MD&A
3Q22
#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 3Q22 | 2 |
3Q22 Earnings Conference Call
November 7th, 2022
Portuguese with simultaneous translation into English
Time: 11:00 AM (Brasilia time) 09:00 AM (EST)
Livestream via ZOOM platform
To register for the event and receive the connection
information, access: https://bbseguros- br.zoom.us/webinar/register/WN_61mIOLFPSG6uAf9H A1L6Nwor 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 3Q22 | 3 |
#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. % | 9 Months Flow | Chg. % | |||||
R$ thousand | 3Q21 | 2Q22 | 3Q22 | On 3Q21 | On 2Q22 | 9M21 | 9M22 | On 9M21 |
Equity income | 974,497 | 1,407,388 | 1,648,550 | 69.2 | 17.1 | 2,699,916 | 4,235,022 | 56.9 |
Underwritting and accumulation businesses | 404,481 | 766,748 | 883,131 | 118.3 | 15.2 | 1,114,203 | 2,256,001 | 102.5 |
Brasilseg | 242,185 | 546,845 | 636,121 | 162.7 | 16.3 | 665,733 | 1,445,518 | 117.1 |
Brasilprev | 119,072 | 172,298 | 217,118 | 82.3 | 26.0 | 349,576 | 691,325 | 97.8 |
Brasilcap | 39,633 | 42,783 | 25,002 | (36.9) | (41.6) | 86,094 | 103,240 | 19.9 |
Brasildental | 3,591 | 4,822 | 4,890 | 36.2 | 1.4 | 12,800 | 15,918 | 24.4 |
Distribution businesses | 579,169 | 631,810 | 750,605 | 29.6 | 18.8 | 1,609,169 | 1,957,719 | 21.7 |
Other | (9,153) | 8,830 | 14,814 | - | 67.8 | (23,456) | 21,302 | - |
G&A expenses | (4,160) | (5,900) | (5,542) | 33.2 | (6.1) | (13,016) | (17,433) | 33.9 |
Net investment income | 6,256 | 4,698 | 10,673 | 70.6 | 127.2 | 22,785 | 21,894 | (3.9) |
Earnings before taxes and profit sharing | 976,593 | 1,406,185 | 1,653,681 | 69.3 | 17.6 | 2,709,685 | 4,239,483 | 56.5 |
Taxes | (772) | 186 | (1,501) | 94.5 | - | (3,100) | (1,501) | (51.6) |
Net income | 975,821 | 1,406,371 | 1,652,180 | 69.3 | 17.5 | 2,706,585 | 4,237,982 | 56.6 |
In 3Q22, BB Seguridade reported net income of R$1.7 billion (+69.3% YoY), in a quarter with strong commercial performance of insurance, pension plans and premium bonds segments, loss ratio improvement and higher net investment income. The R$676.4 million increase was mainly driven by:
- Brasilseg (+R$393.9 million): boosted by the growth in earned premiums (+21.5%), the drop in loss ratio, which improved in the main business lines (term life, credit life and rural), and the increase in the net investment income;
- BB Corretora (+R$171.4 million): supported by the growth in brokerage revenues and the higher net investment income, driven by the spike in the average Selic rate and the expansion of average volumes; and
- Brasilprev (+R$98.0 million): with a lower negative result of net investment income compared to 3Q21, explained by positive MtM result partially offsetting the temporal mismatch in the adjustments of defined benefit plans reserves, which was more severe this quarter due to the sharp deceleration of inflation rates.
On the other hand, Brasilcap contribution decreased R$14.6 million, with the contraction in the net interest margin, due to the higher costs of liabilities, which is justified by the spike of the reference rate (TR), and the negative adjustment of the hedge on prefixed portfolio classified as available for sale.
Year-to-date, net income increased R$1.5 billion (+56.6%), to R$4.2 billion, highlighting:
- Brasilseg (+R$779.8 million): supported by the increase in both the earned premium and financial result, and by the loss ratio improvement;
- BB Corretora (+R$348.6 million): driven by the growth in brokerage revenues and the increase in the net investment income;
- Brasilprev (+R$341.7 million): supported by the improvement in net investment income, with the expansion of the average volume of earning assets and the lower impact of negative MtM results; and
Figure 1 - Non-interest operating results¹
Chg. On 3Q21 | Chg. On 9M21 | |
Brasilseg | 147.0% | 124.8% |
Brasilprev | 3.5% | 4.6% |
Brasilcap | (80.0% ) | (52.8% ) |
Brasildental | 20.0% | 7.5% |
BB Corretora | 22.0% | 14.3% |
Total | 40.4% | 30.7% |
¹Non-interest operating results before taxes, weighted by the equity stake
Figure 2 - Normalized net income (R$ million)
4,361
4,238 | |||||||||||
2,817 | |||||||||||
1,753 | 2,707 | ||||||||||
1,482 | |||||||||||
1,044 | 1,652 | ||||||||||
1,406 | |||||||||||
976 | |||||||||||
(69) | (75) | (101) | (111) | (123) | |||||||
3Q21 | 2Q22 | 3Q22 | 9M21 | 9M22 | |||||||
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.
- Brasilcap (+R$17.1 million): with the improvement in the net interest margin and the expansion in the average volume of
earning assets.
BB Seguridade Participações S.A. | Management Discussion & Analysis 3Q22 | 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
11.8 | 14.1 | 14.9 | |
1.4 | (0.8) | 631 | |
232 | ||||
166 | ||||
14 | ||||
-23 | ||||
3Q21 | 2Q22 | 3Q22 | 9M21 | 9M22 |
In 3Q22, the consolidated financial result of BB Seguridade and its investees reached R$232.4 million, compared to R$14.1 million recorded in the same period of 2021. The spike in the Selic rate, combined with the volumes expansion and the flattening real yield curve, the last one benefiting specifically Brasilprev, were the main drivers to the net investment income growth. On the other hand, the positive impact was partially offset by the temporal mismatch in the adjustments of defined benefit plans assets and liabilities of Brasilprev, due to the sharp deceleration of inflation rates over 3Q22.
In 9M22, the combined financial result was positive by R$631.0 million, compared to a financial loss of R$22.9 million in 9M21, as a result of the higher average Selic rate benefiting all companies in the group and the improvement in Brasilprev's net investment income, with the expansion in the volume of financial assets and a lower negative MtM result, considering the lesser extent of the upward shifting of the foward yield curve as compared to 9M21.
Net investment income (R$ million) | % Net income |
Figure 4 - Inflation rate (%) | ||||
5.5 | ||||
3.0 | 3.0 | 3.7 | ||
4.6 | ||||
2.1 | 1.5 | 3.2 | 2.5 | 0.1 |
0.8 | 2.2 | |||
0.02 | -1.3 | |||
-1.4 |
3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 |
IPCA | IGP-M | IGP-M (lagged)¹ |
1. IGP-M with a lag of one month.
Figure 7 - Financial investments (%)
8.2 | |
Sep/22 | 39.6 |
52.2 | |
8.9 | |
Jun/22 | 33.1 |
58.0
12.7
Sep/21 | 31.8 |
55.5
Available for sale Trading
Held to maturity
Figure 5 - Average Selic rate (%)
12.37 | 13.47 | |||
10.42 | ||||
7.62 | ||||
4.86 | ||||
3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 |
Figure 8 - Financial investments by index (%)
0.2 | |
Sep/22 | 14.6 |
30.2 | |
55.1 | |
0.1 | |
Jun/22 | 16.1 |
22.7 | |
61.1
0.1 | |
Sep/21 | 25.3 |
19.4 | |
55.2 | |
Other | |
Pre-fixed | |
Floating | |
Inflation |
Figure 6 - Forward yield curve (%)
13.76 13.44
12.75 | 12.63 | 12.65 | jun/22 | |
13.70 | 11.61 | 11.54 | ||
11.50 | ||||
12.81 | sep/22 |
sep/21
10.25 | 10.45 | 10.63 | ||
9.90 | ||||
jun/21 | ||||
9.16 | ||||
8.49 | ||||
8.06 | 8.27 | |||
7.71 | ||||
7.08 | ||||
DI1F23 DI1F24 DI1F25 DI1F26 DI1F27
Figure 9 - Trading portfolio by index
(%)
0.5 | |
Sep/22 | 3.4 |
20.3 | |
75.8 | |
0.3 | |
Jun/22 | 4.8 |
27.3 | |
67.7 | |
0.4 | |
Sep/21 | 8.2 |
31.2 | |
60.2 | |
Other | |
Pre-fixed | |
Inflation | |
Floating |
BB Seguridade Participações S.A. | Management Discussion & Analysis 3Q22 | 5 |
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BB Seguridade Participações SA published this content on 07 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 November 2022 10:11:05 UTC.