OREANDA-NEWS. August 20, 2012. Porto Seguro grew throughout the second quarter reaching 13% growth in total revenue, chiefly due to the Itau (+12%) and Azul (+16%) performances in the auto segment as a result of price adjustments to accommodate in the current scenario. Health products prem i ums rose more than 18% mostly because of the result of small and medium companies, as well as a good performance in Dental products. The Property and Casualty segment posted 19% growth due sales of Homeowners, keeping the growth trend. We also had a significant growth in other businesses (non-insurance), highlighting the credit operation that has increased nearly 60% driven by the credit card expantion.

Profits in the second quarter (without business combination) rose 40% (2Q12 x 2Q11), despite the fall of interest rates during the period (2.1% on the 2Q12 x 2.6 on the 2Q11) reaching BRL  143 million. Return on equity reached 14.5%, 3.3 pp. higher, principally because of the financial result performance which attained 128% of CDI (e.x. Pension), contributing with BRL  231 million (+26%). In this context, our asset allocation strategy has parcially off set the decline in interest rates through fixed income position, real interest rate and inflation.

The operational performance has been impacted by the increase in the loss ratio, mostly in the auto segment of Porto Seguro brand (56.6% on the 2Q12 x 53.3% on the 2Q11), driven by an increase in the frequency of car theft and robbery, especially in Sao Paulo. We are adjusting prices and underwriting criterias, intensifying the vehicle tracking facilities in order to mitigate loss risks. In fact, loss ratio in 2Q12 has been showing a reduction when compared to 1Q12.

On the other hand, insurance administrative expense ratio declined 1.8 pp as a result of our efforts to improve operational efficiency. We understand that process improvements and investments in new technologies are essential to support the competitiveness and the company differentiation in the marketplace.

We have also launched nine medical centers, as well as seven automotive centers and five new cars service centers (CARS) and some new products. We must highlight the health corporate plans managed by PortoMed, Porto Seguro Auto Senior for customers over 60; Post Paid Monitored Alarms, which is an innovative service that charge customers only when utilized. In addition, we have launched the Porto Seguro Broadsides Services, which allows every customers without insurance to use the 24h assistance service for vehicles, homes and pets as well as convenience services like holder services (PortoBoy), driver for vehicle inspections, installation of decorative ornaments, etc.

We won in the 2Q12 an award for the most loved company by consumers, published by Modern Consumers and fulfilled by Shopper Experience, prize that makes us proud and shows our commitment to suit customers following a standard of excellence.

Thus, we are still optimistic and keeping our investments on the potential of the Brazilian insurance market, relying on our proficiency to offer products and services with a great quality, always grounded on the partnership with insurance brokers, our employees and shareholders.