||||||||
4.86 | 8.69 | ||||||||||||||
2.1 | 2.5 | 7.71 | 8.06 | 8.40 | mar/21 | ||||||||||
1.5 | 3.2 | 3.24 | |||||||||||||
7.08 | jun/21 | ||||||||||||||
2.2 | 8.49 | ||||||||||||||
1.7 | 8.05 | 8.27 | |||||||||||||
0.8 | 7.46 | ||||||||||||||
0.02 | |||||||||||||||
6.39 | |||||||||||||||
2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | ||||||
IPCA | IGP-M | IGP-M (lagged)¹ | DI1F23 | DI1F24 | DI1F25 | DI1F26 | DI1F27 |
1. IGP-M with a lag of one month.
Figure 7 - Financial investments (%)
8.9 | |
Jun/22 | 33.1 |
58.0 | |
9.1 | |
Mar/22 | 34.2 |
56.7 | |
15.7 | |
Jun/21 | 30.2 |
54.1 |
Available for sale
Trading
Held to maturity
Figure 8 - Financial investments by index (%)
0.1
Jun/22 | 16.1 | ||
22.7 | |||
61.1 | |||
0.1 | |||
Mar/22 | 16.0 | ||
23.6 | |||
60.3 | |||
0.2 | |||
Jun/21 | 27.9 | ||
18.8 | |||
53.0 | |||
Other | |||
Pre-fixed | |||
Floating | |||
Inflation | |||
Figure 9 - Trading portfolio by index
(%)
0.3
Jun/22 | 4.8 | ||
27.3 | |||
67.7 | |||
0.3 | |||
Mar/22 | 4.1 | ||
27.6 | |||
68.0 | |||
0.7 | |||
Jun/21 | 7.4 | ||
30.7 | |||
61.1 | |||
Other | |||
Pre-fixed | |||
Inflation | |||
Floating | |||
BB Seguridade Participações S.A. | Management Discussion & Analysis 2Q22 | 5 |
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BB Seguridade Participações SA published this content on 08 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 August 2022 10:54:03 UTC.