Porto Seguro disclosures its 3Q10 Results
Transcription
Porto Seguro disclosures its 3Q10 Results
3Q10 and 9M10 Earnings Release Investor Relations Contact Investor Relations: (+55 11) 3366-5323 (+55 11) 3366-5378 www.portoseguro.com.br [email protected] Media RAF Comunicação (+ 55 11) 5573-8916 www.raf.com.br [email protected] 3Q10 and 9M10 Highlights 3Q10 and 9M10 Earnings Conference Call Date: Friday, November 05, 2010 Net Earnings of R$ 203.1 million in 3Q10. Excluding the nonrecurring effects, Net Earnings was R$190.0 million. > Portuguese 11:00 a.m. (Brasília time) / 09:00 a.m. (New York time) Tel: (+55 11) 3301-3000 Code: Porto Seguro Replay: (+55 11) 3127-4999 Code: 48093503 Total written premiums increase 45.9% in 3Q10 and 44.8% in 9M10. Eliminating the nonrecurring effects, the increase was 11.8% in 3Q10 and 11.9 in 9M10. http://webcast.mz-ir.com/publico.aspx?codplataforma=2321 > English 11:30 p.m. (New York time) / 13:30 p.m. (Brasília time) Tel: +1 (973) 935-8893 and Code: 20253331 Replay: +1 (706) 645-9291 and Code: 20253331 http://webcast.mz-ir.com/publico.aspx?codplataforma=2322 Public Meeting Date: Monday, November 08, 2010 at 6:00 p.m. (Brasília time) Local: Hotel Clarion Rua Bernardo Guimarães, 2032, Lourdes Belo Horizonte – MG OBR Return on financial investments corresponds to 119.0% of the CDI (interbank deposit rate) in 3Q10 and 117.0% of the CDI in 9M10. Total loss ratio of 56.2% in 3Q10, down 2.2 p.p. from 3Q09 and 57.4% in 9M10, down 1.3 p.p. from 9M09. Combined ratio of 94.4% in 3Q10 and 95.6% in 9M10. Excluding ISa+r, Combined Ratio was 95.5 in 3Q10 and 96.9 in 9M010. ROAE of 23.3% in 3Q10, 9.6 p.p. higher than 3Q09. Eliminating the nonrecurring effects, the ROAE was 21.8% in 3Q10 and 18.2% in 9M10. ABOUT PORTO SEGURO Porto Seguro is one of Brazil’s leading insurance companies. Since 1945 it has offered through its subsidiaries a broad range of insurance products, which include automotive, health, business, life and pension plans, property and transportation. It is the leader in auto insurance and homeowner also ranks third nationwide in corporate health plans, with these segments representing its main key product lines. 1 3Q10 and 9M10 Earnings Release Message from the Management In this quarter, we achieved a better performance in our operational and financing indicators. We had reduction in total loss ratio, in the G&A and commission, and also an increase in the financial result. The combined ratio was 94.4% in 3Q10, down 4.8 p.p. from 3Q09, and the amplified combined ratio reached 85.7%, down 5.6% p.p. from 3Q09. The written premiums in 3Q10 increased 45.9% from 3Q09, excluding ISa+r, the increase was 11.8%. The consolidated net earnings reached R$ 203.1 million in the quarter, 177.1% higher from 3Q09, with a ROAE of 23.3%. Eliminating the nonrecurring effects, net earnings was R$190,0 million in 3Q10, with a ROAE of 21.8%. Written Premiuns (R$ million) Porto Seguro with ISa+r 44.8% 45.9% 1.411,3 5.714,1 3Q10 9M09 9M10 1.411,3 1.577,4 3Q09 3Q10 Net Income (R$ million) Porto Seguro with ISa+r 124.4% 4.414,1 3.946,2 11.9% 11.8% 3.946,2 2.059,3 3Q09 Written Premiuns (R$ million) Porto Seguro without ISa+r 9M09 Net Income (R$ million) Porto Seguro without ISa+r 470.3 52.6% 177.1% 203.1 89.8% 209.6 9M10 319.9 209.6 139.1 73.3 73.3 3Q09 3Q10 9M09 9M10 3Q10 3Q10 9M09 9M10 * The 177.1% increase in net earnings in 3Q10 in relation to 3Q09 is mainly due to: (i) the recording of results from ISa+r; (ii) the growth of 45.9% in written premiums; iii) the 2.2 p.p. reduction in the loss ratio; iv) the 1.7 p.p. decrease in total G&A; v) the 0.9 p.p. reduction in commission expenses; vi) and due to nonrecurring effect of 13.1 million related to the reversal of provision for loss of tax losses on the basis of technical study on the expectation of tax credit realization. 2 3Q10 and 9M10 Earnings Release ROAE % - anualized Porto Seguro without ISa+r ROAE % - anualized 9.6 p.p. Porto Seguro with ISa+r 23.3 13.7 3Q09 9.5 p.p. 23.2 5.0 p.p. 18.5 5.2 p.p 18.7 13.7 9M10 3Q09 13.5 13.5 3Q10 9M09 3Q10 9M09 9M10 Written Premiums Breakdown (%)* 3Q09 3Q10 without ISa+r 3Q10 with ISa+r 3,9 4,5 10,6 3,0 6,2 2,5 6,0 7,6 4,2 8,0 5,0 5,4 11,6 9,0 11,8 63,7 68,0 Auto Health Life P&C 66,9 DPVAT Other 3 Operating and Financial Highlights 3Q10 vs. 3Q09 – 9M10 vs. 9M09 Consolidated Revenues (in R$ thousand) Written Premiums Porto Seguro – Auto Azul Seguros – Auto Isar - Auto Total Auto Health Life P&C P&C - Isa+r Total P&C DPVAT Other Porto Seguro Del Uruguay Written Premiums VGBL Total Written Premiums Pension Plan Contribution Surveillance Services Consortium Credit Operations Other Net Financial Results Total Revenue Additional Information (in R$ thousand) Total Earned Premiums Financial Results – Insurance Ratios (%) Loss Ratio Porto Seguro – Auto Azul Seguros – Auto ISar - Auto Total Auto Health Life P&C - Porto P&C - Isar Total P&C Total Loss Ratio Commission Ratio – Insurance G&A Ratio – Insurance Tax Expenses - Insurance G&A and Tax Expenses Ratio – Insurance Combined Ratio Amplified Combined Ratio 3Q10 760.7 243.7 396.4 1,400.8 186.1 85.7 94.4 62.9 157.3 62.4 120.3 17.5 29.2 2,059.3 37.7 15.3 34.4 42.9 24.0 204.7 2,418.3 3Q10 1,851.9 186.6 3Q10 3Q09 743.8 200.5 944.3 163.5 70.4 63.6 63.6 55.5 77.8 12.3 23.9 1,411.3 31.0 16.2 29.7 38.8 9.2 114.2 1,650.4 3Q09 1,244.7 108.3 3Q09 51.3 67.3 65.1 57.6 72.9 37.3 41.9 25.1 34.0 56.2 20.4 15.7 2.1 17.8 94.4 85.7 53.7 69.3 56.7 79.2 35.0 41.7 41.7 58.4 21.3 17.0 2.5 19.5 99.2 91.3 Shareholder's Equity (R$ million) Var. % Net Earnings (R$ million) Var.% ROAE % EPS in R$ Var. % 3,596.1 203.1 23.3 0.62 2,173.2 73.3 13.7 0.32 # of thousand shares 327,642 229,349 Var.% 9M10 2.3 21.5 48.3 13.8 21.7 48.4 147.3 12.4 54.6 42.3 22.2 45.9 21.6 (5.6) 15.8 10.6 160.9 79.2 46.5 Var.% 9M09 2,205.7 660.4 1,047.6 3,913.7 520.3 231.2 244.2 197.4 441.6 218.2 258.9 48.7 81.5 5,714.1 100.1 42.7 98.1 125.2 60.6 537.7 6,678.5 9M10 48.8 72.3 Var.% / p.p (2.4) (2.0) 0.9 (6.3) 2.3 0.2 (7.7) (2.2) (0.9) (1.3) (0.4) (1.7) (4.8) (5.6) 65.5 177.1 9.6 93.8 2,031.0 522.6 2,553.6 500.7 212.3 196.9 196.9 167.5 209.3 39.2 66.7 3,946.2 91.1 45.6 84.3 100.3 23.7 400.5 4,691.7 9M09 5,426.1 493.6 9M10 3,644.7 376.0 9M09 Var% 8.6 26.4 53.3 3.9 8.9 24.0 124.3 30.3 23.7 24.2 22.2 44.8 9.9 (6.4) 16.4 24.8 155.7 34.3 42.3 Var% 48.9 31.3 Var. % / p.p. 53.1 68.9 66.1 59.1 70.5 33.4 43.5 27.2 35.5 57.4 20.1 15.8 2.3 18.1 95.6 87.6 52.6 72.8 56.4 77.6 35.0 46.3 46.3 58.7 21.7 17.2 2.5 19.7 100.1 90.7 0.5 (3.9) 2.7 (7.1) (1.6) (2.8) (10.8) (1.3) (1.6) (1.4) (0.2) (1.6) (4.5) (3.1) 3,596.1 470.3 18.7 1.44 2,173.2 209.6 13.5 0.91 65.5 124.4 5.2 58.2 327,642 229,349 4 Operating and Financial Highlights 3Q10 vs. 3Q09 – 9M10 vs 9M09 Excluding ISa+r Revenues (in R$ thousand) Written Premiums Porto Seguro – Auto Azul Seguros – Auto Total Auto Health Life P&C DPVAT Other Porto Seguro Del Uruguay Written Premiums VGBL Total Written Premiums Pension Plan Contribution Surveillance Services Consortium Credit Operations Other Net Financial Results Total Revenue Additional Information (in R$ thousand) Total Earned Premiums Financial Results – Insurance Ratios (%) 3Q10 3Q09 760.7 243.7 1,004.4 186.1 85.7 94.4 39.8 120.3 17.5 29.2 1,577.4 37.7 15.3 34.4 42.9 24.0 136.5 1,868.2 3Q10 Var.% 743.8 200.5 944.3 163.5 70.4 63.6 55.5 77.8 12.3 23.9 1,411.3 31.0 16.2 29.7 38.8 9.2 114.2 1,650.4 3Q09 1,414.1 118.5 3Q10 2.3 21.5 6.4 13.8 21.7 48.4 (28.3) 54.6 42.3 22.2 11.8 21.6 (5.6) 15.8 10.6 160.9 19.5 13.2 Var.% 1,244.7 108.3 3Q09 51.3 67.3 54.8 72.9 37.3 41.9 54.9 20.8 17.7 2.1 19.8 95.5 88.1 53.7 69.3 56.7 79.2 35.0 41.7 58.4 21.3 17.0 2.5 19.5 99.2 91.3 Shareholder's Equity (R$ million) Var. % Net Earnings (R$ million) Var. % ROAE % EPS in R$ Var. % 2,469.3 139.1 23.2 0.61 2,173.2 73.3 13.7 0.32 # of million shares 229,349 229,349 2,205.7 660.4 2,866.1 520.3 231.2 244.2 163.2 258.9 48.7 81.5 4,414.1 100.1 42.7 98.1 125.2 60.5 370.3 5,211.0 9M010 13.6 9.4 Var.% / p.p. Loss Ratio Porto Seguro – Auto Azul Seguros – Auto Total Auto Health Life P&C - Porto Total Loss Ratio Commission Ratio – Insurance G&A Ratio – Insurance Tax Expenses - Insurance G&A and Tax Expenses Ratio– Insurance Combined Ratio Amplified Combined Ratio 9M010 (2.4) (2.0) (1.9) (6.3) 2.3 0.2 (3.5) (0.5) 0.7 (0.4) 0.3 (3.7) (3.2) 13.6 89.8 9.5 90.6 4,128.9 326.2 9M010 9M09 2,031.0 522.6 2,553.6 500.7 212.3 196.9 167.5 209.3 39.2 66.7 3,946.2 91.1 45.6 84.3 100.3 23.7 400.5 4,691.7 9M09 3,644.7 376.0 9M09 53.1 68.9 56.4 70.5 33.4 43.5 56.3 20.5 17.5 2.6 20.1 96.9 89.7 52.6 72.8 56.4 77.6 35.0 46.3 58.7 21.7 17.2 2.5 19.7 100.1 90.7 2,469.3 319.9 18.5 1.39 2,173.2 209.6 13.5 0.91 229,349 229,349 Var.% 8.6 26.4 12.2 3.9 8.9 24.0 (2.6) 23.7 24.2 22.2 11.9 9.9 (6.4) 16.4 24.8 155.3 (7.5) 11.1 Var.% 13.3 (13.2) Var.% / p.p. 0.5 (3.9) (7.1) (1.6) (2.8) (2.4) (1.2) 0.3 0.1 0.4 (3.2) (1.0) 13.6 52.6 5.0 53.8 5 Operating and Financial Highlights 3Q10 vs. 3Q09 – 9M10 vs 9MH09 Results from Insurance Operations (Consolidated) Result from Insurance Operations 3Q10 1,851.9 (1,040.2) (159.2) (48.1) (330.1) 186.6 R$ million Earned Premiums Retained Claims Variation of Techinical Reserves - Insurance Reinsurance Premiums Administrative Expenses and Taxes - Insurance Financial Result - Insurance 3Q09 1,244.7 (727.4) (152.5) (14.1) (242.7) 108.3 Var. % 48.8 43.0 4.4 241.1 36.0 72.3 9M10 5,426.1 (3,112.4) (228.6) (59.3) (982.8) 493.6 9M09 3,644.7 (2,138.1) (276.1) (25.4) (717.0) 376.0 Var.% 48.9 45.6 (17.2) 133.5 37.1 31.3 Combined Ratio % % Combined Ratio 99.2 19.5 97.9 95.1 17.8 19.1 20.1 94.7 94.4 18.7 17.8 19.8 20.0 20.4 20.8 54.9 21.3 20.5 58.4 55.5 60.0 56.0 56.2 3Q09 4Q09* 1Q10 2Q10 3Q10 G&A and Taxes 95.5 Comission 3Q10 (ex ISa+r) Loss Ratio * Including ISa+r, since 4Q09. 6 Auto Porto Seguro Auto 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) Insured Vehicles (thousand) 760.7 51.3 743.8 53.7 2.3 (2.4) 2,205.7 53.1 1,808 2,031.0 52.6 1,704 8.6 0.5 6.1 Azul Seguros Auto 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) Insured Vehicles (thousand) 243.7 67.3 200.5 69.3 21.5 (2.0) 660.4 68.9 730 522.6 72.8 587 26.4 (3.9) 24.4 Itaú Seguros Auto 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) Insured Vehicles (thousand) 396.4 65.1 1047.6 66.1 1,051 Consolidated Auto Insurance % Loss Ratio Writtem Premiums R$ (million) with ISa+r 56.7 3,913.7 944.3 1,004.4 1,400.8 3Q09 3Q10 without ISa+r 3Q10 with ISa+r 59.1 57.6 53.3% 48.3% 2.7p.p. 0.9 p.p. 2,553.6 2,866.1 9M09 9M10 without ISa+r 9M10 with ISa+r 56.4 56.4 3Q09 3Q10 without ISa+r Insured Fleet (million) 56.7% 54.8 3Q10 with ISa+r 9M09 9M10 9M10 with without ISa+r ISa+r 2,291 2,538 9M09 9M10 without ISa+r 3,589. 9M10 with ISa+r Written premiums in Porto Seguro auto portfolio totaled R$ 760.7 million in 3Q10, an increase of 2.3% from R$ 743.8 million in 3Q09. This increase basically reflects the expansion of 6.1% in the number of insured vehicles, partially offset by the growth in places where the average premium is lower. The 2.4 p.p. decrease in the loss ratio at Porto Seguro Auto in 3Q10 in relation to 3Q09 is mainly due to risk acceptance criteria adjustments and decrease in robbery and theft frequency; Written premiums in Azul Seguros auto totaled R$ 243.7 million in 3Q10, an increase of 21.5% from R$ 200.5 million in 3Q09. This increase is mainly due to the 24.4% expansion in the number of insured vehicles in the quarter, partially offset by the growth in places where the average premium is lower. The loss ratio in the quarter was down 2.0 p.p. from 3Q09, mainly due to acceptance criteria adjustments and decrease in robbery and theft frequency; Written premiums in the auto portfolio of ISa+r (Itaú Seguros de Automóvel e Residência) totaled 396.4 million, with a loss ratio of 65.1%. 7 Health Health Insurance 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) Lives insured (thousand) 186.1 72.9 163.5 79.2 13.8 (6.3) 520.3 70.5 455 500.7 77.6 380 3.9 (7.1) 19.7 Written premiums in health insurance totaled R$ 186.1 million in 3Q10, 13.8% higher than 3Q09, primarily reflecting the increase of 19.7% in the number of insured lives, partially offset by the reduction in the age group. The loss ratio was 72.9% in 3Q10, down 6.3 p.p. from 3Q09, basically explained by the lower use frequency, the more stable economic situation, and by the elimination of deficit policies. % Loss Ratio - Health 79.2% 71.4% 72.0% 72.9% 2Q10 3Q10 66.2% 3Q09 4Q09 1Q10 8 Property & Casualty P&C Commercial 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 55.5 44.1 42.9 41.3 29.4 2.8 146.3 43.0 111.9 45.6 30.7 (2.6) Building 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 4.2 39.9 4.6 51.8 (8.7) (11.9) 11.4 53.4 12.1 60.8 (5.8) (7.4) Porto Homeowner 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 20.3 46.4 8.3 51.3 144.6 (4.9) 58.4 50.1 50.2 53.1 16.3 (3.0) Other 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 14.4 15.5 7.8 16.3 84.6 (0.8) 28.1 21.4 22.7 18.8 23.8 2.6 Total Porto P&C 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 94.4 41.9 63.6 41.7 48.4 0.2 244.2 43.5 196.9 46.3 24.0 (2.8) ISa+r Homeowner 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 62.9 25.1 - - 197.4 27.2 - - Total P&C with ISa+r 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) 157.3 34.0 63.6 41.7 147.3 (7.7) 441.6 35.5 196.9 46.3 124.3 (10.8) Total written premiums in property and casualty was R$ 157.3 million in 3Q10, an increase of 147.3% from R$ 63.6 million in 3Q09, mainly reflecting ISa+r (Itaú Seguros de Auto e Residência) portfolio and the increase of 48.4% in Porto Seguro written premiums. The loss ratio was 34.0% in 3Q10, down 7.7 from 3Q09, mainly due to the ISa+r residences portfolio. 9 Life Life Insurance 3Q10 3Q09 Var. % 9M10 9M09 Var.% Written Premiums (R$ million) Loss Ratio (%) - Var (p.p.) Lives insured (thousand) 85.7 37.3 70.4 35.0 21.7 2.3 231.2 33.4 3,090 212.3 35.0 2,688 8.9 (1.6) 15.0 Written Premiums totaled R$ 85.7 million in 3Q10, an increase of 21.7% from 3Q09, due to the higher number of insured lives. The loss ratio in 3Q10 was 2.3 p.p. higher than in 3Q09, mainly due to the increase frequency of claims in mass insurance. Pension Plan and VGBL 3Q10 3Q09 Var. % 9M10 9M09 Var.% Pension Plan Contribution (R$ million) Premiums - VGBL (R$ million) Mathematical Reserves (R$ million) Total Active Participants (thousands) 37.7 29.2 31.0 23.9 21.6 22.2 100.1 81.5 1,408.1 140 91.1 66.7 1,158.7 131 9.9 22.2 21.5 6.9 Revenue from pension plan contributions totaled R$ 37.7 million in 3Q10, an increase of 21.6% from R$ 31.0 million in 3Q09, chiefly due to the higher number of active participants, and an increase in contributions. Revenue from VGBL pension plan contributions totaled R$ 29.2 million in 3Q10, an increase of 22.2% from R$ 23.9 million in 3Q09, basically reflecting the higher number of active participants and the increase in the contributions. 10 Other Business Consortium 3Q10 3Q09 Var. % 9M10 9M09 Var.% Revenues from Consortium operation (R$ million) Consortium Members (thousand) 34.4 29.7 15.8 98.1 61 84.3 54 16.4 12.2 Revenue from consortium services was R$ 34.4 million in 3Q10, an increase of 15.8% from R$ 29.7 million in 3Q09, driven primarily by the 12.2% increase in the number of clients, which reached 61 thousand in 3Q10. Surveillance and Monitoring 3Q10 3Q09 Var. % 9M10 9M09 Var.% Revenues from Consortium operation (R$ million) Clients (thousand) 15.3 16.2 (5.6) 42.7 22 45.6 17 (6.4) 29.4 Revenue from surveillance services was R$ 15.3 million in 3Q10, down 5.6% from 3Q09, basically due to the discontinuity of one of the operations, partially offset by the increase of 29.4% in the number of clients. Credit Operations (Portoseg) 3Q10 3Q09 Var. % 9M10 9M09 Var.% Revenues from Consortium operation (R$ million) 42.9 38.8 10.6 125.2 100.3 24.8 Revenue from credit services was R$ 42.9 million in 3Q10, up 10.6% from R$ 38.8 million in 3Q09, basically explained by the 17.4% growth in credit card operations, partially offset by the 2% decrease in loans and financing. 11.4% Credit Operation Portfolio (R$ million) 1,055.1 947.4 17.4% 766.5 652.8 (2.0%) 294.6 288.6 Credit Card Loans and Financing 3Q09 Total Credit Operation 3Q10 * In this quarter we disclose the total Credit Operation Portfolio, different from the previous where the portfolio showed was expired credit. We believe that this criterion is better to explain the revenues from the portfolio. 11 Administrative Expenses Administrative Expenses 3Q10 168,048 57,379 81,214 27,921 6,853 341,415 Payroll Outsourced Services Location and Operating Advertising Other Administrative Expenses 3Q09 121,327 34,399 53,198 26,647 9,181 244,752 Var. % 38.5 66.8 52.7 4.8 (25.4) 39.5 9M10 489,533 148,738 219,477 70,555 64,548 992,851 9M09 362,914 93,475 179,582 56,206 25,039 717,216 Var.% 34.9 59.1 22.2 25.5 157.8 38.4 Administrative expenses increased 39.5% in 3Q10 in comparison to 3Q09 due to, mainly the ISa+r incorporation. Administrative Expenses Excluding ISa+r R$ thousand Payroll Outsourced Services Location and Operating Advertising Other Administrative Expenses 3Q10 3Q09 Var. % 9M10 9M09 Var.% 146,405 50,736 70,958 27,388 3,887 299,374 121,327 34,399 53,198 26,647 9,181 244,752 20.7 47.5 33.4 2.8 (57.7) 22.3 424,298 133,899 199,499 69,891 25,758 853,345 362,914 93,475 179,582 56,206 25,039 717,216 16.9 43.2 11.1 24.3 2.9 19.0 Administrative expenses increased 22.3% in 3Q10 in comparison to 3Q09 due to, mainly; (i) the increase of 20.7% of expenses with payroll as a result of the 5.0% increased under collective union agreement and the 14.2% expansion in number of employees; (ii) the 47.5% increase in costs to third parties; (iii) the 33.4% increase in location and operations costs, mainly due to business expansion. The G&A and tax was 17.8% in 3Q10, down 1.7 p.p. from 3Q09. Administrative Expenses (%) 19.5% 19.1% 3Q09 4Q09 17.8% 18.7% 17.8% 1Q10 2Q10 3Q10 19.8% 3Q10 without ISa+r 12 Other Expenses/ Operating Revenue Other Operational Expenses/Revenues R$ thousand Other Operating Revenues Other Operating Expenses Other Oper. Reven./Expenses 3Q10 3Q09 Var. % 9M10 9M09 Var.% 147.4 (113.3) 34.1 71.8 (77.7) (5.9) 105.3 45.8 - 373.2 (340.3) 32.9 199.7 (249.2) (49.5) 86.9 36.6 (166.5) The 105.3% increase in other operational revenues and 45.8% increase in other operational expenses were due mainly by the ISa+r association. Other Operational Expenses/Revenues Excluding ISa+r R$ thousand 3Q10 3Q09 Var. % 9M10 9M09 Var.% Other Operating Revenues Other Operating Expenses 105.7 (82.4) 23.3 71.8 (77.7) (5.9) 47.2 6.0 (494.9) 296.5 (270.6) 25.9 199.7 (249.2) (49.5) 48.5 8.6 (152.3) Other Oper. Reven./Expenses The 47.2% increase in other operational revenues was due mainly by the growth of policy issues and the administrative fees by credit card; The 6.0% increase in other operating expenses in the quarter was due mainly by the increase in costs on gratifications for service providers, inspection of risks and preventive actions. 13 Investment Income Investment Portfolio Financial Income / Expenses Financial Income R$ thousand 3Q10 3Q09 Var. % 9M10 9M09 Var. % Investment - Ex-Pension Plan Investment - Pension Plan 101.1 58.1 70.5 45.5 43.4 27.7 249.0 143.2 261.0 120.5 (4.6) 18.8 Other Revenues 49.1 48.6 1.0 151.2 149.5 1.1 Investment - Isa+r Other Revenues - Isa+r Total Financial Income 55.0 18.2 281.5 164.6 71.0 133.4 53.2 730.0 531.0 37.5 R$ thousand 3Q10 3Q09 Var. % 9M10 9M09 Var. % Pension Plan Operations ISa+r Other Expenses Total Financial Expenses 46.3 5.0 25.7 77.0 34.0 36.3 82.2 34.3 16.5 50.5 55.7 52.5 110.4 19.1 62.8 192.3 48.3 130.5 30.0 Financial Expenses 47.4 Net Financial Income R$ thousand 3Q10 3Q09 Var. % 9M10 9M09 Var. % Net Financial Income - Ex-Isa+r Total Financial Income 136.3 204.5 114.1 114.1 19.4 79.2 370.2 537.7 400.5 400.5 (7.6) 34.3 Net Financial income in 3Q10 was R$ 204.5 million, an increase of R$ 90.4 million (79.2% YoY). Excluding Isa+r contribution, net financial income amounted to R$ 136.3 million, an increase of R$ 22.2 million (19.4% YoY). For the year, net financial income was R$ 537.7 million, an increase of R$ 137.2 million (34.3%) over 3Q10, and excluding ISa+r, came to R$ 370.2 million, 7.6% (R$ 30.3 million) drop. 14 Investment Income Investment Portfolio The total portfolio (R$ 7.3 billion) produced a financial income of R$ 214 million in 3Q10, representing a yield of 119% of CDI. Excluding pension fund resources and PGBL/VGBL operations, the portfolio (5.8 billion) registered a return of 111% of CDI. For the year, income from financial investments was R$ 526 million, representing a yield of 117% of CDI. Excluding pension fund resources and PGBL/VGBL, the portfolio registered a return of 105% of CDI, with a financial income of R$ 382 million. The position held in fixed-income government securities was largely responsible for the increase in yield of 3Q10. It is worth highlighting that the effective CDI rose by 20% between 3Q10 and 3Q09. The effective CDI fell by 8% YTD. 15 Glossary Amplified combined ratio: Represents the ratio of total expenses with insurance operations to total revenue plus net financial income from insurance operations. Claim: Event whose occurrence gives the policyholder the right to receive indemnification from the insurer. Commissions: Selling expenses and the portion of insurance premiums paid to brokerages, financial institutions and other insurers. Combined ratio: Quotient obtained from the sum of insurance-related operating expenses (retained claims, selling expenses, G&A expenses and taxes) divided by earned premiums. In other words, the ratio of total expenses with insurance operations to total revenue from insurance operations. Commission ratio: The quotient obtained from the division of total selling expenses in the insurance operations by total premiums earned. Earned premiums: The portion of insurance premiums already expired during the policy's coverage period. G&A ratio: The quotient obtained from the sum of administrative expenses and taxes in the insurance operations divided by total premiums earned. Loss ratio: The quotient obtained from the division of total retained claims by total premiums earned. P.P.: percentage points. Premium: The amount paid by a policyholder to the insurer to maintain the policy. Reinsurance: Operation through which an insurer transfers a portion of a certain risk to a reinsurer. Reserves: Liability booked by insurers and reinsurers to reflect the estimated cost of payments with indemnifications, benefits and related expenses. Retention: The amount or portion of risk that an insurer assumes. RVNE: Estimated value of the risk premiums for which the policies have not yet been issued. SUSEP: Brazilian Private Insurance Superintendence. Underwriting: The process by which an insurer or reinsurer analyzes the proposals presented for insurance or reinsurance coverage and determines if it will provide a portion or all the coverage solicited for an agreed premium. VGBL: Free Benefit Generating Plan: product designed for building retirement savings. Written premiums: The total amount of premiums subscribed in a certain period. This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to the growth prospects of Porto Seguro. These are merely projections and as such are based exclusively on the expectations of Porto Seguro’s management concerning the future of the business and its continued access to capital to fund the Company’s business plan. These forward-looking statements depend substantially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Porto Seguro’s filed disclosure documents at the Securities and Exchange Commission of Brazil (CVM) and therefore are subject to change without prior notice. 16 Balance Sheets Assets PORTO SEGURO S.A BALANCE SHEETS (Amounts of in thousands of reais) Consolidated 3Q10 ASSETS CURRENT LIABILITIES 2Q10 3Q09 10,515,958 9,851,565 6,934,474 Cash and cash equivalents Marketable securities Premiums Receivable Deferred selling expenses Credit Operations Securities and amounts receivables Tax and Contribution Other receivables Reinsurance expenses and retrocession Other assets NONCURRENT ASSETS 27,857 6,673,385 1,822,966 635,012 157,198 720,624 57,734 293,392 37,500 90,290 2,353,712 30,127 6,297,642 1,676,118 607,243 155,604 669,461 45,632 255,544 6,324 107,870 2,282,108 29,705 4,213,978 1,175,353 431,160 159,511 603,198 37,000 227,512 11,976 45,081 1,794,555 Long-term assets 1,634,632 1,590,411 1,114,561 604,611 519,194 80,442 118,135 296,088 13,536 2,626 19,404 639,834 482,261 32,159 116,315 305,284 12,379 2,179 19,523 263,283 409,923 7,390 117,074 307,479 6,707 2,705 19,100 1,921 8,428 9,055 637,151 1,995 8,428 9,100 617,186 1,404 8,428 9,268 614,718 62,525 54,988 46,176 12,869,670 12,133,673 8,729,029 Marketable securities Tax and Contribution Deferred Income Tax and Social Contribution Credit Operations Escrow Deposits Other receivables Deferred selling expenses Investments: Other Investments IRB - Brasil Resseguros S.A. Investments Rental Properties Fixed assets Intangible asset TOTAL ASSETS 17 Balance Sheets Liabilities PORTO SEGURO S.A. BALANCE SHEETS (Amounts of in thousands of reais) Consolidated LIABILITIES AND SHAREHOLDERS' EQUITY 3Q10 2Q10 CURRENT LIABILITIES Accounts payable Interbank deposits Exchange acceptances and bond issued Loans Accrued vacation and related charges Tax and Contribution Interest on own capital and dividends payable Third-party deposits Commissions on premiums issued Other payables - insurance transactions Technical Provision - Insurance and Pension IRB - Brasil Resseguros S.A. NONCURRENT LIABILITIES Long term liabilities: Accounts payable Payables Deferred Income Tax and Social Contribution Mathematical Reserve - Insurance and Pension Legal liabilities Labor Provisions Deferred Revenues DEFERRED INCOME MINORITY INTEREST 8,034,722 7,544,032 5,467,809 835,296 188,247 86,849 74,736 256,581 18 107,188 313,074 52,796 6,076,486 43,451 1,237,920 734,726 193,080 59,419 42,910 63,510 213,193 510 94,990 273,255 46,389 5,812,155 9,895 1,195,240 584,650 220,297 60,430 40,465 56,519 138,634 504 58,687 234,866 42,898 4,016,031 13,828 1,087,362 9,923 61,263 14,539 1,103,550 24,814 23,831 8,923 47,177 13,330 1,076,368 25,611 23,831 967 872 5,419 42,197 17,420 980,560 17,935 23,831 675 SHAREHOLDERS' EQUITY Capital Treasury stock Capital Reserve Revaluation Reserves Securities adjustments Property valuation adjustments Profit Reserves Retained Earnings TOTAL LIABILITY AND SHAREHOLDERS' EQUITY 3,596,061 3,393,529 2,173,183 1,870,000 47,412 131,913 3,525 (1,032) 1,073,120 471,123 1,870,000 47,412 132,200 4,309 (1,262) 1,073,120 267,750 3Q09 - 12,869,670 - 12,133,673 920,000 47,412 133,300 4,127 (755) 858,410 210,689 8,729,029 18 Income Statement PORTO SEGURO S.A. INCOME STATEMENT PERIOD AS OF SEPTEMBER 30, 2010 AND 2009 (Unreviewed amounts of in thousands of reais) 3Q10 Income Written Premiums Pension Plan Contributions Surveillance Services Consortium Revenues from Services - crediporto Revenues from Services - integração Revenues from Services - services Revenues from Services - atendimento Revenues from Services - other Credit Other Revenues Financial Revenues - Insurance Financial Revenues - Other Rent Expenses Reinsurance Technical Reserve Variations-Insurance Technical Reserve Variations-Pension Plans Net Retained Claims Pension Plan Redemptions and Benefits Cost of services rendered - Monitoring Cost of services rendered - Integração Cost of services rendered - Services Cost of Financial Intermediation Provision for doubtful accounts - Financial Commercial Expenses - Insurance Commercial Expenses - Other Activities Administrative Expenses - Insurance Administrative Expenses - Other Activities Tax on Revenue - Insurance Tax on Revenue - Other Activities Other Operational Income(Expenses) - Insurance Other Operational Income(Expenses) - Other Activities Financial Expenses - Insurance Operating Income 2,494,957.0 2,059,350.0 37,719.0 15,232.0 34,433.0 1,740.0 1,024.0 2,408.0 7,050.0 1,638.0 42,834.0 8,634.0 263,313.0 18,005.0 1,577.0 3Q09 1,701,018.0 1,411,284.0 31,011.0 16,189.0 29,759.0 1,585.0 1,151.0 1,007.0 736.0 784.0 38,725.0 2,761.0 158,982.0 5,839.0 1,205.0 (2,134,336.0) (1,583,650.0) (48,142.0) (14,101.0) (159,297.0) (152,527.0) (33,524.0) (30,325.0) (1,040,277.0) (727,425.0) (1,375.0) (2,585.0) (7,551.0) (9,923.0) (1,010.0) (890.0) (61.0) 0.0 (8,204.0) (6,132.0) (12,022.0) (23,558.0) (376,889.0) (265,087.0) (11,900.0) (11,066.0) (291,910.0) (211,943.0) (49,505.0) (32,809.0) (38,177.0) (30,720.0) (12,018.0) (8,110.0) 14,371.0 (16,797.0) 19,823.0 11,006.0 (76,668.0) (50,658.0) 360,621.0 117,368.0 Var. % 46.7 45.9 21.6 (5.9) 15.7 9.8 (11.0) 139.1 0.0 108.9 10.6 212.7 65.6 208.4 30.9 9M10 6,870,268 5,714,132 100,118 42,701 98,110 6,215 3,094 5,412 16,075 3,526 125,169 22,494 685,385 44,100 3,737 9M09 4,821,944 3,946,173 91,141 45,574 84,320 4,385 3,169 2,720 736 2,331 100,301 7,085 506,259 24,483 3,267 34.8 (6,027,306.0) (4,477,670.0) 241.4 (59,314.0) (25,385.0) 4.4 (228,689.0) (276,121.0) 10.5 (98,056.0) (88,316.0) 43.0 (3,112,442.0) (2,138,124.0) (46.8) (4,731.0) (4,936.0) (23.9) (21,508.0) (24,090.0) 13.5 (2,993.0) (2,612.0) 0.0 (95.0) 0.0 33.8 (23,467.0) (22,666.0) (49.0) (42,806.0) (63,576.0) 42.2 (1,091,356.0) (790,682.0) 7.5 (35,278.0) (30,927.0) 37.7 (860,100.0) (625,469.0) 50.9 (132,751.0) (91,747.0) 24.3 (122,728.0) (91,548.0) 48.2 (32,131.0) (21,786.0) (185.6) (22,784.0) (75,680.0) 80.1 55,680.0 26,232.0 51.3 (191,757.0) (130,237.0) 207.3 842,962.0 344,274.0 Var. % 42.5 44.8 9.8 (6.3) 16.4 41.7 (2.4) 99.0 0.0 51.3 24.8 217.5 35.4 80.1 14.4 34.6 133.7 (17.2) 11.0 45.6 (4.2) (10.7) 14.6 0.0 3.5 (32.7) 38.0 14.1 37.5 44.7 34.1 47.5 (69.9) 112.3 47.2 144.9 Income Tax PRE TAX AND PROFIT SHARING INCOME Social contribution Profit Sharing 360,621.0 (75,457.0) (42,974.0) (39,018.0) 113,887.0 (29,225.0) (12,577.0) (2,198.0) 207.3 158.2 241.7 0.0 842,962 (177,725) (101,782) (92,935) 344,274 (78,034) (32,760) (23,756) 145 128 211 291 INCOME BEFORE MINORITY INTEREST MINORITY INTEREST 203,172.0 (86.0) 73,368.0 (70.0) 176.9 22.9 470,520.0 (190.0) 209,724.0 (92.0) 124.4 106.5 NET INCOME FOR THE QUARTER 203,086.0 73,298.0 177.1 470,330.0 209,632.0 124.4 19 Cash Flow CASH FLOW STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND JUNE 31, 2010 (In thousands of reais) Consolidated 3Q10 CASH FLOW FROM OPERATING ACTIVITIES NET INCOME OF THE PERIOD Prior year adjustment Amortization Goodwill amortization Revenue from safe of fixed assets Adjusted net income (Increase) reduction of Assets Variation of investment Variation of issued premium Variation of deferred expenses commercialization Variation of credit operations Securities and amounts receivables Change in dividends receivable Variation of tax Variation of other accounts receivable Variation of other values and goods Variation of tax and deferred social security contribution Change in reinsurance and retrocession expenses Variation of court deposits Increase (reduction) liabilities Variation of accounts payable Variation of Interbank loans Variation of obligations by exchange acceptance bonds Variation of Loans and on lending obligations Variation of vacations and charges Variation of tax Variation of other deposits Variation of commissions on issued premiums Variation of other debts due Variation of technical provisions - insurance and reinsurance Variation of tax and deferred social security contribution Variation of legal obligations Variation of working contingencies and civil Variation of adjusts with bonds Variation of minority stakes NET CASH BY OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Interest on equity and dividends received Sale of fixed assets Sale of investments Acquisition of fixed assets Acquisition of investments Investment in deferred NET CASH GENERATED BY (USED IN) INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Treasury stock Distribution of interest on capital and dividends CASH FLOW FROM FINANCING ACTIVITIES INCREASE (DECREASE) OF CASH CASH AT THE BEGINING OF THE PERIOD CASH AT THE END OF THE PERIOD INCREASE (DECREASE) OF CASH 2Q10 470,330 66,954 8,842 (367) 267,244 46,251 5,600 (232) 545,759 (816,419) (184,714) (30,312) (7,741) (52,704) (80,180) (58,958) 8,619 (79,722) (22,992) (2,745) 318,863 (475,899) (37,866) (2,096) (10,442) 4,574 (19,795) (21,053) (8,961) (42,789) 8,184 (11,941) (1,327,868) 58,778 9,086 (4,295) (39,859) 28,354 86,328 74,346 27,201 27,055 600,371 19,492 95,538 (3,036) (1,332) 234 (618,084) (42,798) 13,919 (31,725) 3,051 17,128 42,940 62,148 (12,618) (12,908) 334,831 5,406 68,356 (2,239) (799) 139 978,261 196,152 - 444,831 145,610 - 4,756 (86,854) (361) (22,459) 2,884 (44,449) 647 (11,680) (104,918) (52,598) - (100,925) (101,417) - (100,925) (10,183) 38,040 27,857 (10,183) (7,913) 38,040 30,127 (7,913) - 20