Brazil’s BB Seguridade Posts 86.6% Rise in Q2 Net Profit

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Brazilian insurer BB Seguridade Participacoes SA on Monday increased its full-year outlook, citing higher-than-expected growth in written premiums as it posted an 86.6% rise in net profit in the second quarter.

Shares in the company, controlled by state-run lender Banco do Brasil SA, rose more than 2% after the announcement as analysts praised the figures, whereas Brazil’s Bovespa stock index .BVSP was up 1.1%.

BB Seguridade said it now expects its non-interest operating result to grow by 15% to 20% in 2022, up from a previous estimate of 12% to 17%.

The company said in a securities filing the move came on the back of higher-than-expected growth in premiums written – a measure based on the number of policies sold and the premiums charged – and a better-than-estimated loss ratio for its Brasilseg insurance unit following another wave of COVID-19.

“The impact of Omicron was much lower than anticipated,” it said.

BB Seguridade reported a second quarter net profit of 1.4 billion reais ($271.08 million), roughly in line with market estimates, citing strong sales growth, a loss ratio improvement and higher net investment income.

Market consensus in a Refinitiv poll was 1.3 billion real of net income.

JPMorgan analysts said Brasilseg was the main highlight with a “nice combo” of 23% year-on-year written premium growth and loss ratio down 18 percentage points quarter-on-quarter.

Credit Suisse also labeled the figures as positive on a “robust performance at Brasilseg, brokerage.”

BB Seguridade said it expects written premiums at Brasilseg to jump 20% to 25% this year, up from 10% to 15% in the previous estimate, due to growth in rural insurance and home insurance sales.

The company’s pension plan unit, Brasilprev, is still expected to post growth of 9% to 13% in reserves this year, it added.

In the first half, Brasilprev’s reserves grew by 3.9%, below estimates, but the firm said it still considers it “feasible” to meet current guidance.

($1 = 5.1646 reais)

(Reporting by Gabriel Araujo; editing by Steven Grattan, Kirsten Donovan and David Evans)