MD&A
4Q22
#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 4Q22 | 2 |
4Q22 Earnings Conference Call
February 9th, 2023
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_ZD5UA2CORNOm- jint50VIQor 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 4Q22 | 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. % | Annual Flow | Chg. % | |||||
R$ thousand | 4Q21 | 3Q22 | 4Q22 | On 4Q21 | On 3Q22 | 2021 | 2022 | On 2021 |
Equity income | 1,223,678 | 1,648,550 | 1,807,766 | 47.7 | 9.7 | 3,923,594 | 6,042,788 | 54.0 |
Underwritting and accumulation businesses | 728,785 | 883,131 | 1,108,437 | 52.1 | 25.5 | 1,842,988 | 3,364,438 | 82.6 |
Brasilseg | 401,288 | 636,121 | 636,033 | 58.5 | (0.0) | 1,067,020 | 2,081,551 | 95.1 |
Brasilprev | 406,968 | 217,118 | 425,461 | 4.5 | 96.0 | 756,544 | 1,116,786 | 47.6 |
Brasilcap | (83,753) | 25,002 | 41,959 | - | 67.8 | 2,341 | 145,199 | 6,101.7 |
Brasildental | 4,283 | 4,890 | 4,985 | 16.4 | 1.9 | 17,083 | 20,902 | 22.4 |
Distribution businesses | 552,870 | 750,605 | 771,759 | 39.6 | 2.8 | 2,162,039 | 2,729,478 | 26.2 |
Other | (57,977) | 14,814 | (72,431) | 24.9 | - | (81,433) | (51,128) | (37.2) |
G&A expenses | (4,772) | (5,542) | (5,568) | 16.7 | 0.5 | (17,788) | (23,000) | 29.3 |
Net investment income | 9,331 | 10,673 | 3,939 | (57.8) | (63.1) | 32,117 | 25,833 | (19.6) |
Earnings before taxes and profit sharing | 1,228,237 | 1,653,681 | 1,806,137 | 47.1 | 9.2 | 3,937,922 | 6,045,621 | 53.5 |
Taxes | (1,605) | (1,501) | 451 | - | - | (4,705) | (1,050) | (77.7) |
Net income | 1,226,632 | 1,652,180 | 1,806,588 | 47.3 | 9.3 | 3,933,217 | 6,044,571 | 53.7 |
In 4Q22, BB Seguridade reported net income of R$1.8 billion
(+47.3% YoY). The R$580.0 million increase was mainly driven by:
- Brasilseg (+R$234.7 million): boosted by the growth of retained earned premiums, loss ratio improvement, especially in term life and crop insurances, and higher net investment income;
- BB Corretora (+R$218.9 million): sustained by the evolution of brokerage revenues, due to the success of commercial incentives to Banco do Brasil's sales force, and the increase in the net investment income, with the higher Selic rate and the expansion of interest earning assets;
- Brasilcap (+R$125.7 million): explained by the financial result, with improvement in the net interest margin supported by the higher yield on earning assets, which was negatively impacted in 4Q21 by market-to-market losses in the disposal of prefixed income bonds available for sale; and
- Brasilprev (+R$18.5 million): positively impacted by the lower tax rate in the quarter, driven by the tax benefit arising from IoC distribution, the higher tax credit arising from "Lei do Bem" and the lower CSLL rate, which had been increased by 5.0 p.p. in the second half of 2021.
In 2022, 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$360.2 million): driven by the improvement in the net investment income, with the expansion of the average balance of earning assets, lower negative impact of MtM results in the comparative and the convergence of the inflation rates pegged to assets and liabilities of traditional plans; and
- Seguridade Participações S.A. | Management Discussion & Analysis 4Q22
Figure 1 - Non-interest operating results¹
Chg. On 4Q21 | Chg. On 2021 | |
Brasilseg | 25.5% | 83.5% |
Brasilprev | (11.7% ) | 0.3% |
Brasilcap | - | (65.8% ) |
Brasildental | 4.0% | 6.7% |
BB Corretora | 35.0% | 19.4% |
Total | 21.0% | 27.9% |
¹Non-interest operating results before taxes, weighted by the equity stake
Figure 2 - Normalized net income (R$ million)
6,048
6,045 | |||||||||||
3,941 | |||||||||||
1,227 | 1,807 | 3,933 | |||||||||
1,753 | 1,687 | ||||||||||
1,123 | 1,652 | ||||||||||
103 | (101) | 120 | (7) | (3) | |||||||
4Q21 | 3Q22 | 4Q22 | 2021 | 2022 | |||||||
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$142.9 million): sustained by the improvement in the net investment income. The performance is attributed to the higher yield and to the expansion of the average balance of earning assets.
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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
25.3 | |
18.0 | |
10.8 | 14.1 |
2.8 | |
1,088 |
457 | ||||
232 | ||||
133 | 110 | |||
4Q21 | 3Q22 | 4Q22 | 2021 | 2022 |
In 4Q22, the consolidated financial result of BB Seguridade and its investees reached R$456.5 million, a volume more than 3x higher than the one recorded in the 4Q21. The higher average Selic rate and the expansion of the average balance of earning assets were the main drivers to the growth. It is worth noting that the fourth quarter of 2021 was negatively impacted by MtM losses in the disposal of prefixed bonds available for sale at Brasilcap and, to a lesser extent, at Brasilseg.
In the year, the combined financial result amounted to R$1.1 billion, compared to R$109.9 million in 2021. The following effects had contributed to the impressive growth: (i) the spike of the average Selic rate, with positive impacts to all companies within the group; (ii) the strong evolution of Brasilprev's net investment income, with expansion in the volume of earning assets, the parity of inflation rates that adjust assets and liabilities of defined benefit plans and the lower negative MtM impact, considering the lesser extent of the upward shifting of the forward yield curve as compared to 2021.
Net investment income (R$ million) | % Net income |
Figure 4 - Inflation rate (%)
5.5
3.0 | 3.7 | |||
4.6 | ||||
1.6 | ||||
1.5 | 3.2 | 2.5 | 0.1 | -1.1 |
2.2 | ||||
0.02 | -1.3 | |||
-1.4 | -2.5 | |||
4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 |
IPCA | IGP-M | IGP-M (lagged)¹ |
1. IGP-M with a lag of one month.
Figure 7 - Financial investments (%)
7.9 | |
Dec/22 | 38.9 |
53.2 | |
8.2 | |
Sep/22 | 39.6 |
52.2 | |
9.0 | |
Dec/21 | 31.9 |
59.1 | |
Available for sale | |
Trading | |
Held to maturity |
Figure 5 - Average Selic rate (%)
13.47 | 13.65 |
12.37 | |
10.42 | |
7.62 |
4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 |
Figure 8 - Financial investments by index (%)
0.1
Dec/22 | 16.2 |
29.6 | |
54.1 | |
0.2 | |
Sep/22 | 14.6 |
30.2 | |
55.1 | |
0.1 | |
Dec/21 | 20.3 |
21.7 | |
58.0 | |
Other | |
Pre-fixed | |
Floating | |
Inflation |
Figure 6 - Forward yield curve (%)
13.70
13.45 | |||||
13.67 | 12.70 | 12.60 | 12.61 | dec/22 | |
11.78 | 12.81 | ||||
11.61 | 11.50 | 11.54 | |||
sep/22 | |||||
10.99 | 10.60 | 10.63 | |||
10.51 | sep/21 | ||||
10.45 | 10.57 | dec/21 | |||
10.25 | |||||
9.90 | |||||
9.16 | ||||
DI1F23 | DI1F24 | DI1F25 | DI1F26 | DI1F27 |
Figure 9 - Trading portfolio by index
(%)
0.2
Dec/22 3.8 20.0
76.0
0.5
Sep/22 3.4 20.3
75.8
0.3 | |
Dec/21 | 4.1 |
28.6 | |
67.0
Other Pre-fixed Inflation Floating
BB Seguridade Participações S.A. | Management Discussion & Analysis 4Q22 | 5 |
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BB Seguridade Participações SA published this content on 09 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 February 2023 10:15:13 UTC.