BB Seguridade, a prominent insurance and pension provider in Brazil, reported a 9.7% increase in net income year-to-date, reaching R$6.4 billion in the third quarter of 2024. Despite a challenging interest rate environment, the company's operational performance remained strong, with innovative product launches and a focus on digital transformation. Chief Financial Officer Rafael Sperendio highlighted the company's resilience with a 10% year-on-year increase in Q3 net income, amounting to R$2.3 billion.
Key Takeaways
- BB Seguridade's year-to-date net income rose by 9.7%, reaching R$6.4 billion.
- Insurance premiums written showed a modest growth of 1%, with a notable 8% increase in retained premiums.
- Pension reserves increased to R$422 billion, with an 11% year-on-year rise in net inflows.
- The company adjusted its annual premium growth guidance from 8%-13% to 0%-3%.
- BB Seguridade launched innovative insurance products and invested R$368 million in digital transformation.
- The company's partnership with Banco do Brasil remains strong, with ongoing contract renewals and modernization efforts.
Company Outlook
- BB Seguridade expects premium growth to be between 0% to 3% for the year, a downward revision from previous estimates of 8% to 13%.
- The company remains optimistic about future performance, particularly in life insurance penetration and credit life insurance recovery in Q4.
- For 2025, BB Seguridade anticipates growth in premiums earned, supported by favorable credit origination conditions.
Bearish Highlights
- Financial results declined by 16% due to adverse interest rate conditions.
- Net investment income decreased by 18% year-on-year and 10% year-to-date.
- There was a decrease in net inflows for pension operations, attributed to interest rate volatility.
Bullish Highlights
- The insurance segment's loss ratio remained historically low at 25%.
- Brasilcap premium bonds and brokerage revenue both saw year-on-year increases of 6% and 10%, respectively.
- Life and rural insurance premiums grew by 25% and 15%, outpacing crop insurance growth.
Misses
- The company's financial results were impacted by a challenging macroeconomic environment, particularly by interest rate volatility.
Q&A Highlights
- CFO Rafael Sperendio addressed the impact of IGP-M inflation on provisions, emphasizing the company's commitment to maintaining correct adjustments for customers.
- Andre Haui discussed the agricultural sector's stability and the company's efforts to improve retention rates in agricultural insurance.
- The company confirmed that there are no plans to change the frequency of dividend payments and that the repurchase program is nearly complete.
BB Seguridade (BBSE3.SA) has demonstrated a robust operational performance despite some economic headwinds. The company's strategic initiatives, such as the introduction of innovative insurance products for preserved forests and small producers, underscore its commitment to customer experience and market adaptation. With the pension market in Brazil showing significant growth potential, BB Seguridade is well-positioned to capitalize on these opportunities while continuing its strong partnership with Banco do Brasil. The company's focus on modernizing its insurance portfolio and expanding access to the pension market, along with a solid dividend policy, signals a positive outlook for the future.
InvestingPro Insights
BB Seguridade's (BBSEY) financial performance, as reported in the article, aligns with several key metrics and insights from InvestingPro. The company's strong operational performance and resilience in a challenging interest rate environment are reflected in its attractive valuation and dividend metrics.
According to InvestingPro Data, BB Seguridade boasts a P/E Ratio of 8.04, indicating that the stock is trading at a relatively low earnings multiple. This is consistent with one of the InvestingPro Tips, which notes that the company is "Trading at a low P/E ratio relative to near-term earnings growth." This valuation metric suggests that investors may be undervaluing the company's earnings potential, especially considering its reported 9.7% increase in year-to-date net income.
The company's commitment to shareholder returns is evident in its dividend policy. InvestingPro Data shows a impressive dividend yield of 7.3%, which supports the InvestingPro Tip that BB Seguridade "Pays a significant dividend to shareholders." This high yield, combined with the company's history of maintaining dividend payments for 12 consecutive years, aligns with the article's mention of BB Seguridade's solid dividend policy and its positive outlook for investors.
Furthermore, the InvestingPro Tip highlighting that "Management has been aggressively buying back shares" indicates a strong belief in the company's value and future prospects. This share buyback program, along with the high dividend yield, contributes to a high shareholder yield, as another InvestingPro Tip points out.
For investors seeking more comprehensive insights, InvestingPro offers 11 additional tips for BB Seguridade, providing a deeper analysis of the company's financial health and market position.
Full transcript - BB Seguridade Participacoes SA (BBSEY) Q3 2024:
Felipe Peres: Hello, and good afternoon. Thank you for attending our virtual meeting to present the results of the Third Quarter of 2024. This event is being recorded and there is simultaneous interpretation into English. To listen to the audio in English, just click on the interpretation button. The event will be divided in two parts. First, the COO, Andre Haui, and then our CFO will make presentations about the results. Then there will be a Q&A session. The company presentation is available at the company's Investor Relations website, www.bbseguridaderi.com.br. [Operator Instructions] Now, I would give the floor over to our presenter, to Andre, and then we'll come back for the Q&A session.
Andre Haui: Thank you, Felipe. Good afternoon, ladies and gentlemen, my friends. I'm very pleased to talk about the results of BB Seguridade year-to-date for the nine months. But before continuing, I would like to thank our associates, our shareholders, customers for all the effort and the support in this recent months, and we'll keep going. So as already disclosed, our net income in the last nine months was R$6.4 billion, a growth of 9.7% year-on-year. Our managerial net income has grown by 5.7%, totaling R$6.1 billion another record high. Our combined operating results, net of taxes for the all the companies has been growing, more than 10% a year and which more than offsets the increase. And, so far, we've been having a great operational performance. When we look at the insurance business, the volume of premiums written in the last nine months amounted to R$13.2 billion with a growth of 1%, but it's important to highlight that retained premiums amounted to R$11.4 billion, a growth of 8%. We continue to grow strongly in the more profitable insurance such as credit life and crop insurance. And we assigned this reinsurance most of our credit insurance and that's a strong part. Also the loss ratio remains at historically low levels with a reduction of 3 percentage points up until September and being at 25%. The partnerships with the [indiscernible] have grown with R$167 million contribution of partnerships. When in terms of pension, we're able to obtain R$422 billion in reserves and R$7.9 billion in the net inflows. And reserves increased by 11% in year-on-year. At the premium bonds business, we collected R$4.9 billion with a growth of 4% and reached reserves of R$11 billion. When we look at the distribution business in brokerage, there was a brokerage revenue of R$4.1 million plus 11%. There was also there were R$110 million in premiums written of large risks and transport insurance with partner brokers. That's more for corporate insurance, and we intend to grow more and more in this segment. Now one of the pillars of our strategy is to have the customer experience at the center and innovate. NPS remains at the quality zone growing year-on-year. And, there was a reduction of complaints of 9% year-on-year, also showing the quality of our services. And it's important to say that, our churn has improved by 15.2%. And when we look at the strategy with the customer that's overprotected, meaning customers that have owned more four or more products within our portfolio, there has been a substantial increase of 9.5% in the number of customers like this, and also their NPS improved by 9.3 points. It's important to highlight the innovations that BB Seguridade brings. In recent months, we're able to launch insurance for preserved forest, for rural producers or those who own lands in the area of environmental conservation, that's important, because it allows companies to protect the biomes within several areas of Brazil by purchasing this insurance, especially right now, when there have been so much wildfires and, fires in general, and we show our commitment to sustainability. We've also developed a crop insurance for small, producers as sugars, cane, rice, soybeans and coffee. We launched an insurance for non-financed machinery and equipment, focused on the legal entities. So that will improve the access to our portfolio and increase our revenues. We're able to increase sales of personal protection insurance that in addition to the digital channel is also available in our BB branches, focusing on different niches. And in the last nine months, we invested more, R$119 million in the third quarter of '24 and R$368 million in the nine months of '24 in digital transformation and analytical maturity. So I would like to thank Banco do Brasil, our controlling shareholder and also the trust of our shareholders, and we are available to society, so we can continue to increase the culture of insurance and protection in the whole country. Now, Rafael will talk about the financial results.
Rafael Sperendio: Thank you, Andre. Now moving on to Page 5, I would like to talk about the results in the third quarter and year-to-date. I also talk from the managerial point of view, adjusted that does not consider the IFRS 17. We continue in the same situation because this new rule has not been adopted by society. Most of our dividend flow for shareholders is based on IFRS 4. So focusing on the concept that we reported up until '23 and started now reporting on a managerial basis, our net income for the quarter, R$2.3 billion in profit with a growth of 10% year-on-year. If we look at the pink bars, there is an adjustment as usual, where we separate the effect of the temporal mismatch of the update of IGP-M for the fine benefit plans. There is one month of lag in this, so it's neutral effect that adds up to zero, but it generates volatility. So the results of the Q3 was highly benefited for this because it added R$146 million in the results of the Q3. This year was the opposite. It decreased by R$11 million. So at normalized basis, this growth of 10% that we reported would have been even greater at 19% given its which is very good given the challenges, especially in the financial result. In year-to-date, in the last 9 months, it's a longer period, so this mismatch does not play such an important role. A growth of 6% and a growth both in the quarter year-on-year, year-to-date as well came from operations, more than offsetting the loss in financial results, which was expected. We were even surprised with that we're able to offset that loss or that decrease with increase in volumes from insurance, but something we did not expect in this year and has happened and impacted the financial revenue significantly was the opening in the interest rate structure that caused the mark-to-market to be negative in assets that are linked to inflation at Brasilprev to ensure the fine benefit plans. So on the right side of the slide, the financial result decreased by 16% year-on-year and 19% year-to-date, which accounts for 16% of for the profit of the first nine months of the year, where it represented 21% last year. In the next page, we break down the net income for the fifth 9 months of the year, separating between the main components and the main factors that influenced this change when compared to the same period of last year. So operations added R$15.44 billion while finance used up, R$221 million. So as I mentioned, all the growth comes from operations, and a part of it is used by the decrease in the financial revenues. So on the right side, it shows clearly that there is an excellent performance on premiums written either on the left side, either from new sales of this year, as well as transfers from the excellent performance in the last 2 years, which helps this growth in revenues from brokerage. And there's also a component of mix that collaborates to that. So all operations had a composition in terms of sales with higher commissions. So more concentrated in products or payment methods that have a higher percentage brokerage fees, which increased, in terms of brokerage revenues, R$238 million. Another fact that contributed with a direct effect was pension funds with the growth of 112 in management fees in line with the growth of reserves. Another very important factor that has helped the results of this year was the result in the loss ratio, R$177 million coming from reduced loss ratio, especially in crop, or rural insurance. And a part of this gain is used up by the increase in expenses or due to the offsetting effect from the increase in commissions that is good for the brokerage firm and not so good for the insurance firm. But on a conglomerate view, it's positive. And then, in other components, the financial part with the drop of Selic the increase in the average volume of operations, there's a component of financial expenses that, especially at Brazil Cup, with the liabilities linked to TR. So the Selic interest rate has a direct impact on it. That's helpful. The temporal mismatch with its effect, and a good portion of this R$120 million in net investment income change came from mark-to-market with the loss of R$117 million, whereas last year, there was a positive gain by R$97 million. So last year, the context was very favorable. The interest rate in the first nine months was very high, around 13% with the curve going down and low inflation. So all, winds were tailwinds. Now it's the opposite situation. Interest rates going down, the curve opening, and inflation rates higher than last year. This year, there's a concentration of not so positive effects. In the next page, we break down operation by operation. So on the upper left corner, on the premiums written chart, in the third quarter, there is a reduction of 5% year-on-year in the light blue bars. On the right side, we can see that most of this drop of 5% was in the rural segment that accounts for half of premiums written, especially in crop insurance that was reduced by 32% year-on-year in the third quarter. Looking within the rural insurance, there is a very strong performance in other lines of insurance. The new -- the rural union insurance has grown especially for livestock. And so, that's not sufficient to offset everything, but a good portion of agriculture insurance. Another product that was reduced year-on-year was life insurance. We understand that, it's something that refers to the third quarter, and October has improved. And in the third quarter, again, credit life that has grown by 9.2%. Year-to-date, premiums written have grown by 1%. The dynamics is the same, because year-to-date, reflects the same contribution factors that I mentioned for the third quarter. I would just like to emphasize that, this 1% in growth in premiums written does not reflect directly what has contributed to improve the results of company. Within the rural insurance premium and crop insurance, 78% goes to reinsurance. So what ends up being in the company's results, just a net of commission between what is paid for the brokerage broker and what we receive? What's important to add up to results is retained premiums that has grown by 8%, which is within the guidance interval. When you look at the left lower left of the slide, we have the main performance ratios. The result that has quality, a reduction of the combined ratio, the light blue or light green line has been reduced, especially in rural insurance, higher commission ratio reflects what I just said, this mix of written premiums more concentrated in agriculture insurance that increases average commissions, but it's good for BB Corretora and reduction in G&A ratio was a reduction of 60 basis and 40 basis points, in accumulated year-to-date. That's in line with investments in technology and the reclassification we made as I mentioned in the Q2 call, some investments in technology that were being classified as CapEx now are being recorded as OpEx, and we made an adjustment in the Q2, and now we report according to the new methodology in the Q3. That's what explains the increase in G&A ratio. Finance net investment income drops 18% year-on-year and 10% year-to-date. This is a company that's post fixed, so Selic plays an important role here that's partially offset by the increase in volume. And finally, net income has grown 13% year-on-year and 9% year-to-date, with the growth of premiums earned in the Q3, which amounted to 7%, and 9 -- 7% in the Q3 and 9% year-to-date. With the reduction of the loss ratio, the combined figures are better. These were the main drivers, plus the offsetting of net financial income. Now pension operations at Brasilprev on Slide 8, Contributions are stable year-on-year. In the Q3, there have been a drop in net inflow less withdrawals. There's an effect of volatility of interest rates, people who are risk averse. When you reach a volatility period, people redemptions increase. So this is an effect concentrated in the Q3. But in year-to-date, this effect is diluted. So we noticed that the growth in net inflows is there is a growth reserves grew by 11%, reaching R$423 million in September. Management fee grows at the same level basically despite the drop in the average management fee due to higher concentration in vehicles that are more conservative where the fee is lower. This has impacted the average management fee, for the company as a whole. Basically, the average fee drops, but revenues grow at the same pace. The net income grew 13% year-on-year. Basically, when we look at the third quarter and year-on-year, there is an increase due to the increase in management fee. Also, the reversal in coverage ratio, that's partially reverted by the negative effect of IGP-M. So year-to-date, the drop of 11% reflects the drop of net financial income that's associated to the fact that the last year, the IGP-M, accumulate for inflation. Our traditional plans are adjusted by IGP-M. This year, the inflation in the 9 months has increased our financial expenses, pulling net income down. In Brasilcap premium bonds have grown 6% year-on-year, 4% year-to-date. Reserves are stable. Draws paid grew 28% year-on-year, as dropped by 9%, still relevant value, R$43 million in the first nine months of the year. The net investment income has dropped by 8% year-on-year in the third quarter due to the compression of financial margin, 60 basis points. And in year-to-date, the restriction of margin is lower, but it's offset by the increase in volume. The net investment income grew by 8%, when compared to the same period of '23. This dynamic of financial revenues and expenses explains that, net income had dropped year-on-year by 5% and increased year-to-date by 6%. We have a 10% growth in year-on-year in the third quarter in brokerage revenue, 11% year-to-date, not only from new sales, but a mix of sales more concentrated in pure products that have pay higher commission rates. The net margin is stable, and therefore, the net income grows at the same level of growth of revenues. To wrap up in the last page, our guidance comparison to the guidance for the year. Non-interest operating result goes up from 8.8% to almost 12% in year-to-date for nine months. Loss ratio is certainly, important effect to justify these increase. Premiums written, there was an interval from 8 to 13. We delivered 1% year-to-date. Here, we chose to review this range here. So 8% to 13% growth, we expect to end the year from 0% to 3%. I would like to remind you once again that if our guidance was for premiums written, we didn't need to review it. But in premium sweetened, agriculture or rural insurance plays an important role, so we had to adjust that. And finally, the PGBL and VGBL pension plans reserves indicator has grown above the interval considering this scenario that I talked about scenario volatility of interest rates, we are growing even more than we expected. So these were the main points. I would like to highlight and now we are available for the Q&A session.
Felipe Peres: Thank you, Rafael. Let's now start the Q&A session. We do have some questions. [Operator Instructions] The first question is from Guilherme Grespan from JPMorgan (NYSE:JPM).
Unidentified Analyst: Hi Felipe, good afternoon. This is [Andre Espirien]. Thank you for the presentation and congratulation on the results. I would like to focus on life and credit life in the medium term, it was mentioned that life insurance recovered in October. But thinking about the 12 to 18 months forward, at the top line of these two products. In life insurance, I would like to understand whether you agree that the penetration of number of customers is mature and how could we think about the increase in life ticket in the medium term? And for credit life insurance, in what product credit product is the cross selling divided? I think consigned credit and working capital. But if you could give us a breakdown, like, x percent of sales come from this product and so forth. So just for us to have understand how this will correlate to the credit origination appetite at the bank.
Andre Haui: About credit facilities, in general, 80% of premiums today are in with individuals and 20% with legal entities. Legal entities, I'm talking about working capital and small and medium sized companies. For individuals, for all the lines of insurance, except for revolving credit and credit cards. All the others already have credit life, but a significant amount comes from consigned credit, personal credit, just removing, the consigned credit. As I said, that's a payroll loan. Most the bulk of it comes from payroll loan. And in terms of what we expect from these two types as the people segment, there is still a lot of room for penetration for life insurance. And not only in Banco do Brasil, but in Brazil as a whole, the penetration is about 0.5% of the GDP was in other emerging countries, it's 2% of the GDP. There is room to grow. The main challenge we face is, how can we occupy that space? For example, there is a niche that we do not operate in, and we are studying options to go there. It's the life insurance with the accumulation factor. Our product is purely risk based. Another possibility that would help in penetration are low cost products. For example, personal protection insurance. Let's say, R$8 million. It's a small ticket. I would say that there is an opportunity -- considerable opportunity to increase penetration. But in addition to these challenges that I mentioned, also an important thing we must take into account to increase penetration nationwide is to have available income. For credit life, we've been able to maintain a good performance, penetration in credit is at the same level with no changes, but life faced some difficulties in the third quarter because this is a product that needs a very active approach in sales more than credit life, because credit life comes within the context of the origination of credit. In the third quarter, there was an influence from the negotiation of salaries of bank workers. Last year, that didn't happen. That changed the performance of the third quarter. And another point that's important to consider, the third quarter of '23 was the strongest quarter ever in the history of Brasilseg. So it's a high comparison basis. In the fourth quarter, we see a recovery. In this fourth quarter, as of October that, life insurance is recovering.
Unidentified Analyst: And in credit life, is it fair to think that the disbursement of insurance would go in line with credit disbursement or do you think it would be greater?
Andre Haui: Well, today, I have no reason to believe that, that would be greater. We do not have that many options to expand in terms of addressable audience. What we had to do was done.
Felipe Peres: Our next question comes from Tiago Binsfeld from Goldman Sachs (NYSE:GS).
Tiago Binsfeld: Tiago Binsfeld. I would like to understand the pension, how the update of participant basis and the update by IGP-M. How often is that done? Will there be more frequent reviews from now on?
Rafael Sperendio: Regard to the update of, base is part of the test of liability adequacy testing that's made, every 3 months. This movement now reflects the result of IGP-M that's becoming positive. At Brasilprev, the guideline is not to reduce the benefit of customers. So when IGP-M accumulates a negative value, we do not transfer that negative factor to the benefit of the customer. But when it becomes positive, we reduce this increase that I added. It's reverted when the IGP-M becomes positive. So the adjustment made was due to the fact that at the end of the last quarter, the index became positive, and we started to reverse the increases we made not to decrease the benefit of the customer with a negative inflation rate. So then we made the adjustment with the basis of September for the liability adequacy testing. With this new rule from SUSEP, this will be done every quarter. Well, when it's negative IGP-M, if IGP-M does not become negative year-to-date or 9 -- 12 for 12 months, we won't have that effect from now on. What will happen with a neutral effect will be a change in provisions because this was a reversal in the complimentary protection provision, and that will be incorporated in the mathematical provision for benefits to be granted? So I can reassess that one provision is lower than it should be. The other one is higher than it should be. So I change the provisions, but I, like, swapped the provisions. But it will be a neutral effect. It's not so easy to understand, but we provided a summary that describes this in detail. And the idea is not to apply the negative inflation rate to the benefit of the customer, but then when the IGP-M goes back to positive, the customer gives me back that amount so that year-to-date, the right IGP-M adjustment can be made. So there is a small mismatch there.
Tiago Binsfeld: Okay. Thank you, Rafael. That's clear. If I could ask a second question. Looking at the dynamics of premiums written and premiums earned. When you think, for 2025, do you think this current dynamic can prevail? I'm trying to imagine how these two lines could increase, also sending policies for reinsurance.
Rafael Sperendio: In terms of premiums earned, this dynamics of growing above premiums written is likely to remain provided that we continue with the favorable credit origination environment. So in payroll credit and working capital for small and medium companies. If the environment is positive, then, this will remain. Otherwise, there will be a rebalancing effect. It will go -- premiums earned will go back to a closer to premiums written. I transfer results from the past so that brings a higher growth in premiums written or earned. In terms of agriculture insurance, our retention is still below the optimum level. But, this is a process that we are increasing this retention slowly because in the past, it used to be 10%, and it increased to 20%. And this year, we are at 22%. So, we intend to converge to the point that we believe to be optimal, but this is quite dynamic. So it's revised often.
Felipe Peres: Next (LON:NXT) question from Antonio Ruette from Bank of America (NYSE:BAC).
Antonio Ruette: Good afternoon, Antonio Ruette. Thank you for the question. Congratulations on the results. I have two questions. First, for Rural Insurance, if you could give us more detail about the trends that led to this weaker growth due to crop insurance, talking about demand and the expectations? What do you expect for the next quarters and how has that impacted the loss ratio? You see loss ratio much lower. So, how would be the trend for loss ratio and premium growth for the next two or three quarters? And, also, if I could ask a question about 2025, what's your expectation for 2025 in general terms? I know it's early, you haven't yet given any guidance, but if you could just mention your general expectations for loss ratio premiums and finance?
Andre Haui: Thank you for the question, Antonio. I'll start and you can add to it if you want. In the agricultural sector, after the pandemic, all the supply chains, everything, and supply and demand is being rebalanced, and that is also true for agri business. Also, there was a weather issue that influenced the schedule for purchase of, inputs and making loans, and that affected our performance during this year. In addition to international factors such as commodity prices, exchange rate, all of that influenced our sales of crop insurance. So, it's a balance -- a period of rebalance and there's nothing to worry about, but that is also true for the adjustment after the pandemic. In terms of loss ratio, both in realized [indiscernible] and from the future, there’s nothing that indicating a major concern with any weather event. Rain, it is now raining, so the areas highly affected by drought, now have the humidity levels of soil higher, now more favorable for planting season. So we don't see any problem in planting and new planting. What, in terms of what were is going to be harvested, we also didn't face any issues. Now from 2024, ‘25, you mentioned about the occurrence likelihood of occurrence of La Nina, El Nino. Some reports show a prevalence of La Nina, but not as severe. Some weather reports are neutral for next year, which will be extremely favorable in terms of output. So at first, there's nothing there's no source of concern for us in terms of increase of loss ratio in that segment. In the other lines of insurance, we are making adjustments to the underwriting policy. Agriculture has higher volatility, but home insurance, we implemented a strong program for to reduce loss ratio that's having good reserves this year. And we're also working on credit life to bring loss ratio to a lower level. The current level is not something we're pleased with. But in the aggregate, I'd say that the trend for loss ratio is very positive. It will depend on the economic context, however, and how successful will be in placement products, especially those that are linked to credit. So it's still early to make that estimate. But something we are more comfortable in saying that is the main concern we had for 2024 was the financial result is not something that we'll have in 2025 because we see, we expect interest rate, Selic to grow up until the end of the year. But next year, it's likely to decrease, maybe not with so much volatility in the interest rate curve. And that will help to maintain the company in the trend of a bottom line growth. But it's too early to make estimates.
Felipe Peres: The next one comes from Pedro Leduc from Itau BBA.
Pedro Leduc: Good afternoon. Thank you for the question and congratulations on the team. My question is a prospective one about the delay in planting, and therefore led to a delay in purchasing credit and insurance. As you revised guidance downward, it seemed that, there was a movement, maybe in the fourth quarter, everything that lacked in the third one will happen. Now thinking about penetration of insurance within credit, was that reduced to the price charged? And in terms of reinsurance cost, how do you see that for the next cycle? I'm trying to understand, whether we could increase penetration of agro insurance maybe through price or whether there was any resistance of purchasing insurance in this cycle.
Andre Haui: Thank you for the question, Pedro. We assess the penetration in credit, with no change. It remains stable. What you mentioned at the end of your, question, it doesn't -- the penetration remains the same. In terms of conditions for reinsurance, for this crop season, I think customers obtained a favorable conditions so that, it has not impacted. For 2025, we expect conditions to even improve. In Antonio's question in terms of, maybe people are expecting a more severe weather event, La Nina. At first, there's nothing that doesn't worry us, because La Nina is prevailing now, but at low intensity, and most weather reports expect some neutral effect. But, this will reflect in the loss ratio potentially at the same level, or if there is any change, it would be small, not significant. In terms of price, this is a constant concern. We see today that the penetration of crop insurance in the impacted area of Brazil or in the planted area of Brazil is still very low compared to other market, such as the United States, which is 10% here compared to 80% there. I mean, a ballpark figure, of course. And, we still have work to do in terms of developing products, especially for lower risk areas. Our products are good for high risk areas, but are not so appealing for low risk areas. And this is a great challenge we have to increase penetration, in Brazil as a whole.
Felipe Peres: The next question comes from Daniel Vaz from Banco Safra.
Daniel Vaz: Thank you. Good afternoon, Felipe, Andres and Sperendio. Thank you for the question. Congratulations on the results. Going back to Rural Insurance, we see an increase and acceleration of planting in the center of Brazil. The south still has an issue with the weather. Could you look at this scenario and compare the southern region at the center of Brazil and saying how farmers are behaving regarding insurance. So in the Q4, are they getting insurance for costing and also making crop insurance at the same time, and how is in the south?
Andre Haui: For the current stage of planting, you summarized it well. In more recent data, we saw an increase in rainfall, especially here in the southeast and south of Brazil in the month of October. And that helped farmers to advance with planting, especially soybeans and corn. With regard to getting costing financing and buying insurance, there has been an advancement, but below what we expected in house. And that's why we reviewed the guidance. And this is not only an issue from the origination, but the components that are part of credit costing is a result of several variables. The amount insured, if I'm going to buy insurance on for sales or only for costing, and in costing, there is important variable, which is the input price. If the planted area is reduced or there are less need for input or seeds, you know, this reduces the cost of, the cost in general. If there's the level of soybeans is reduced, the there was a reduction in the amount to be insured and therefore, the premium paid in crop insurance. So there's several factors that compose that. So there has been an advancement with increase of interest rates and with planting, but that was below what we expected. And this is why we reviewed the guidance interval.
Felipe Peres: The next question now from Kaio. Can you hear us, Kaio?
Kaio da Prato: Hi. Can you hear me now?
Andre Haui: Yes.
Kaio da Prato: Great. Sorry for the previous problem. Good afternoon, everyone, Andrea and Rafael. My question is also related to Rural Insurance. Here, I look more at retained premiums. When you look at the growth in retained premiums, agricultural has been lower-than-expected, but other life has grown between 15% and 20%, and both account for almost 90% of these retained premiums. What explain this mismatch between the performances among products, whereas in theory, there should be some cross selling among them? Looking forward, what do you expect for these two products in addition to agriculture insurance? And, in the next 12 months, what do you expect in terms of growth? And finally, any metric for profitability among these three products, which one is most profitable?
Andre Haui: Thank you, Kaio. That's a good point. Just adding, in terms of the last part of your question, not only [lian] and Life had a good performance. [Lian] grew by 25% year-to-date and life by 15%. But, these lines -- these insurance lines are much more profitable than crop insurance. Crop insurance has -- there has been a positive loss ratio, but that's not normal. The average loss ratio for crop insurance is around 69%. That's our historical behavior. But rurally and life for rural farmers have a lower loss ratio, and this is why we don't, assign that to reinsurance companies. There were some adjustments, and the addressable portfolio increased, we add coverage for livestock that could be given as collateral for credit. This is something that you we did not used to have. In the life for rural producers, we had an increase in the eligible audience and the insured amount. So that explained the mismatch of growth in the rural and life insurance when compared to crop insurance. For 2025, the trend is for these lines to grow more in line with crop insurance. Today, we don't expect any major adjustments that needs to be made in these two portfolios that would continue to cause these lines to grow in a mismatched way compared to crop insurance.
Felipe Peres: Now a question from Eduardo Nishio from Genial Investimentos.
Eduardo Nishio: Good afternoon, Felipe, Andre and Rafael, In terms of agreements that you are reviewing with Banco do Brasil and Bank of Brazil has also enforced the type of this insurance that would be perennial contract. Do you have any updates about that? And if you could share the type of this renewal, whether it will be more automatic, the renewal of the contract to decrease the volatility as the contracts expire that is created? And do you see the contract with Caixa as a parameter in terms of Caixa Seguridade?
Andre Haui: Hi, Eduardo. Thank you for your question. I'll answer that. [Indiscernible] Seguridade is Bank of Brazil, so it's only natural that we'll continue to be the insurance broker and the insurance company of Banco do Brasil. In terms of contracts, we talk about it. It's been discussed, but this is not a concern because we'll continue to exist to be strong and continue to grow. So it's natural that this discussion takes place and that renewal comes at the right time with some changes in parameter for both parties. There are strong partnerships. These are strong companies. So it's part of our daily activities. So this is not something that we consider because we think that this is a strong, share. We've paid a lot of dividends since the IPO. The bank is a controlling shareholders, so we're always talking. And at the right time, we'll disclose any news. This is not -- this is something that's been discussed. I just don't remember the other part of your question. Well, we're always looking outward to the models, not only from Caixa, but from to the market as a whole in the global market. We are a different entity because we have -- we're owned by a government owned company, and we have some so we're mixed in that sense. But we still have many contracts with our partners, with the bank. So now we're focused on getting the portfolio more modern, generating results, making the access to the pension market more available to people as a whole and pay more dividends to shareholders. This is a small market in Brazil still, so we do have a lot of room to grow. This issue of the contracts will be addressed, and it's an ongoing. It's part of the business.
Felipe Peres: The last question from the Q&A was sent in writing regarding dividends. If there's any plan to change the policy to quarterly dividends. And, is there any updates on the repurchase program? And any opening of any new program?
Andre Haui: As for the repurchase program, I'll ask him to answer. But in terms of dividends, we've always enforced a policy to paying dividends. There's no adverse scenario or contrary policy, so we always look at the best option trying to reach the highest levels. That's it. What about you, Rafael?
Rafael Sperendio: Yes. In terms of frequency, the Corretora, the brokerage, always pays all dividends. So it doesn't -- we have to pay dividends every semester for every six months, not less than that. Most of our available cash flow comes from the brokerage, the Corretora. And in the insurance companies, we are very conservative in terms of paying dividends. We prefer to retain cash throughout the semester and make an assessment at the end of six months to see how much we have available to pay in dividends to shareholders. So far, we have not discussed. We don't plan to increase the frequency of dividend payment. In terms of repurchase, the program has been almost totally executed. We need to manage the cash that arrives at BB Seguridade and to all other companies that I mentioned. So this is the main factor that limits somewhat the calendar of dividend payment, but it's been almost totally executed in terms of launching a new one. We first need to fulfill the formal requirements to cancel. So far, we cannot cancel a new one until we have fulfilled the entire cancellation requirements.
Felipe Peres: Okay. This is it. There are no further questions. With this, we end our virtual meeting for the earnings of the third quarter. I'll ask you to please give your feedback on the form that will be sent after this conference call is finished. Would you like to make any final remarks, Rafael and Andrea?
Andre Haui: Just saying to the investor relations team and myself are available to answer any further questions you may have, and have a good afternoon. I would like to thank you for your trust and especially our customers and our team. Without our team, none of this would be possible. No results could be delivered. So this is a group effort, lots of love and dedication involved. So thank you all, from the [Investes, Brazil PEG, e Brazil], all the companies, and thank you all very much.
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