BB Seguridade Participações S.A.

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.

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