Bb Seguridade Part Sa Adr

This event is being recorded and has simultaneous translation into English. Those who wish to listen to the audio in English just click on the interpretation button at the bottom on the screen If you want, during this presentation, we will show the slides in Portuguese. If you want to send the questions, please click on the Q&A. To see the document in English, go to our investor relations website at the address that is here on the screen. Today with us, we have Mr. Ulisses Assis, CEO, and Rafael Esperengio, CFO and IRO. Now I would like to give the floor to Mr. Assis, who's going to start the presentation. Thank you, Filipe. Good morning, everyone. It's a great pleasure to be here with you again to talk about the results of the second quarter and the first half of 2023. I'm going to start the discussion talking about our main numbers and our strategies, and then Rafael is going to come in with a few more details. Filipe, please. So we closed the first quarter of 2023 with 3.7 billion in net income, which is 37% above the same period last year. And this number makes us very happy more than anything because it was really built on very solid basis, demonstrating the resilience of our company, our business, a growth that is strong in terms of operational result. Also, the net income has grown, but the operational result is even above what we've been growing historically. So this is something that we really believe in and that is building solid basis for our company. In terms of insurance premiums, the first half was 16%, the same period last year. We lost ratio of 29%. 7.3 percentage points below 2022 in pension, a quite solid growth in contributions, 27 billion in contributions, 10% growth. with a net inflow of 2.2 billion and in recent years we have been reporting negative net inflows and sometimes not really increasing and this you can see a growth in terms of premium bonds since last year we have had a strong recovery we reassumed market leadership So we have collected 3.1 billion collection, 18% growth. And in terms of reserves, we get to almost 11 billion BRL with 28% growth. Obviously, this commercial performance leads to higher revenues and a brokerage firm with 2.4 billion brokerage revenues, 15% above last year. All of this is making possible for us to pay out 3.2 billion dividends which represents 86% of the net income of the first half of the year. Now on the strategies and those who have been accompanying our company for the last two years, we have a commitment in terms of lines and strategies and one of them is a digital transformation and the new distribution channels and also customer experience and in transformation line so we have invested 250 million in technology between the products channels analytics intelligence And this is more than last year. Last year, we had challenged ourselves to put all our products in the cloud, service-oriented, when we completed it. And this provides us more leverage in terms of sales and lots of traction, whether it's physical or digital. This has been fundamental to reinforce the partners and their distribution of products, and also we have the embedded strategy. All of this has provided to us to consolidate our leadership in these segments, as you can see. on the bottom right-hand corner in terms of life credit, life, rural, pension, both in terms of contribution and reserves and premium bond reserves. And this has also helped us to develop new projects as an example of corporate insurances, recently launched product using a lot of technology that has driven and growth. And we've been growing because of the market. And our ambition is to have a fair share ideal and corresponding to our size in the market. This is a little bit about products. Now I'd like to focus on channels. So our digital channel has grown 13%. in terms of sales as compared to the same period last year. As we look at the products that do not depend directly to credit, they are not related to credit, we grew 38% in terms of digital sales, 96% growth in digital transactions in terms of sales and after sales, 121%. growth in monthly premium bonds and 218% in BB protection. As you can see on the right-hand side of the corner, we have embedded it into the PIX journey of the bank, and this has made it possible for us to attract many more customers. So depending on the journey, on what customers need then, and on the services that they use, it's in the bank app. and we embed the product that is related to that customer profile. In this manner, we have been able to expand our sales volume, and we are likely to grow more and more. Today, of almost 9 million customers, 71% of them are active in the digital channels. So this provides opportunities for offers, especially talking about cross-sell and up-sell, which we have been doing. And we have also invested in WhatsApp with remarketing with very interesting NPS. So we are doing the remarketing of term life insurance, home insurance, pension plans. So we want to embed as many solutions as possible for all products in the WhatsApp. And this has been very good. And lastly, talking about analytical intelligence, nothing would be possible if we didn't effectively use data. So we must know what to do with the data in terms of analytical science. in terms of customer satisfaction, customizing the relationship with each one of them. And we know that the future of the insurance market is customization, and we have invested in that. We have been using analytical intelligence to develop new products or to add value to existing products, and this is very important. We have also tested the value propositions for different customers in terms of businesses, not to mention the strategy. we have an accelerated strategy by democratizing information. So we have been investing a lot in this and we believe this is going to help our company to continue in the market with a customized proposition at the right time for each customer and this is very important. Now, very briefly, talking about the new channels and the strategy for new channels. This is something that in the last two years we've been talking about it. If you remember in 2021, we had no distribution outside Banco do Brasil. When I took office, I decided to build a new sales channel without ever leaving aside Banco do Brasil. But this is a new business, a company as big as ours. And we don't have to choose between one strategy or the other. We need to be capable of using different strategies at the same time. And this strategy has been very successful. We closed the first half of 2023 with 858 premiums issued, which is 64% bigger than in the first half of 2022 when our strategy started. And in the bottom line, it's 66 million in the first half of the year. And when I talked to the press, if we look at 66 million, considering 3.7 billion, you think it's not too much. But then, as this is a new strategy, as this has been growing, we think that this is quite an interesting number because not too many companies in Brazil generate 66 million. And we're talking about... half year where the strategy has only just started. And we know that in retail, we need to have small strategies. And there's a strategy that we started from scratch. And because of the growth, it's going to get bigger and bigger. And we are going to have an increasingly larger share in the bottom line of our company. I wanted to mention the strategy to you as we've been talking about this for quite some time. It was fair to talk to you about our net investment income. And we know that you know that we expect to grow because we have acceptance and new partners have been coming to us. We signed 24 new partnerships and a quarter diversifying the segments. So we are embedding new products for existing partners and signing partnerships to sell different products. And if you remember two years ago, we didn't sell anything. through Banco do Brasil agents, and we have many invented products and many other partnerships with a great potential for growth, and we hope to increase it even further in the second half of the year. And lastly, I would like to talk about customer experience. We had a 3% expansion in our membership, And the highlight is 13% in our premium bond membership, 4.3% in credit life insurance, and 6.3% in terms of pension plans. We are very happy that our membership has grown. Our customer base has been growing. And we are happy also and very satisfied with engagement. Our NPS, according to the latest surveys, had been growing robustly, if you remember, in addition to that growth. We have attained 4% growth in rural and 10% in premium bonds, 18% in life. So our value proposition has been increasingly better received by customers. As a consequence, the number of complaints last year had dropped 31%. And we are having a drop quarter on quarter of 13% accumulated over a strong comparison basis and for churn. dropped 15% year-on-year, because this is a very interesting product if we break down our numbers. So we have higher and higher NPS, fewer complaints, and a smaller churn. And lastly, very briefly, I would like to give you an overview of our relationship program. We have launched, we piloted the relationship program last year. It's embedded in the bank app where they get a classification. and the level of protection at that given point in time. We started with 15,000 customers. In the customer in June, we added another 230,000. In June, another 1 million. And now in the third quarter, we are going to migrate our entire customer base into the bank app. We learned a lot with the tests that we had, with our pilot experience to date, Total NPS is 4.2 percentage points above protected customers. I'm talking about super protected customers. And we want to migrate more and more customers to the super protected using cross-sell and up-sell because our super protected customers provide the profitability that is 10 times higher than other customers to our company. Not to mention that 68% of them have more than one product, and we want to work on a very strong strategy using data, technology, using appropriate channels so that we can take more and more solutions that will add value to customers and help us give traction to our sales. Now I finalize. I'm going to give it over to Rafael to talk about our numbers, and then I come back for the Q&A. Thank you, Ulysses. Thank you all very much. We are going to go to slide number 10 to talk about our IFRS 17, and then we do what we are used to doing, and then we'll talk about our numbers according to the previous standard.

So...

There's an issue with Susepi. They haven't accepted it yet. We are still working on that. And everything that we receive is based on the previous accounting standard. Now, very briefly, showing the main differences between the two accounting standards. So with BrazilSeg, recapping, well, the changes here in terms of the previous standard are concentrated In credit life and mortgage insurance, all other products in the portfolio will follow the simplified approach, similar to the previous. So BBA, both for credit life and mortgage insurance. Now we report them based on our historical experience in terms of risk recurrence for these two lines. More specifically, for credit life, we are recording numbers in a faster way. This expects the transition table here. We are reporting 400, 328. 4,000, sorry, 328. And as opposed to 2,384 and the numbers that are being booked, they had already been appropriated in IFRS 17. And that's why there's an impact of 126 million in the bottom line. As the lines mature and we've been seeing an acceleration of this movement, especially a very strong growth in credit life, the situation will reverse. And this is very clear when you see the bottom line of the second half of 2023. And there is a difference in the equity equivalence. According to IFRS 4, it was just 9 million as opposed to 42 million according to the previous number. So in terms of operations, we are booking or recording results and acquisition cost is deferred for a longer time, not just for three years, which is deferred in IFRS 4. And on the other hand, we are also... Booking or recording the numbers according to the onerous contract and more than 15 million in December 2020 and IFRS 17. It was realized immediately. So here, if on one hand, we have smaller numbers being booked for Brazil SEC, for Brazil PREF, the numbers are bigger because of a longer deferral and reversal of the onerous feature and assumptions were worse than we saw in actual numbers. And that's why we are reversing. And now going to page 11, going back to our usual accounting standard. So our net income in the second half was 1.8 billion with a 31% growth year on year. It was not better just because of the time mismatch. in the update of traditional liabilities, this has taken out $128 million of our net income, and it was an absolute quarterly record. Other than that, we would have booked almost $2 billion in terms of net income in the quarter. We know that these numbers, this is just something time-specific, it's a one-off, and the In the future, as IGPM curve stabilizes, we're going to be able to record everything in our numbers, probably in the second half of the year. And then we have 3.6 billion in terms here on the right-hand side. So a 39% increase, very good result here. And you're going to see more details on the next page. Add to net investment income. Consolidate the numbers for all companies of the group. We saw that in the second quarter it had the benefit with a higher SILIC rate and deflation of IGPM has reduced the cost of our liabilities and the increase on the average balance with a very good sales performance that we've been seeing, especially since last year. So when we look at the net investment income, it doubles in the second quarter as compared to the second quarter last year, getting to 20.4% of the net income and 19.8% in total income with 714 million BRL. On the next page, you can see the net income broken down. So of this 1 billion growth in year-on-year growth in terms of net income, 70% comes from growth in sales and operations, growth in the sales of credit life insurance and pension contributions, especially in the first quarter. This has driven not just the growth of revenue in terms of premiums earned in the insurance company, but the growth of reserves in terms of pension. that will have an impact in revenues from management fees, but it also increases the revenues at BB brokerage firm. These are the main drivers that were impacting the numbers of the quarter. Another important piece of information that we've been seeing in terms of quality of our results is the drop in the loss ratio, especially in crop insurance that had a strong impact last year because La Nina and this year, even though La Nina persisted, the frequencies were much smaller. So you can see an additional 393 million with this milder, so to speak, effect. in the year of 2023 the other 30 percent 70 percent of the operation came from net investment income as i said in the quarter or for the half year same thing so the volume and rate changed 224 million 131 due to brazil temporal mismatch as while we see that when we mark to market differently from last year the entire A structure both face and actual. So there's a stipend in the four yield curve. And this year there is a closing. So most of the view come from the actual structure because of exposure. of brazil prev and so this added 316 million brl to the net income of the year if we see the overall number for the net investment income and now about brazil seg in the second quarter the two percent growth year and year as you can see this is driven especially by the growth of Credit life, 27.7% growth. And this year we have been noticing that there is a 7.1% shrinkage in rural insurance. So fewer contracts hired or contracted. for this period than we had in 2022. In Q3, we are going to see a slightly stronger performance of rural as compared to last year in terms of life. We had a drop of 2.2% year on year in the second quarter. And here the explanation is IGPM inflation benefits it. The costs of liabilities in Brazil Prev and it has an impact in life and the portfolio in terms of inventory and it is adjusted by IGPM. And in the end, even though we noted a quite extraordinary rate, And we had a reduction of churn in life and deflation of IGPM. In fact, it has in the update of the inventory of life insurance led to a shrinkage of 2.2% in the portfolio. We have an intense migration process of our portfolios. It makes no sense in terms of the index that we are using. We are changing it so as in the future we'll see fewer problems in life, term life insurance line. And now for the quarter, the premiums have grown 16% above the guidance of the year, also driven by an even stronger growth in the quarter. So when we look at accrued numbers, almost 50% growth in credit life and rural year-on-year growth of 11% in the half year, especially in terms of rural collaterals. Below on the left hand side, you can see the performance ratios in terms of the quality of subscription. So here you can see a 50 basis points improvement in a combined race in the second quarter as compared to the second quarter last year. And here the main drivers are the reduction of commissions, which is a result of the negotiation that we had last year for some products. that we did December last year, commissions have gone down. So expenses has gone up a little bit from 10 to 10.7, 30 basis, because of all investments we have made in distribution, technology, and also staffing. and to adapt to the more efficient structure. And these are the explanations for these numbers. And also higher allocation of funds for marketing to promote sales of insurance products. The loss ratio has gone up year on year, and this is explained by a concentrated event but because of a higher frequency in credit life, more severity of life, claims, which is a trend, which is not a trend, it's just one-off. In accumulated, the rate has increased. improved 8.4%. And here you can see a longer window with the strong reduction in loss ratio that we saw, especially in crop insurance commissions has dropped 20 basis points. And the explanations are the same as we had for year on year explanation for the second year, for the year, for the first half of the year. Now, in terms of net investment income, if we compare the six months of the year, we compare year to year, 23 to 22, we had an increase of 41%. And this growth in premiums earned had an influence in the net investment income and growth. uh we had a high of 73 percent growth in the year getting to 1.9 and b and now uh going to um brazil prev pension so collections have grown ten percent year on year in terms of the first half of the year so a good flow a significant uh better performance And you can see here we had in terms of accrued lumbers, we had 11.3. And in the second quarter, 10.8%, a good net inflow driving the inflow to 2 billion. In accumulated last year, we had net redemptions of 1 billion. And then this improvement in the net inflow. And in the improvement of return of the assets, you can see that the total reserves grew 12%. And if we separate from traditional reserves that dropped 3.8% in 12 months, P&D reserves has grown 13.3%. affecting our guidance. On the other hand, we can see a strong movement of risk aversion in the market, explaining that the multi-market fund share and under the total assets under management going from 31% of the total to 24.5%. Now, with a slowdown in the margins, and investors have started to be more likely to risks with a reduction in a select rate, we think that this behavior will become stronger. But so far, the risk with a reduction in the overall share of multi-market explains why our management fee revenues have grown with a 33% growth year-on-year and 4% in the accumulated numbers. In terms of net investment income, we see a significant drop year-on-year and in accumulated numbers. And so there is a deflation of IGPM, especially in the last three months. This has reduced the cost of all our abilities significantly. And then on the other hand, the closing of the structure at actual rates has contributed greatly In terms of revenues. So we go from a financial loss of 8.2 in the second quarter, 89 in the second quarter last year to a profit of 223 in the second quarter this year and 470 in the first half of this year. So better flow growth in revenues from management fees and better net investment income. We had 91% growth year on year of the net income and a 39% increase in the first half of the year, year on year again. And in terms of here, Brazil cap year on year, 35% growth, 15% quarter on quarter. And then that investment has grown 10% year on year, driven by higher volumes, with a shrinkage in the financial margins as compared to last year. And so, as a reminder, to Q2022 was positively affected by the opening of the curve. There was a hedge in pre-exposure and it was classified as available for sales. This led to gains in the second quarter. which did not happen again in the second quarter of 2023. That's why the margin has gone down if we look at the two years. So, net investment income, first half of the year, year-on-year has grown 16%. And then the growth of the net income has contributed to a 7% growth in accumulated numbers for 2023. If we look year on year, there is a drop of 1%, especially considering admin and operational expenses. investments made in partnership and technology and risks and on the structure that we have reinforced in all these areas had an impact in the company's results and it affected the financial performance and the expenses in the second half. But if we look at the numbers, the performance for the six months of the year offsets these higher expenses. Now, in the brokerage company, our brokerage revenue has grown 12% year-on-year, a strong growth, especially in terms of credit life, not just in life, but because of past sales that took place in the second half last year, this has increased driving up brokerage revenues and a strong performance that we've been seeing with the growth in a segment of premium bonds. For accumulated numbers for the year, 15% higher brokerage revenues And in the second quarter, we also had a quite positive contribution of the increase in collected volumes in pension, especially in the first half of the year, that helped a lot the increase of revenues in total numbers for the year. In terms of net margin, we had a slow drop of 20 basis points year on year because of review that we did in the scope of our civil litigations. So there was a slight increase In this liability and another periodical review that we did in the allocation model of costs between brokerage insurance, BB Insurance and BB Seguridade, that's why there is a slight drop in the net margin for the accumulated number of the years. It's almost one percentage point up. And then lastly, the net income grew with a better net investment income margin. And then the net income has grown 17%, slightly above the growth of the revenues. And in the second quarter, year-on-year, the growth was in line with their revenue, 12% growth going to $707 million in the second quarter. And to wrap up... the our presentation talking about our guidance as we had anticipated in our last conference call we were expecting the convergence of the indicators for the guidance ranges and this is going on and in terms of operating results from 12 to 17 We are closer to 25.7 in terms of premiums written, 15. So there is a marginal 15.7 growth. So everything that we had said, very strong in the first half of the year because of the comparison basis. As months go by, we can see this convergence to for within the range and this will be true in the second half in terms of reserves of brazil prev the indicator was within the range in the first quarter 13.3 in actual numbers closer to the top of the guidance in our scenarios We are optimistic and this we've been able to execute it and show a good performance. So these were the main highlights that I wanted to share with you. And now we're open for questions and answers. Thank you, Rafael. Let's start our questions and answers session. If you want to ask a question, please click on the raise hand button and release the microphone. or send your question in writing by clicking on the Q&A icon. Our first question comes from Antonio Ruay from the Bank of America. Antonio, please, you may ask your question. Good morning, everyone. Thank you for the opportunity of asking a question and congratulations on your performance. I have two questions to ask. The first one is related to the guidance. So what's new since you gave us the guidance in terms of rural loss ratio and the crop and looking into the second half of the year, what would be a potential trigger? So you have said that the idea is to converge, go into the middle of the guidance. What could change it? Just a very quick follow-up in terms of buyback. Is it just complementary to the payout by dividend or could it change your dividend policy? Thank you very much for your question. Let me first answer your second question. Well, buyback will be funded by cash flow and BB Seguridade. So we don't leave any money on the holding just there. And in summary, the way we assess the dividend or payout, the final payout for the year is going to be distributed or paid out dividend minus bought back shares. So the buyback is the same. So if we were having a payout on average of 80, 90%, as we have had in recent years, it's not going to be 80 or 90 plus buyback. No, buyback is going to take out some of that. Can I answer the question? No, this is very clear. You may answer the second question. As to the guidance. So, there were some positive surprises. Loss ratio was better than expected. But these positive surprises are enough to to drive the company's growth more into the optimistic zone on the upper half of guidances. And today we review our projections for the end of 2023. There is no indication that there will be any material extrapolations of the ranges that we published that will lead us to review them. This is August vision. So that's why we decided to keep, we work for the convergence of both to go within the range, even though we are more certain that we will be on the more optimistic, and range on the upper half of our guidance. Super clear answers. Thank you very much, Esperendio. Our next question comes from Tiago Binsfeld from Goldman Sachs. Tiago, please, you may ask your question. Hello, good morning, Ulysses, Rafael, and Felipe. I have two questions to ask. related to interest rates that have started to drop first operationally how do you see the company's capacity to keep um collections at a high level as interest rates go down and then in terms of net investment income how is it going to affect your consolidated net investment income. If you don't want to share your expectations, could you say something about that?

Hi, Tiago.

Thank you for the question. So we are not too sensitive. We can talk about that. No problem. It's okay. We just need to think of the portfolio allocation, which is public. and then also the explanatory notes so today for every basis drop in selic we have an impact of 100 million approximately even though this effect is not isolated and here in it's not just about uh the reduction in the rate but this event it was accompanied by an adjustment in expectations in the structure and as we saw in the second quarter and in third quarter we have positive marking to market which is likely to offset not in full, but at least partially, the expected SELIC drop from now towards the end of the year. So it's still too early for us to estimate the full impact. So 100 basis, 100 million. is a ballpark number. We don't work with interest rates going to the same levels as we had in recent years until 2021, early 2022. We think that this is going to go down, but it's going to stay at higher levels than the recent history. And because of that, we are not expecting any significant changes in terms of competition. Now, looking in the long term, so an environment of low interest rates and inflation under control is the best environment that we have to develop insurance businesses and so we look sustainable growth in the middle and long term and to our business this is a lot better much more positive so we can see the penetration of insurance in the GDP, and we compare Brazil to other countries, you see that... insurance penetration its share of the gdp is very much related to low interest rates and inflation under control much better than high interest rates and high inflation and then customers need to focus on their most more basic needs and not necessarily on insurance so this is the scenario that we see that is coming through the economy is getting better if inflation under control lower interest rate this is the perfect environment for us to develop more strongly thank you rafael there was a first question about pension if you have anything to say about that I kind of answered it generically. We are not expecting any significant changes in the competition environment. We will see a reduction of return in assets as other assets in terms of private credit closing, the stock exchange recovering more strongly. And we are likely to offset that a long time as investors accept higher risk. And then we can work with products with higher value added and to reverse the downward trend that we've been seeing in revenues from management fees. And this would be the best environment. So far, we haven't seen a more aggressive competition scenario as we saw in the last two years. And, Rafael, a last follow-up. During the presentation, you said there are some investors that are more likely to accept risk. And do you see an inflection towards multi-market, or is it too early? No, it's early. But on the margin, we have seen an improvement in terms of net inflow. better than we had for multi-market options so there is risk aversion is despite that we are increasing the portfolio internally managed by bb asset as the manager in open architecture is still going up we are well prepared and to have an appropriate portfolio. But for now, there is no inflection. But in the margin, the multi-market share has grown. Thank you very much, Rafael. This is very clear. Next question comes from Guilherme Grispen from JP Morgan. Guilherme, please. Hello, Ulisses and Esperengio and Filipe. Thank you for the presentation. My question is once again related to buy back which got my attention more than your performance there was a significant increase than what you were doing before latest programs were 10 million shares every year not really executed there has been a significant increase in the amount to be bought back and i would like to understand why we can understand it in different ways one of them is potentially So the controlling bank wants to have a higher share, but there's a significant secondary effect, which is the concentration of ownership by the controller, which could favor a future renegotiation. So the higher the ownership by Banco do Brasil, the lower will be the economic loss once the contract is renegotiated, which increases the likelihood of success. We can understand the buyback in many different ways. So what is the rationale for this much bigger amount than in the past? And should expect this buyback level to be recurring from now on? Or was it a one-off specific of this year? Thank you. Thank you for the question, Greenspan.

As to buyback, the rationale...

In our opinion, the market does not appropriately price our potential. So there are some shareholders, not just the controlling shareholders, that have been in the company for over 10 years since the IPO. So the idea of the buyback, as we do not agree with the current amount that is being negotiated, is not appropriately reflected. is to effectively reinvest our cash in our own operation that we trust. And we are sure of its potential in terms of performance.

The time is one year and a half.

And the results have shown to be very solid. And we do not believe that the reduction interest rate is a reason for us to impact the reduction in the mid and long term, much to the opposite. So an environment of low interest rates and inflation under control was the best environment for us to develop our business in the long term. And for this reason, we understand, that have an open program for one year and a half in terms of deadline, whenever we think that our shares are not being appropriately priced by the market, we are going to buy back to add value for the shareholders who have been with us for a long time and who recognize the company's potential to generate income and profit and those who stay will see a higher value added as they see an increase of their share in the company as a whole and future dividends. You want to create value. Just to make it clear, it's perennial, so the idea is for this to be something more related to scenario rather than to a change in the approach To compensate shareholders is not something that we want to continue in the medium and long term to compensate shareholders. Well, we're working with a year and a half time horizon, but we are not changing it structurally. I mean, the compensation policy. Of course, depending on the results of our program, there might be a different bias. But for now, it's not what we are doing. We wait for one year and a half now in the future. Once it expires in 2025, we will rediscuss and see whether it generated the value that we expected, whether we're going to continue that or not. But this is regardless of, well, it depends on external events. So we might change the structure if we see that it's better. But for now, we're not changing anything. Thank you very much. It's clear. Our next question comes from Kyle Prato from UBS. Kyle, you may ask your question. Good morning, everyone. Sperendio, Ulisses, and Felipe. Hi, everyone.

Can you repeat your question, please?

Can you hear me now? Yes, we can. I have two questions to ask. Thank you for taking my question. The first is about 2024. Once this year is over, that will be very strong again with lower interest rates. What can we imagine as the main drivers for growth for your bottom line in 2024? Any products? Can you give us some more details that you could share with us? And the second question is about rural insurance. What can you tell us about the rural performance after the announcement of the crop plan? in terms of loss ratio and in terms of premiums too. So, Caio, I'm going to speak first and then Rafael will compliment.

For the next few years,

It is clear how much we have been investing to prepare the company for the future. And, Kyle, without any fear of making any mistakes, I can tell you that we are on the forefront of some issues in the insurance market. In technology, I have no doubt about that. We are a huge company, gigantic, but we have the speed. We are as fast as a startup. We are prepared. And the last step, which was the CRM, and we are solving it now, and we'll be 100% prepared for open insurance that will start next year. Number one. We are very much concerned in terms of improving our portfolio value proposition, customer relationship. We believe in a strategy of the program that already provides benefits to us in terms of cross-sell and up-sell. We already have a basis of 9 million customers, so we have a potential to explore these customers that is really in terms of cross-sell and up-sell. And as Rafael said, we have a low penetration for some products in BB's customer base, not to mention the insurance market that you have seen, led by CNSEG. With some insurance companies, we have launched a program to develop the insurance market so that we go from the current 4% or 5% of the GDP going to up to 10% of the GDP. So we think with a lower interest rate, with a potential increase in sales, for our entire portfolio that is really major because, as you know well, the market is very resilient with a higher SILIC, lower sales, better net investment income. And as SILIC goes down, we can explore more the market. So we are paying close attention. We have very solid strategies, not to mention the distribution in new channels, which we did not have before. and we are talking about almost 1 billion of premiums sold this year which was not part of our numbers in the past and so being modest for each percentage point 100 million reduction is static one 100 million in the bottom line, we have 16 million in our bottom line according to the new strategy, something that we started from scratch. This will offset a significant part of the impact of the SELIC in the nest investment income. And so appropriate portfolio, good strategy, solid basis and opportunity to grow in new businesses. Now, for example, in terms of credit life, there is a new level of credit life hiring and contracting for the insurance. When we see low selling rates, the credit portfolio will be renewed when they have an even greater potential for credit life. And we can think of that growth when we talk about rural. Today, we have a consolidated market leadership But we are not just sitting. We want to add value to our products and seek new products to deliver differentiated solutions for each segment. And in a recent test, we had less than 15% of the planted area that was insured. As Rafael says, we really believe, and that's why we have the buyback. We believe in our results in the short, medium, and long term, and especially due to sales increase. And rural... We started in the mid-July since the crop plan was released. We have very good contracting volumes, and we are expecting to close 2023 with very good performance. So it started strong. It remains strong. So we believe that we are going to end the year within our expectations. Have I answered all your questions or do you have anything else to ask? No, thank you very much. You have answered all my questions. Our next question comes from Eduardo Nishio from Genial. Mr. Nishio, please. Good morning, everyone. Good morning, everyone. Thank you for taking my question. Good morning, Ulisses, Esperandio and Filipe. Well, my question is a follow-up on Ulisses' comments before, investment in technology and distribution. In technology, could you give us a little bit more color about the investments that you're making?

And...

If you may define quantities to share with us the numbers of analytical intelligence, WhatsApp, how much more are you selling for each one of those initiatives or any other initiatives? And what do you expect? Is it just sales increase in new CRM or also any improvement in underwriting? Can you see anything? like that and are these additional numbers contemplated in the guidance or could there be a positive surprise or even next year talking about 250 million so far and there is a significant improvement going to 7.5% 8% There is a volume in terms of structured businesses and partnerships. We have about 11%. Could you tell us a little bit more of up to how much it can get? 15%, 20% in two or three years? It would be interesting for us. Another thing in terms of distribution, Is it more profitable than the banking channel? I forgot to mention, 10% of the GDP by 2030 sounds to me very aggressive. How would you do that? How the insurance industry would get to such a big number? It's been at 4% for a while. Thank you very much. Okay. I'll try and summarize what Ulisses says. I would say the following to you. The impact, and I'm going to start From the end, so analytics. Last year, we closed 4 billion BRL. Premiums were sold through analytics. Why do I say 4 billion BRL? They are customers that were directly impacted, that we are sure of the impact that they bought a product on the days, rather at the time or a little bit later in digital times. So if I get the numbers of this quarter, I can tell you during the call or right afterwards. But without technology, we would not have been able to expand or to improve our NPS because we viewed all our customer relationship metrics that are critical processes. So we stopped measuring NPS. of contracts and you need to do that. So we're measuring in claims assistance. So we're talking about customers effectively here. We're not just saying for saying. So we want to get into details. Everything that we invested in technology more recently in the last two years has been fundamental. because we would not be able to have a much faster adaptation of the portfolio. In the past, it used to take us months. Today, it's a matter of hours. So there is a new product, a new partner to distribute that. If we have a home insurance, it's very fast. So we have all the products in API. There has been a leap in quality. Without these technology solutions, this 1 billion premiums issued in new channels would have been impossible. This is a very material point. And I would like to talk about the 60 million in bottom line. So not talking about staffing and everything. It's something that we measure very carefully. But technology, as I said, has been helping with all these strategies and something else. And when I talk about a 15% reduction in life insurance, and so there is a sales target, the more I can retain... of these 15 there will be much better results so how much can i generate in terms of analytics appropriate journey right timing and offer to do cross-sell and upsell i'm also making the most of the business opportunities things that would have been impossible without technology and as i said This has been growing as a whole. It's not a silver bullet. It has many different impacts. And it is contemplated in the guidance. Of course, there might be market ruptures. And then you talked about underwriting. At Brasilsec, we've been working with many, many different startups and many different initiatives to improve underwriting. So we have investments, not just direct investments, but also indirect investments through our controlled companies in startups that may solve a pain that we have to change things. So I think that this is a hole in talking about technology associated to better improvements. When we talk about distribution of new channels, it's difficult to say whether It's 15, 20. We didn't have an expectation that businesses would grow so fast. Went from zero to 1B last year. And in six months, we did everything that we did last year. So we have increasingly more robust companies in the companies at the holding too. And we are focusing on strengthening with a broader portfolio, the partnerships that we already have that are going very well, but especially focused on attracting partnerships that will add substantial value. Partnerships with a higher distribution value, going from prospection, implementation of the right product, to the partnership sales training of the sales force of the partner. So this work is very well structured. I hope that it will have a higher and higher share. And sales in the bank have been growing a lot. I'm not talking about slicing up an existing thing. I want to make it bigger. So you talked about profitability. The strategy is... contemplated division or splitting commissions with partners. So we have an agreement with a partner. So it's less profitable because BB Brokerage House will get more, but it will get less over something that didn't exist. So it's better to get less of something that a lot of nothing, we didn't have it in the past. So we are taking solutions to other channels in many cases. We need to share the commission's and we have a direct agreement with the partner, and then we lose. It's not that we lose. We don't have that revenue. Am I clear? Have I answered your question? Thank you very much. Just the last part about the 10% GDP share, which sounded very aggressive to me. Well, it is a challenge, and that's why I said this involves the whole industry, and this is a very broad-ranging project. And the full project in CNSAG page, and we can show you, it involves... issues related to legislation, changes in the legislation, increase in portfolio, new distribution channels, lower costs to a higher share of the population, not to mention the possibility of substantial increase in crop insurance, that is being discussed by the Ministry of Agribusiness. So there are many issues involved in the plan. It is, yes, it is very ambitious, but it's based on the commitment that the whole market is going to invest. And we will do our share. We have been taking part in all events to develop the sector. Recently, there has been an event in Sao Paulo. I was there and I participated in events, so there is a bias. When the market is getting united, I say this because I am part of CNSEG, so all major insurance companies are getting together in terms of talking about the importance of insurance. We see that claims... Our main advertising, unfortunately, but this is what happens. So last year we had a higher demand for rural insurance. Some of our competitors could not operate. There was an interesting wave that we served. And I think that this is going to become perennial as there are climate problems. There are more farmers getting aware that they need crop insurance. Also, the pandemic highlighting the importance of life insurance. We're having a significant growth in pension markets. So this year we see that the market has been growing. The pension market as a whole is getting bigger because people are more aware, better income. Not to mention that we can see that consumption is being stimulated again. So the insurance market should package products that are increasingly more suited to different shares of the population. This is ambitious, I know, but we are very committed and engaged to make the insurance market grow more and more. Thank you very much. Our next question comes from William from Itaú BBA. William, you may ask your question. Good morning, everyone. Thank you for taking my question. I have a question about pension. If you could explain why the redemption rate is better It's just because of more conservative products, because of a high interest rate. And now thinking about the future, how do you expect this rate to grow in the future if the SELIC rate goes down?

Well,

I'm going to focus on what the company has been doing. So, we are not just sitting and waiting to see the impact. Of course, we assume that we need to have a broad portfolio in any scenario whatsoever. I need to have a broad portfolio value. value solutions whatever solution that they need whether it's multi-market or anything else i need to have a broad ranging full portfolio accessible to all kinds of customers that we have in the company we do have that and we continue to expand it because we think it's important apart from that once again we go to relationship i talk a lot about relationship i'm obsessed about that This is the main thing. So product and price technology, everyone will have that at some point. You design a product today and the competition will copy it tomorrow. This is part of the market dynamics. Value proposition, not everyone has. And those who have, in my opinion, will continue. In Brazil Prep, in addition to everything that I said, there's a portfolio technology. We have a value proposition that is very well done. This is related to the managers of Banco do Brasil. So the consultants that we have today in-home, they are highly specialized in pension, and they are very close to customers. In the past, I would get requests for migration to the competition, and then afterwards, I would try and convince the customer not to do that. Today, we are proactive. We call them, Felipe, Esperinho, William, and discuss about their portfolio. We give options. So before they decide to migrate, I have an investment advisor who can offer other options and I want to hear. what you have to offer me before I decide to migrate to the competition. So today we're very well structured in terms of retention. And this explains part of lower redemptions. But this is a strategy that we have. And once we talk more to customers, we offer more appropriate solutions. We have information of the customer portfolio because we know where they migrated to. So we can compare to what the customer has today, what we promised and what we have to offer. So these weapons help us both in defense and attack. So we have been seeing a growth of collection year after year. And this is really in DNA of the bank sales force and talking about sales as a whole. The second half this year, we're going to repeat the same sales campaign that we had in the second half last year with the bank branches and network. This was historical. We are repeating it second half of this year to make the bank network increasingly more engaged. We are going to keep a growing collection, but we want to be able to retain more and more customers. not to let them go away. And then we gain in efficiency and in the results because they're in here. So we should deliver an appropriate value proposition to keep them in home longer. And then we have possibilities with lower selling rate to have solutions with higher value added, more sophisticated products. with a higher management fee so we see good scenario for pension both in in terms of defense and attack thank you lysis we have time for one final question in the chat It's about life insurance premium dynamics. And the performance is slightly below that of the industry. Philip, before getting there, I have just gotten the numbers. So this year, considering sales of insurance, pension upgrades, 6.5 billion sales based on analytical intelligence, quite consistent numbers. To answer the question that someone had asked me. Nishio had asked this question. About life insurance, Filipe, with a performance that was slightly more modest. Then seen in the industry as a whole, if we see year-to-date numbers in terms of the IGPM projections and deflation, whereas most of the market works with the IPCA. This is why. Thank you, Rafael. Now we end our earnings call for the second quarter of 2023. If possible, we kindly request you to answer a brief questionnaire that will pop up on the screen when we close the event. Ulisses and Rafael, would you like to say any final words? Well, I would just like to thank you all. It's a great pleasure to be here. We are available to talk to you. about anything that you might need, about any theme. And we are really confident on the sound basis of the company's results and what lies ahead for future quarters. Thank you all very much. Thank you. Thank you all very much for taking part in our conference call. I am available along to investor relations team to answer any questions you may still have. Thank you very much and have a nice day.