Bb Seguridade Part Sa Adr

Hello, good morning. Welcome to our virtual conference call to present the results of the fourth quarter of 2024. This conference call is being recorded and you are now listening to the simultaneous interpretation into English. To listen to the audio in English, press the interpretation button at the lower right-hand side in your screen. This conference call is going to have two parts. In the first part, our CEO, Andrei Howey, and our CFO, Rafael Espirindio, will share with you the results of 2024. Then we are going to have a questions and answers session, when analysts and investors will be able to ask questions. Our slide deck is available at our investor relations website at www.bbseguridadri.com.br. Now I'm going to give the floor to Andrei, who's going to start the presentation, and I will come after their presentations to moderate the Q&A session. Andrei, please, the floor is yours. Thank you, Philip. Thank you, dear friends. First of all, I would like to thank everyone who joined us in our virtual conference call. It's a great enthusiasm and satisfaction for me to announce that our net income grew 9.5% in 2024, reaching the record of 8.7 billion. Managerial profit, according to SUSEP, is 8.2 billion, an increase of 5.7% compared to 2023. A very solid result, supported by the 11.9% growth in non-interest operating income net of taxes, which more than offset the drop in investment income. We continue with a very robust payout policy for our shareholders. In 2024, 7.1 billion BRL were allocated to the payment of dividends, in addition to 1.2 billion used to share buybacks. In other words, between dividends and buybacks, more than 8.3 billion BRL were allocated to our shareholders in a payout of more than 95%. We have 17.5 billion in written premiums growing strongly in the most profitable lines. In credit life, the increase was 7.9%. According to data from SUSEP until November, written premiums were more than 70% higher than the second place in the rankings. In rural lines, despite the challenging year, we managed to expand our market share to 63.6%, an increase of 21.2% in farmers' credit life insurance and 28.1% in rural lien insurance. Our loss ratio closed the year at the lowest historical level of 23.7%. a result of a very robust underwriting and risk mitigation policy, which is the result of our reinsurance strategy. In our accumulation, businesses' pension reserves expanded 9.4% in 12 months, reaching 428.9 billion. Collection of premium bonds grew at 4.2%, totaling 6.7 billion in 2024. In our distribution business, the 10% growth in brokerage revenues was ensured both the commercial performance, including the sale of products that are not underwritten by our investees, and also by the recurrence and booking of revenues related to sales completed in previous years, especially in credit life insurance. In 2024, we continued to execute our strategy to evolve the use of technology and data to generate businesses and to improve the service to our customers. 138 million BRL were invested by all of the groups, companies in IT infrastructure, cybersecurity development of new products and digital solutions. This investment has helped us to make important developments in our portfolio. In rural insurance lines, we are expanding our operations beyond traditional products. such as crop insurance, to be able to take advantage of all the opportunities of every business. We have launched Livestock Leon at the beginning of last year, and we have already issued 511 million premiums, and now revenues grew 84, almost 650 million BRN insurance premiums in the livestock market, which represents an important share of BB's rural credit lines. As I mentioned in the previous slide, farmers' credit life insurance had a significant growth of 21.2%. This increase was made possible by the conditions we implemented in the product, with an expansion of the amount insured and the age of our customers. In a strategy that aims to look at the customer throughout their life cycle, we sold more than 85,000 personal protection insurance policies, which was launched in 2024. This product is a live insurance with simplified coverages and more affordable prices. An important product to universalize access to insurance, creating long-term opportunities as customers develop their financial education and start to purchase more sophisticated products. In a pension, we launched a product that allows to offer the accrued balance in reserves as a collateral for credit operations. Important solutions that we developed in-home. to provide liquidity to our customers to prevent them from accessing long-term services in the event of any momentary needs. In 2024 alone, more than 800 million BRL were given as collateral for credit operations. We also continue to advance in our distribution businesses. In 2024, BB Brokerage Rouse traded more than 18.7 billion in insurance premiums. So it's important to work as a brokerage with sales of more than 967 million BRL for auto insurance premiums and 153 million in large risks and transportation premiums. with a focus on the BB's wholesale segment. In these reforms, we do not take part in the underwriting. To diversify our strategy, we issued more than 2.1 billion premiums via partner channels, accounting for 12% of the total. In rural alone, it was 1.3 billion BRL, contributing with 233 million BRL to the result, a growth of 17%. Last but not least, we evolved in our performance in digital channels. In 2024, 180 new thousands were added to our customer base and more than 915,000 sales were conducted. We raised more than 900 million pension plans and reached 26% in PM premium bond sales carried out remotely through digital channels. The economic performance that I have spoken to you is related to one of the most important pillars in our strategy, which is the customer at the center of our work. Our NPS remains consolidated within the quality zone and has evolved 4.7 points last year. The number of complaints has been dropping continuously and in 2024 it was 15.2% lower than it was in 2023. The evolution of satisfaction levels is reflected in the permanence of customers evidenced by 17 reduction in churn in 12 months. And the level of protection of our customer base continues to evolve. The number of super protected customers, which have more than four products, has grown 12.6%. So the differentiated benefits and service has reflected in an NPS at 11.9 points higher in 2024. And now our relationship NPS is almost 12 points higher than that of our customers. Now I end my speech and give the floor to Rafael, who's going to continue giving you details, our financial details. I'll be back for our Q&A session. Thank you very much. So thank you, Andre. Now going to the details of our numbers for the year and the Q4, just reinforcing. So our approach is always according to SUSEP's accounting standards, which is the basis for our booking and our financials. So 2.8 billion, 2.2 in Q4, growing 6% in both comparison basis, a very solid result, especially if we... consider all the challenges with the investment income, not just the reduction of the SILIC rate, the increase of the cost of liabilities in Brazil, with the defined benefit that is pegged to the IGPM, and then we had a deflation of 3% in IGPM in 2023, in 2024, a high of 6%, and this had a direct impact, also related to the interest rate that caused a negative effect. That's why The investment income dropped 13% year on year in Q4 and dropped 17% in the whole year numbers. So this is one of the smallest shares in our historical series. Now, with a little bit more detail and breaking down our adjusted net income. So the profit has grown 440 million. related to the growth in operation 723 million and especially due to brazil saying not just because of the growth in sales during the business year, but also because of the booking of sales that were conducted in previous business years with a reflection on brokerage revenues and also offset by higher commission rates or commission fees, and then reduction of the crop insurance that helped the overall composition of brokerage revenues. So, we had a reduction in loss ratio in 2024 in all lines. There was a reduction in the loss ratio. Credit life has contributed a lot for the better results of the operation. In terms of the net investment income, we had an operational growth and then investment income takes 200... 184 million as compared to 2023, 57 million growth coming, especially because of higher volume. And then we were able to offset the reduction in the SILIC rate with higher volumes. But then on the other hand, the market took out 184 million of our bottom line in 2024 and in 2023, That number was positive by 149 million BRL. Now, going a little bit about the details per operation. First, the Brazil SAG in terms of premiums written. So, there was a growth of 6% in Q4, coming especially from an acceleration of the growth of rural areas. lines, growing 23% year-on-year in Q4, and a 2.2% growth of premiums for the whole year. Rural growth, 4.1%, and half of the premiums written this 4.1%. So, here, we call the... Rural lien and also for individuals and small and middle-sized businesses. And then it dropped 40% because of the end of the product that we had for the credit letters. And then we decided to discontinue it in Q1 2024. So when we look at the quality of the operation, there is an overall improvement of the combined ratio coming, especially because of the drop in loss ratio, as I mentioned before, all lines getting better, except for credit life. Credit life has a few one-offs in 2024, especially the reporting of claims that were, there was a backlog, and then we viewed the basis and reported in 2020 first and second quarters of 2024 and technical reserve surplus so apart from that it would have been flat so here in pink you are seeing the increase in commercial in commission fees so this is related to our brokerage business as i said before credit life has space higher commissions and crop pays less, so one goes down, the other one goes up, but in the end it goes up. SG&A is almost flat. Net investment income dropped 2% in Q4, 8% drop in the whole year, especially because of the drop in the SELIC rate, which we could partially offset with volume, but not completely. Last, our net income grew 1%. uh 10 year on year 10 in the whole year better combined ratio as i showed before more than offsetting the results now going to our pension business three percent growth in collections in 2024 getting to 59 million brl so in q4 there was a four percent reduction year on year In terms of net inflow, we can see flat in redemptions, 7 million net inflow in 2024. So there is a growth of our reserves of 9%, so the concept in total, and then reserves of PGBL and VGBL in line with our management fees that grew 10% year-on-year in Q4, and also considering the whole year for 2024. even though we observed a drop in management fees because of the mix. And so you can see here in the lower left-hand side, the reduction of multi-market funds in the total AUM as a consequence of reduction in the average rate because of risk aversion and more concentration fixed income. So there is a reduction in the management fee, but because of the increase of more business days in 2024, this was offset and revenues grew, which is very much in line with our growth in P&D reserves. So here, the efficiency of the operation improved in Q4 and also for the whole year, but the increase in revenues, the management fees and the more efficient operations were not enough to offset the drop in investment income because of IGPM. So there was a deflation 2023 and inflation 2024 in Q4. So the impact was quite significant. So we had a reduction of 72% in net investment income. And this explains the drop in the net income, dropping 27% quarter on quarter and 15% yearly. if you compare the two years. So premium bonds collection grew 4% quarter on quarter, a drop of 3% in our reserves because of a shortened term. So there was a reduction in the last 12 months. So lotteries paid. So we paid 19% draws into... Q4 in 63 in the year, almost flat net investment income, almost flat reduction of the SELIC rate, so partly offset by the reduction in TR. For the year, so financial went up by 5% despite the 20 basis points drop in the financial margin because of the balance in financial investment. And then net income grew 1% year on year, 5% for the whole year. So for the whole year, it grew very much in line with the growth of the net investment income in Q4. It grew even though investment income dropped because of expenses. And this has been the main challenge in this operation. And we are trying to make it more efficient. And this is our challenge for the midterm. Now going to our brokerage business that grew 8% year-on-year, 10% for the whole year, especially because of the insurance operation. not just, as I said initially, because of sales of the current business year, but also because of the booking of sales that were conducted in the last three years, with brokerage fees being booked in 2024, when the year was 6 billion, so quite relevant number of commissions that will be for the next year's net margin. It's better 1.1 year on year because of the mix and also higher investment income because of volume. And for the whole year, the margin is almost flat, an increase of 30 basis points. That's why the result is up a little bit higher than the growth in revenue. Now going to talking about our 2024 guidance. So non-interest operating result, our range was 5 to 10. We delivered a 10.7. So exceed our guidance because of a lower loss ratio than we initially expected. And this is an extremely good result because if we think the need of needing to have additional reserves and coverage we hadn't planned that it was not planned but despite this provisioning that had not been included in a projection we could exceed the range of the guidance. And in 2025, because of the most financial feature of this kind of coverage, it reflects the update rate plus inflation. So in 2025, we are likely to reclassify this expense to investment expenses. So therefore, the constitution of additional reserves, it would have been 12%. Written premiums of Brazil SEC is an upper half, which was from 0% to 3%. So pension plans, reserves, our range is from 8% to 12%, and we have 10% almost. Now, for 2025, the guidance here, the only highlight is that in non-interest operating result, we reclassified. So the additional expenses for the provision of coverage is financial expense. In Brazil, perhaps this is a difference. so the range is from 3% to 8% of the operations for 2025, written premiums to a growth from 2% to 7%, and reserves of pension plans with a range from 12% to 16%. This is what we expect for 2025. Now I end my presentation. Now I am going to join Andrei and Filippi for our questions and answers session. Thank you. we are back for our questions and answers session now i'm going to give you a few instructions just as a reminder if you want to ask a question if you want to send us a question in writing just click on the q a icon in the lower menu on your zoom screen as a reminder we are going to have a list of questions If we are not able to answer all of them, our investor relations team will get back to you after this conference call. So, analysts and investors may also ask their questions in audio. To do that, you need to click on the raise hand button at the lower menu on the screen, wait for your name to be called, and then you open your microphone. Well, I think that we already have a few questions, so let's start. Well, the first question comes from Jitendra from HSBC. Guy Jitendra.

Your question, please.

You can unmute your microphone and ask your question.

Hi, good morning, everyone. Thank you for taking my questions and congrats on the results. I have two very quick questions. First, maybe on the premium growth. When we look towards 2025 in terms of written premium, how do you expect growth in 2025 across different product lines, given the higher rates in Brazil and some economic slowdown? So if you could just provide some numbers by product lines, that would be very helpful. And second, I just want to understand dynamics about cross-return premium and net-earned premium. So net-earned premium have remained stable throughout 2024, while gross premium were volatile. So how these two lines could evolve in coming quarters going forward or for 2025? Thank you. Great.

The question is related to the guidance of written premiums and what are our expectations for the different business lines. And also, and the second question is the dynamics between retained and earned premiums. So I'm going to start the second question first. So in terms of retained premium, it grew more strongly, especially because of the dynamics of risk mitigation that we adopt in our company, in our insurance company, BrazilSeg. Crop insurance is a profitable product, but it has a certain volatility associated to it along years. So to reduce the volatility in our financials, we adopt a very conservative policy of reinsurance where we retain something like 24% of the premiums, and then the difference goes to a panel of reinsurance, and then we capture the commissions. For the other business lines, as there is not so much volatility or loss ratio associated, so we do not grant premiums to reinsurance, but we have stop-loss clause. So this is, in a nutshell, the strategy that we adopt for risk mitigation of our insurance portfolio. As in 2024, we had a very challenging year for the agribusiness. Our crop insurance especially the costing modality is the one that dropped the most year on year but it is more sensitive to premiums written when we move to retain premium it's only 24 is retained by the company the sensitivity to retained premiums is higher. So the lines where we retain more that have grown more along 2024 with a highlight with credit life. Also in the agricultural or rural line, we have the farmers credit life insurance and rural lien and then life and rural lien have grown by two digits. That's why retained premiums grew more than written premiums because it's less sensitive to the performance of agricultural or crop insurance. Now, talking about 2025 as part of our growth of 2% to 7% growth, I would say that this year, if we compare to the business year of 2024, this year It's something that I will call less predictable for the lines that are more dependent on credit. So the sensitivity of this range will be very much concentrated, especially in credit life and rural insurance. So if it's better than expected, we get to the top. if it's smaller than expected we're going to move towards the floor of the guidance for the other lines life residential corporate they're under penetrated lines in our bases in our customer base these are lines that we are going to try and drive them to grow, to grow to the top or above the range of the guidance, but those are lines that have a smaller share of our portfolio as a whole. Now, credit life, we have a few important drivers. so there is everything that we've been talking a lot about, and then there is a new product, so we have the payroll loan, and then we have a new product in March that will help, but we still have an environment thinking of interest rate that is not so favorable as we used to have in the beginning of last year when we were expecting rates to go down with a much more favorable environment for credit life. And rural insurance has its own unique dynamics. So for 2025, differently from 2024, we are more optimistic for lines that are not really related to credit, but a little bit more uncertainty in the lines whose performance is more related to credit origination by Banco do Brasil. Thank you. Thank you, Gitenda, for your question. Our next question comes from Tiago Binsfield from Goldman Sachs. Good morning, Tiago. You may open your microphone and ask your question. Good morning, Andre, Rafael, and Philippe. So I have a question about the investment income to understand your expectations for 2025. Now I'm looking at page seven of your presentation. There was a drop in 24 of 280 million BRL. Of course, there is lots of uncertainties in the year that lies ahead. Things you can't control, market to market, time mismatch, but what do you think of the share of investment income to the profit, thinking of the next months in the operational performance may add 550 million BRL, which is in your operational guidance. So maybe the investment income would have something related to that. Could you give us some color about the numbers to help us think about that? Thank you for the question, Tiago. Well, the investment income, you were right about a few of the points that impacted 2024 that we think are not going to be as relevant in 2025. So breaking down all the components, I'm going to focus on the portfolio. is related to pnl and this between operational and financial i'm going to focus on the share that is in our financials number one last year as you said correctly and this is in our presentation we had a net loss of 184 million because of market-to-market. So a relevant share took place at the end of last year because of the opening of the interest rate curve, especially because the portfolio that we have in Brazil, PREV, as an asset to back up our liabilities here related to operations. Most of it is pegged to the inflation, long and mid-term. So of the 184 million that we have here because of the companies after income tax, there is an asymmetry today, I would say. The likelihood for 2024 is 2025 is higher in terms of positive marking or not having any marking than what happened last year. So, in the conservative scenario, we are no longer going to have marking to market. Negative, the curve will be flat as compared to December, which is not true because it has already closed from December until now, so we already have positive marking in Q1. So just here we would have 184 million additional in the investment income. In the post-fixed share, on the other hand, it's quite simple math. It didn't change the assumption that we have 100 basis of SELIC is equivalent to 100 million profit. So it depends on your SELIC assumptions. If we think the SELIC And we think of the curve, we would have something like five points of increase in the average SILIC. So four points of increase in average SILIC equivalent to 400 million BRL, roughly. But it depends on your assumptions using what is implicit in the interest rate curve. It's an increase of almost four points, 400 million, but then in 84% Assuming that there is no negative market-to-market, we would have something like 584 in the investment income of additional results in 2025. Great, thank you very much, Rafael. Our next question comes from Caio da Prata from UBSBB. Good morning, Caio.

You may ask your question.

Good morning, Philip and Andre. Thank you very much for the opportunity. I have two questions to ask. The first one is also related to the guidance, but this is more operational. Could you give us more color in terms of the increase of the bottom line per business line and what is the expected loss ratio for rural insurance? And you had a very positive performance in 2024.

And then I will ask you a second question.

Thank you for the question. Well, the assumptions are in the operational result. The two are in the guidance. So the growth in reserves at Brazil prep. What is missing there to close is the issue of loss ratio, which is your question. In 2025, what happens is we closed the historical law of loss ratio in crop and rural insurance. So it's difficult to assume, as I said in the answer to the first question, because crop insurance has considerable volatility. So when we look at the context, the current context in terms of climate change, And of course, this changes rather frequently. But today, for the business year of 2025, in the Q1, there will be a predominance of La Nina. And then it will be mitigated in Q2. And then we are going to have a predominance of neutrality after Q2 towards the end of the year, which is a very favorable scenario. this la nina scenario we already have the february numbers and we monitor this every day what we need to see is a lower frequency of notices as compared to last year but faster especially in mato grosso do sol and rio grande do sol once again this is higher than historical law that took place last year if i compare 2023 And then things change. Well, the dynamics changes because what we are seeing this year, an increase in January and a downwards trend in February. In 2023, we saw it going up, January, February and March. So, what can you say? And we are still very much in the beginning of the year to know the trends. But in principle, it looks like loss ratio will will be between what we saw in 2024 and what we saw in 2023 we are not worried about it this is normal but we cannot assume that it will remain at the historical for two years in a row so this is more or less our prospects for loss ratio for crop insurance for the other lines We are working with the improvement for home insurance, which is not very relevant. And for the most relevant, we are seeing an improvement in credit life. And there were some one-offs, as I said, for credit life, especially in 2025. There were some one-off events that we hope will not happen again in 2025. and these would be the main highlights for the other modalities. We are not expecting any significant variation in the loss ratio in 2025.

Very good, thank you.

Second question about investment income. Just a quick follow-up on Tiago's question. Now, looking into pension, after the resolution that impacted your redemptions along 2024, just remind us of the mismatch between igpm and ipca rates now as compared to how it was in the beginning of the year i think you reduce this this mismatch a lot well this is true the mismatch has gone down in terms of the indexes today is something like 90 matched So this reduced a lot. So before the resolution, it was something like 75%.

Great.

Thank you. Thank you for the question, Caio. Our next question comes from Antonio from the Bank of America. antonio you may open your microphone and ask your question good morning everyone thank you so much for your time and congratulations on the results i have two questions so i think it's clear that the growth in premiums depends very much on credit origination for next year and this is incorporated in the guidance just taking a step further it is penetration capacity in originated credit so could you explore the main lines that would be rural and credit life so how the penetration in originated credit how this has evolved and what are the main drivers for 2025 and a follow-up of something you've touched on it is about the private paycheck And backed loans. So what is the ratio between insurance and the paycheck-backed loans? Now, giving you a little bit more detail about penetration. For the small and micro businesses, we have working capital penetration still very low. So I'm going to talk about credit life first and then rural. For individuals, we already have quite a high penetration. It has gone down slightly as compared to last year, which is normal in an environment of rising interest rates. So credit life in this context has a more difficult penetration. It has gone down, but not a lot. It's just a little bit. But this is a more mature portfolio in terms of penetration, and this is a product that has been available in our portfolio for slightly more than 10 years, so a much more mature portfolio. So for small businesses, we have some more room to improve penetration. In rural, we can look at through different metrics. The penetration of insurance in Brazil as a whole is very low. So, my memory may be betraying me, but it has gone all the way to 15% about two years ago. but penetration has gone down to 10% of the planted area in Brazil is protected by crop insurance. So very low level if we compare to more developed economies using the US as a reference penetration is like 80% of the planted area, which is much more relevant than we have here in Brazil. And not just talking about grain, But we migrate to livestock, which is extremely relevant, has an extremely relevant share in our credit lines. We explore it very little. We had a livestock product. We've been testing it. Of course, we do not master it as much as we master grains, but we've been testing it since 2018, 2019. And now it has become slightly more relevant in 2024. And we are going to continue expanding in 2025 since it's a very healthy portfolio with very good loss ratios. And we are confident to escalate it. And also our livestock lien debt was relevant in 2024 for the composition of premium. Yes, there is an opportunity in the segment of grains but the whole agriculture industry is going through a rebalancing of supply and demand both on the side of price and so the price of inputs and commodities and after this period of adjustment we have a more optimistic stance for 2025 and once this happens we will be able to increase penetration again as we saw happening two years ago and in livestock, which is very much underexplored and is very important for Banco do Brasil. And it's been increasing along years. But this is where lies the greatest opportunity if we look in the mid and long term. Thank you, Antonio, for your question. Our next question comes from Daniel Vaz from Banco Sraff. Daniel, you may ask your question.

Hi, Daniel.

Good morning.

Good morning, everyone.

I would like to revisit what Rafael said in terms of risk retention in cropping insurance. This might unlock some gain in terms of premiums written to retained premiums. Have you been discussing this in terms of your risk policy? Any evolution in terms of renegotiation of the contract with Banco do Brasil? So can any new developments, anything happened in the meantime that you could share with us? I'm going to answer the two questions. In terms of reinsurance, obviously, This is assessed at the level of the company, Brazil Sec, that has the contracts and this is done year on year. And looking at the loss ratio and risk appetite. Obviously, we changed the level by two percentage points, but we are going to take a look at that year on year. We think there is room for more players in our panel. There is a risk appetite of local and international reinsurance companies. And of course, it depends very much on how much commissions are. That is the commissions that are available. So, yes, we are looking at that in the company as board members and as part of the company's financial committee. So we look at the scenario every year. This year we are going to review that again and decide whether it makes sense. As to the contracts, SBB Seguridade, the company, belongs to Banco do Brasil. We are going to continue existing. This is not a taboo. We are still talking to the bank. We think this is the time for us to sit down and design contracts Anything has not arrived yet because we still have a long time for the contracts with our partners in InvestEase. So at the right time, we're going to sit down and talk. But obviously, we're examining, reviewing it, we understand it, and we want to extract as much value as possible and the bank to be rewarded by what they're using. Thank you very much. Thank you, Daniel. Our next question comes from Guilherme Grispen from JP Morgan. Guilherme, you may ask your question. Thank you so much for the presentation. I have two questions. One about new products. I still have one question and follow up to Antonio's question. He asked about the private paycheck loan. So your credit life for the private or public paycheck loans and if the penetration is the same. So also for the consortium, that you're going to relaunch the credit letters. So you had some difficulty in terms of profitability of the product over the last few years. I imagine that insurance is more about distribution, less about pricing. And there is a pool, if you fit the product in a distribution of the consortiums, the credit letters of Banco do Brasil, would be a very good pool for you to capture. So what are you changing in the product? And how do you think about the revamping that you're thinking for 2025? So buyback. There was a zero, which got my attention, and you finalized with 87%. So what is your buyback mindset? I thought that you were going to favor more buyback in the margin, but the zero buyback in the quarter got my attention. I think I can answer about buyback. Guilherme, thank you for the question. Rafael is going to start by the last one and then I will talk about the credit letters. Well, let's do buyback operation. We have 1 billion and 200 million. It's an irrelevant volume. The program was almost fully executed and there are a few limitations in its execution. For example, the cash available today in Seguridade has a reduced PL and the distribution capacity is the beginning of the quarters. So we have executed as much as possible the cash available and the buyback program has an impact in the capital of banco do brasil and we need to take that into account We ended it. If there is a definition in terms of the allocation of this in a treasury, and this is in a short time span. So a product that used to be offered to BB Consortium, it was a corporate product. It was an insurance for the portfolio. So we stopped this insurance. Now we have direct insurance for the customer that is taking up the consortium, that is buying it. And so there is a credit life built there. And we see very good opportunities there. As to the penetration of the payroll loan insurance, we need to see that number better, considering public and private. But its penetration in credit life as a whole is 20% to 25% of our potential audience. There's a lot of room to grow. This is a new product. It's a new credit modality. So we think we have a lot of space to explore there. Just a quick follow-up. The half billion of opportunity in consortium, is this profit?

This is premium. Thank you, Guilherme.

Our next question comes from Anon Shirazi from Citibank. Good morning, Anon. Good morning for the opportunity of asking the questions. My question is about your basic scenario and guidance just to understand your IGPM and SELIC assumptions for the year.

Thank you for your question.

Arnon, thank you for your question. In terms of assumptions that we used, SELIC between 14 and 15% within that range, of course, we define scenarios and we define likelihoods, so we're working with SELIC within that range along 2025. And IGPM, and IPCA between 4% and 5.5%. These are the ranges that we stressed to converge both for impacting reserves and impacting our operational result and the pricing component in terms of written premiums. Thank you very much. Thank you, Arnon. Our next question comes from Eduardo Nishiyu from Genial Investments. Nishiyu, you may ask your questions. Good morning, everyone. Andrei, Sperendi, and Philip. I have two questions. The first one is about your loss ratio. You had a very strong good year. And what are your prospects of loss ratio, especially for crop insurance that had a very good performance this year, how did you include your expectations? Not just overall, but also agricultural and rural.

And question number two regards pension. So with the

It was negative in Q4 in terms of inflow. How much do you include in terms of net inflow? Do you expect an improvement as compared to 2024? Good morning, Nishio. Thank you for your question. As to loss ratio of crop, we are expecting it to be higher. Then 24, but once again, anything? that we are worried about because our comparison basis is the lowest level in history, in our historical series. So we are seeing the climate transition now with the predominance of La Nina and with an impact where we have a relevant exposure in Mato Grosso do Sul and Rio Grande do Sul. We are seeing more severity in claims But impact was very much concentrated in January, but we are not worried about it at first. It's not even close to what we saw in 2022. And today, with the numbers that we are observing, it will be something between 24 and 23, what happened in those two years. So this is what we've been seeing But it's still too early for us to explore any kind of trend. These are our expectations. And in principle, today, according to our climate expectations, until the end of the business year, we are expecting something neutral for the next few months. We are not going to have any big surprises along the year, except if those projections do not prove to be accurate.

Thank you.

But this is what we expect today. And as to the growth in reserves, pension reserves, we are working with a range that we have defined. So at the floor, there is an outflow of funds if there is some stress or deterioration of the environment. So we need to contemplate that within the range and along the business year we might review. But today, as we are very much in the beginning of the year, we need to forecast adverse scenarios. So we expect outflow of funds. And from the middle to the end, we expect net inflow of funds. But I would say that today, Considering the current scenario, there's a little bit more less volatility. We are likely to have a more favorable year. Except there is a deterioration, but this is not our assumption today.

Great, thank you very much. Just a follow-up as to the loss ratio.

Overall, do you see that rate flat or slightly worse in 2024 overall? We talked about crop, so it's likely to increase marginally. because we work with prospects of increase in crop. But on the other hand, there is a reduction in credit life and home insurance. So the combination of all of this will lead to a loss ratio that will be marginally higher. Thank you. Congratulations on your performance. Thank you, Nishio. Our next question comes from Marcelo Mizar from Bradesco BI. Marcelo, please open your microphone, please. Hello, everyone. Good morning. Congratulations on the performance. It's a pleasure to be here. About life insurance, in last year's performances, slightly smaller, And when we think about the dynamics, what is getting better and worse, what is your expectation for the products? The product changed in terms of mix and everything and pricing. How much growth do you expect in terms of the writing of life insurance? In terms of loss ratio, as a follow-on to Nishio's question, you said that we should think that loss ratio is going to have a slight increase year on year it's difficult once we get numbers and we take a look and we look at rural insurance at the levels that you mentioned so the consolidated loss ratio is unlikely to get worse do you see any higher numbers in life maybe to get to the higher consolidated loss ratio. And lastly, about pension, the question is, do you think that 2025 can be a year of positive net inflows? Are you doing anything different in the product profile and higher interest rates or not?

Do you think this is more the seasonality?

And this is what we had to say. Thank you, Mizai, for your question. And congratulations on the sell side. I'm going to start addressing the first one. And then I have three questions. If I forget something, please remind me. For life, we are working with a more favorable environment in 2025. Then in 2024, we have the coinsurance that had a negative impact. And for the first half as a whole, for the live product was a difficult six months. And so this is an old portfolio. So it is still adjusted by the IGPM. accounts for 80%. So when IGPM is negative, we do not transfer price adjustments. So the policies that matured along the first half of the year had no price adjustments. So only the policies that matured along the six months were adjusted. So inflation in the first half of last year had a negative impact in the issuance of premium in 2025, which is a scenario that we do not expect to repeat in terms of the writing of premiums in 2025. And this is a natural dynamics that takes place in the company. When we have a more favorable environment for credit life origination, the network is going to focus as much as possible on credit life, which is a simpler product and approach than life, pure life. So when the situation reverses and if this happens in 2025, there will be an acceleration in the growth of life insurance even stronger than what we are expecting. But I can tell you that within the range of the guidance today, according to our assumptions, we think that it's going to grow from the middle onwards. As to the loss ratio as a whole, so crop is worse, credit life gets better, home insurance gets better, but the improvement in credit life is not enough to offset the increase that we are expecting in rural insurance. That's why the loss ratio is likely to go up a little bit. It's not a relevant increase, but we are talking about the historical floor with a slight increase in 2025. And for pension, today the scenario that we are working with, so we have unemployment at a historical low, the interest rate curve with less volatility. what really influences inflow is the income available, and sometimes customers panic when they see an atypical oscillation in terms of return. So this happened a little bit along 2024, especially towards the end of the year. So we took out risk from the funds along last year, and today... we are having a much more conservative management to take out volatility so as not to scare customers. So it will not have the same impact as in 2024. And our expectations, looking into the two-digit SELIC scenario for 2025, less volatility curve and unemployment at a historical low, it favors that our basis scenario that is optimistic, we have positive net inflow. But I do not have a specific guidance for the net inflow. Can I follow up? Ask a follow-up. Average administration fees slightly lowered this quarter, and you say this profile of less risk with the portfolios with less risk. So products with a lower risk, would there be an impact in admin fees in 2025? Yes, there is, and we hope that this trend remains flat, what we saw in the last few years. Great. is less than 1 billion per quarter. Thank you. Thank you, Mizahi. We have another question from Pedro Leduc from Itaú BBA. Good morning, Pedro. You may ask your question. I promise to be brief. In terms of premiums written, we have the guidance in 2024 rule follows credit origination at BB with credit with different dynamics between different credit lines. So how do you see the mix, the final combination, within crop insurance and farmers credit life insurance and rural lien? What is the final makeup? So just as a reminder of what happened in 2024, yes, it was a little bit difficult. for the agricultural products because of the whole scenario, and we were able to offset the deficit, so to speak, by opening new lines. As I said, we have livestock lien and livestock insurance related to collateral credit, collateral credit. and we increased the insured amounts for the farmer's credit life insurance. So we could work around the difficulties that we had in the agricultural or rural front. And so compared to the portfolio of the bank, but the relationship between the products that we have in the portfolio and the bank credit lines. So costing... we can go in with crop insurance and farmer's credit life insurance, depending on the collateral that is given for the lien. Investment lines, then we can go in with lien and life. and for commercial lines, life, and sometimes lien. So there is a common point between the six lines. So Farmers Credit Life Insurance, we can work for the three. When one of them is difficult, we can always resort to Farmers Credit Life Insurance. And this is an extremely important and relevant product for farmers, especially during the pandemic. 1.3 billion, I can't remember the exact number, were paid during the pandemic. More than half were for farmers that had the farmer's credit life insurance. So this ended up helping a lot many families who depended on the farming business. For 2025, Of course, our comparison basis is more difficult for the growth of rural lien and farmer's credit life insurance. So the dynamic today, in the build-up of premiums written, we are going to see a slowdown of the growth in lien and a recovery of crop insurance. This is the scenario. Excellent. Thank you very much. Thank you, Leduc. We have no more questions on the line to be asked by audio, and we answered all the questions that had been asked to us in writing. So now we end the conference call for the fourth quarter of 2024. As a reminder, at the end, we have a satisfaction survey. We kindly request you to answer it, and thank you for that. Now I'm going to give the floor to Andre and Rafael for their closing remarks. I would just like to thank you and say that I am available. I and the entire investor relations team to answer any questions that we might not have answered now. So, first of all, I would like to thank our customers, our investors, and I would like to emphasize the quality of our team that is very technical and that made possible this performance with exponential growth in this company. Thank you so much for your trust and hope to see you next quarter. Thank you very much and see you soon.