BB Seguridade Participações S A : Dados Econômico-Financeiros

Consolidated Financial Statements - 2022

BB Seguridade Participações S.A.

		INDEX
MANAGEMENT COMMENTS ON PERFORMACE	1
STATEMENT OF INCOME	19
STATEMENT OF COMPREHENSIVE INCOME	19
BALANCE SHEET	20
STATEMENT OF CASH FLOWS	21
STATEMENT OF CHANGES IN EQUITY	22
STATEMENT OF VALUE ADDED	23
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS	24
1	- OPERATIONAL CONTEXT	24
2	- ACQUISITIONS, DISPOSALS AND CORPORATE RESTRUCTURINGS	25
3	- PRESENTATION OF FINANCIAL STATEMENTS	26
4	- DESCRIPTION OF KEY ACCOUNTING POLICIES	29
5	- RISK MANAGEMENT	36
6	- SEGMENT INFORMATION	39
7	- INVESTMENTS IN ASSOCIATES	42
8	- COMMISSIONS INCOME	50
9	- COSTS OF SERVICES PROVIDED	51
10	- PERSONNEL EXPENSES	51
11	- ADMINISTRATIVE EXPENSES AND SALES	51
12	- TAXES	51
13	- OTHER INCOME AND EXPENSE	53
14	- FINANCIAL RESULT	54
15	- CASH AND CASH EQUIVALENTS	54
16	- FINANCIAL INSTRUMENTS	54
17	- DIVIDENDS / INTEREST ON EQUITY CAPITAL RECEIVABLE	55
18	- COMMISSIONS RECEIVABLE	55
19	- INTANGIBLE ASSET	56
20	- OTHER ASSETS	56
21	- CORPORATE AND STATUTORY OBLIGATIONS	56
22	- PROVISIONS AND CONTINGENT LIABILITIES	57
23	- UNEARDED COMMISSIONS	59
24	- OTHER LIABILITIES	60
25	- EQUITY	60
26	- RELATED PARTY TRANSACTIONS	63
27	- OTHER INFORMATION	66

REPORT OF INDEPENDENT AUDITORS FOR FINANCIAL STATEMENTS

AUDIT COMMITTEE REPORT SUMMARY - FISCAL YEAR 2022

FISCAL COUNCIL REPORT

DECLARATION OF THE MEMBERS OF THE EXECUTIVE BOARD ABOUT THE FINANCIAL STATEMENTS

STATEMENT OF THE MEMBERS OF THE EXECUTIVE BOARD ON THE REPORT OF THE INDEPENDENT AUDITORS

MEMBERS OF THE MANAGEMENT BODIES

Consolidated Financial Statements - 2022

BB Seguridade Participações S.A.

MANAGEMENT COMMENTS ON PERFORMACE

Dear Shareholders, Employees and Business Partners.

We present the Annual Management Report of BB Seguridade Participações S.A. ("BB Seguridade" or "Company") for the year 2022, in accordance with the requirements of the Brazilian Stock Corporations Act, the Securities and Exchange Commission (CVM) and its Bylaws.

The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS).

It is noteworthy that this report presents accounting data of the companies invested in by BB Seguridade, which may differ from those disclosed by the affiliates, both due to differences in the financial reporting standards used and to the possible amortization of intangibles, deduction of results among affiliates, or due to other reasons. In this context, the net profit attributed to the investee companies reflects the results determined by the Company for each business segment, as per the Explanatory Note on Investments in Equity Interests.

Throughout this report, we will address the actions taken and results achieved in the year, as well as presenting the Company's strategic priorities.

1 - BUSINESS DESCRIPTION

1. Seguridade is a holding company that concentrates its investments in the insurance, open pension, premium bonds and dental care plans through private partnerships in companies invested by its wholly owned subsidiary, BB Seguros Participações S.A. ("BB Seguros"), as well as in the distribution of those products, highlighting its controlled company, BB Corretora de Seguros e Administradora de Bens S.A. ("BB Corretora").

In the insurance segment, operations are carried out through a joint venture with the Spanish group MAPFRE, in a 20-years term agreement, which began in 2011. This partnership is operated through two insurance companies: Brasilseg Companhia de Seguros S.A. and Aliança do Brasil Seguros S.A. (together, "Brasilseg"), focusing on the life, rural, mortgage life, home, business and other product segments.

In open pension plans, BB Seguridade operates together with the Principal Financial Group, through Brasilprev Seguros e Previdência S.A. ("Brasilprev"), in a partnership that will remain valid until 2032, as provided in the agreement in force since 2009. Brasilprev sells private pension solutions, with emphasis on defined contribution plans, in the PGBL (Free Benefit Generator Plan) and VGBL (Life Free Benefit Generator) modalities.

The Company's business in premium bonds is concentrated with Brasilcap Capitalização S.A. ("Brasilcap"), in partnership with Icatu Seguros and Aliança da Bahia.

Also, in the dental care plan segment, the Company operates together with Odontoprev through Brasildental Operadora de Planos Odontológicos S.A. ("Brasildental"). The joint operation began in 2014 and will last for 20 years.

In the distribution side of the business, BB Corretora's main channel is Banco do Brasil ("BB"). Complementarily, BB Corretora seeks to expand its distribution channels through commercial partnerships with companies from the most diverse business segments, also maintaining strategic investment in a digital brokerage company, the Ciclic Corretora de Seguros S.A. ("Ciclic"), in a partnership with the Principal Financial Group that began in 2018 and will be extended until 2032, aiming at developing the sale of insurance products through remote channels.

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Consolidated Financial Statements - 2022

BB Seguridade Participações S.A.

2 - BUSINESS ENVIRONMENT

Throughout the year, the international environment was the focus of the economic landscape, mainly due to the high inflation, although the latest announcements have shown a downward trend in the price level in US and in the Euro Zone. The risks related to the pandemic and the war between Russia and Ukraine, in addition to the monetary tightening measures in the central economies, have contributed to a deceleration of global economic activity.

By the end of the year, the latest data has confirmed the slowdown of European economy. However, there was a perception of a less deep recession on the way in the region in face of the increase in gas stocks at higher-than-expected levels. In the US, consumption and the labor market still showed some resilience, which should prevent a more severe recession, despite the Federal Reserve's ("Fed") signaling of additional interest rate increases. In China, decisions related to the reduction of sanitary restrictions indicated a clear shift of the government's focus to economic growth, in prejudice of the Zero-Covid measures.

In Brazil, the economic activity has recurrently and positively surprised throughout the year. The recovery of the service sector and the labor market, as well as the measures to increase household income and consumption, have contributed to the economic growth posted until the Q3. However, recent indicators suggest a less favorable behavior of domestic demand, given the tightening of financial conditions and the reduction of income transfers, which should lead to an economic deceleration. Regarding the national financial system, there was a slowdown in the credit portfolios, both for companies and families, due to higher interest rate, higher indebtedness and commitment of families' income, and the increase in delinquency rate.

Despite the strong decompression movement of the IPCA, inflation rate exceeded the upper limit of the target interval. The tax reduction on fuel, electricity and telecommunication led the deflation in July, August and September, but other factors, according to the Brazilian Central Bank, have put pressure to inflation, which reached 5.8%. The factors were: (i) inertia of the previous year's inflation; (ii) rising commodity prices; (iii) imbalance between demand and supply of inputs and bottlenecks in global production chains; (iv) food price shocks resulting from climate issues; and (v) recovery in demand for services and employment, driven by the sharp decline in the number of Covid-19 cases and the consequent increase of mobility. Despite the failure in achieving the inflation target, the monetary policy kept the tightening movement, with Selic rate reaching 13.75% per year. Finally, throughout 2022, uncertainties in the external environment, the electoral process and discussions surrounding the future of the fiscal framework in Brazil brought volatility to asset prices, in particular to the exchange rate, which ended the year at BRL/USD 5.22.

The Brazilian insurance market maintained the pace of two digits of nominal growth observed in the previous year, with an increase of 16.1%1 in the total volume of insurance premiums, pension plans contributions and premium bonds collection, according to data made available by the Superintendence of Private Insurance (SUSEP). The main increase was in insurance premiums written (+21.3%), while pension plans contributions and premium bonds collections grew by 11.0% and 16.9%, respectively.

On the operational side, despite the record volume of crop insurance claims at the beginning of the year related to the weather events that affected the Summer Crop productivity, 2022 was a year of expressive reduction in the number of claims reported related to Covid-19, which benefited products with death coverage. In the pension plan segment, the industry's net inflows² reached R$24.7 billion, 75.4% higher than the reported in 2021, mainly driven by the growth of contributions.

1. Total variation in the sum of premiums written, pension plans contributions and premium bonds collection. It does not include health insurance. Source: SUSEP - December 2022.
2. Source: Quantum Axis

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Consolidated Financial Statements - 2022

BB Seguridade Participações S.A.

3 - FINANCIAL PERFORMANCE

As a holding company, BB Seguridade's net income consists basically of the equity income arising from its investees, along with the holding standalone operating and financial income and expenses.

The table below presents BB Seguridade´s income statement for 2022 and 2021, as well as the comments on the main variations of the year:

Table 1 - Financial performance | Income Statement - Parent

R$ thousand	FY2022	FY2021	Var.%
			On 2021
Equity income	6,042,788	3,923,593	54.0
BB MAPFRE Participações S.A. (Brasilseg)	2,081,551	1,067,020	95.1
Brasilprev Seguros e Previdência S.A.	1,116,786	756,544	47.6
Brasilcap Capitalização S.A.	145,199	2,341	6,102.4
Brasildental Operadora de Planos Odontológicos S.A.	20,902	17,083	22.4
BB Corretora de Seguros e Administradora de Bens S.A.	2,729,478	2,162,039	26.2
Other	(51,128)	(81,434)	(37.2)
Other income and expenses	(13,537)	(8,572)	57.9
Personnel expenses	(14,955)	(12,167)	22.9
Administrative expenses	(3,867)	(3,152)	22.7
Tax expenses	(2,914)	(2,083)	39.9
Other operating income/(expenses)	8,199	8,830	(7.1)
Financial result	16,370	22,901	(28.5)
Financial income	44,465	26,992	64.7
Financial expenses	(28,095)	(4,091)	586.8
Earnings before taxes	6,045,621	3,937,922	53.5
Income taxes	(1,050)	(4,705)	(77.7)
Net income	6,044,571	3,933,217	53.7

In 2022, BB Seguridade net income increased R$2.1 billion (+53.7%), to R$6.0 billion, highlighting:

• Brasilseg (+R$1.0 billion): supported by the evolution in earned premiums, loss ratio improvement and growth of net investment income;
• BB Corretora (+R$567.4 million): with brokerage revenues increase in all business lines and higher financial results;
• Brasilprev (+R$360.2 million): driven by the improvement in the net investment income, with the expansion of the average balance of earning assets, lower negative impact of MtM results in the comparative and a greater balance between the inflation indexes in the adjustment of assets and liabilities of traditional plans; and
• Brasilcap (+R$142.9 million): sustained by the higher net investment income. The performance is attributed to the expansion of the average balance of earning assets and the spike in the Selic rate.

The performance of each investee company will be better explained below.

The other income and expenses line grew by 57.9%, driven by higher personnel expenses, with the expansion in the number of employees and filling of vacant positions. Also explaines the variation: the growth of tax expenses, concentrated in PIS and Cofins charged on financial income, which rose 64.7%; and the increase of administrative expenses, due to higher costs with rental and condominium fees, business trip, specialized technical services and communication.

The positive balance of other operating income/(expenses) was 7.1% lower, impacted by the higher volume of provisions for civil lawsuits and the write-off of intangible assets in 2022, while last year this line was positively impacted by the reversal of provision for labor lawsuits and recovery of charges.

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