BB Seguridade Participacoes SA

BOVESPA:BBSE3

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, everyone. Thank you for attending our virtual meeting to present the Results of the First Quarter 2023. A few housekeeping reminders before we start. This conference call is being recorded and it has simultaneous interpretation into English. [Operator Instructions]. Please access our investor relations website at the www.bbseguridade/ri. [Operator Instructions]

Today with us we have Ullisses Assis, CEO of the BB Seguridade and Rafael Sperendio, CFO.

Now I'd like to give the floor to Ullisses, who is going to start a presentation. Ullisses, please, the floor is yours.

[Ullisses Christian Assis, executive]

Good morning, everyone. It's a great pleasure to be here this morning, to talk a little about our results of Q1 of 2023. We are very happy with our performance. This result has been built on very sound basis. It's the best result ever for a first quarter in the company. And I am going to share with you the main numbers, the little bit of our strategy and then Rafael is going to give you more details and then, we are going to open for Q&A.

We closed the first quarter with BRL 1.8 billion, considering IFRS 17, BRL 1.83 billion, and for presentation purposes, we decided to use the old methodology also to facilitate comparison. According to the methodology, we have BRL 1.761 billion, an increase of 15% over the same year last year. And as I said, this has been the best first quarter ever in the company, and very robust growth with premiums going up by 35%, premiums term insurance with BRL 3.7 billion premiums issued, and the loss ratio of 30%, 16% percentage points below what we had before. Also in pension plans, our contribution is very interesting, 14% higher than last year, totaling almost BRL 15 billion in a contribution and also with net inflow of almost BRL 2 billion, which is more than we had during 2022 as a whole. In the first quarter of 2022, we had BRL 475 million negative and this year considering the contribution and a little slowdown in redemption, so we have a positive condition or in flows by BRL 2 billion. We had done this 4% growth year-on-year in the premium bonds, almost BRL 10 billion reserve accumulated 22% growth year-on-year. A number that [Indiscernible] and confirms our leadership in reserves. Obviously, all this commercial performance that has had exponential growth with higher brokerage revenues with BRL 1.2 billion and 19% growth year-on-year.

Now considering these numbers, I would like to mention our pre-management pillars and I've been talking about this ever since I started working here. So, we talked about analytical intelligence and customer experience. We are still investing in digital transformation, and last year, I was estimating which percentage of our product are complying with a newer texture. We completed the project with 100% of our products, of our main products in the new IT architecture, but we still have a lot to do. So, I would like to share this not just in terms of the new IT architecture, improvement and expansion of channel, and we really are obsessed about that to be where ever customers want us to be, so that they can have any type of transaction. Simplification of customer journey to contact or to have any access to product and also heavy investment in the analytics because we think that this technological framework supports our strategy much better and helps us to attract sales and also helps to improve customer satisfaction. So we are reviewing all our journeys for with 1-click design. We are improving transactional journeys end to end in WhatsApp. This is something that we have noted that is valuable for customers. And then, we have transactions through the voice assistant, so we have -- we are working with pension through [ Alexa ] and also intensive use of predicted and propensity models in our communications of customers. On the right hand side, we have few examples, so we're using analytical intelligence, for example, to define the best payment date, amounts for allocation, time for contribution in pension, if the salary changes or child is born, to get married, so we can identify those moments to make the best offers to our customers. Also using WhatsApp to do remarketing of life insurance and another case is the use of geo referencing, geo localization something that we did during carnival, offering personal belongings insurance during carnival in the main markets where carnival is the most famous in Brazil.

Now going to the next slide, you can see that the result of these investments are taking place. Everything is evolving very fast. So we went from 13.2% to 16%. Here we're talking about sales through the digital channel and when we compare the growth of products sold over the same period of last year, we have had a growth of 42.5% in terms of a business is conducted through digital channels compared to Q1 2022. Premium bonds focused very much on digital solution, credit life also and personal belongings is something that is widely accepted and is selling very well to digital channel. And we are having significant sales. Also, using the digital mode of operation, we are not going to say -- we're not to give you details. New product functionalities, customer experience, we are going to see if why translating bad cyber security. Payment means or payment solutions, we need to be really up to date with new payment methods. We need to be very efficient, so this strategy supports our partnership aim, and also I think that we can really advance in this package as a whole supports the entire growth of other strategies of the company.

Now going into diversification of distribution. This is something that is very dear to us, and we have insisted on that for the past 2 years. So we ended Q1 with BRL 417 million, then outside Canal Banco do Brasil and then we have had an 80% growth compared to Q1 2022. We have cooperative sales of machinery, agricultural inputs, sellers, banks and others, and we are also diversifying the products that can be distributed in these partners. So in addition to agricultural insurance, we have machinery insurance. Also, we have a product called Bem da Sorte, which is philanthropy premium bond that donates the funds to NGOs. Also we worked with a travel insurance via Ciclic for plane tickets. So we want to make the most -- to make these partnerships profitable, the ones that we are already have existing partnerships we want to make them more profitable and I said this and I am repeating, whenever we create a new partnership, it won't sell overnight. We need to implement many integrations. So, we think that we have good partners. We have good existing partnership, now we needed to focus on a -- making the most of existing partnerships and of course, all is trying to seek new partners, especially those with a highest potential to drive our growth. So, this is something that has been growing. I am very happy about that, and in the mid term, it will be increasingly more representative as a share of our businesses.

Lastly, I will talk about customer experience and our journey and this area so since last year we challenged ourselves in terms of the critical processes in a relationship with our customers. So we have been using lots of technology in order to reduce those frictions, so we have seen an increase in NPS that has been very robust, more than 10 points in ruling assurance more than 11 points in premium bonds and more than 12% in life insurance. In addition to increasing NPS, the number of complaints has gone down, more than 30% year-on-year. And then, the churn for term life and home insurance going down by almost 7%. Churn is something that is essential for us because we have strong traction of sales and the more we can retain them, the better will be our results. And this is very important work, and we've been investing a lot in that. And all of this in a scenario of increasing our customer base from Q1 '22 to Q1 '23, we have had a growth of 4.3% in our customer base, driven especially by savings bonds, credit life and home insurance. And then lastly, ending my part of the presentation, I'll talk about our relationship program. I have been talking about this work, and I've been giving you a few spoilers since last year. We have created a segmentation model. We have different levels, and we've been working in our relationship program. First is a pilot model. It's still in a pilot model, and we hope to expand it to our entire customer base, still this year. When we take our customer base and compare it, the period of growth and so when we finalize segmentation, and we started piloting the program from October 22 until now, our customer base -- the NPS of our customer base grew 14 points. When we talk about the overprotected, our main customers, the customers that do more businesses with us, it increased 10%. And we take the 50,000 customers that are within our platform and the protected customers' NPS has grown 4 points. So this is very clear to us, every time we research has been demonstrating that the more we talk to them, the more interact with them, the more we improve experiences, the more we have premium service experiences. We talk more to them with deliver effective value proposition, we see that their NPS goes up and the churn goes down. On the right-hand side of your screen, this is just a short example. This is still being piloted. And so, now we are testing with BB insurance staff. So within the bank, customers can and we are finalizing testing to reduce it to our entire base. They may know what is the level of protection that they have, their products and which products that they need to consume, so that they will become an over protected customer. And so, as they go up in protection, they gain other benefits as compared to the previous category. And we can -- in a very playful way, we are going to gamify the relationship with our customers so that they can self-manage their product portfolio. Our idea, as I said, is cross-sell, upsell, to sell more, to communicate effectively with customers and to deliver a value proposition in which they will see the benefit and make them more loyal.

Now I'm going to give it over to Rafael for him to talk about the numbers, and then I'll get back to you at the end of the presentation.

[Rafael Sperendio, executive]

Thank you very much, Ullisses. So before going into the results of our first quarter. On this page, you can see the details of the impact of the new accounting standard, IFRS 17 that has been issued by [Indiscernible] and is in effect since January, this year. And you must have noticed that our financials are already compliant with the new accounting standard. According to this, our profit would have been BRL 1.833 billion, growing with a growth, as compared to the net income reported in Q1 '22. And then for the market to get used to this new approach, considering the modalities according to IFRS 17, segregating by products at Brasilprev, it's been classified as an onerous contract, and the impact has been fully reported in a transition balance sheet. So we retroacted to December 2020. So according to the new accounting standards, IFRS 17, if we have an onerous contract, this will be immediately booked in our financials, as we have adopted this new standard. So it has been booked in the company's transition balance sheet. As to P/VGBL and for insurance products, both credit life and homeowners insurance, we have [ BBA ] and the others. They are annual risk products. We use PAA, and PAA is the simplified approach according to IFRS 17 that where the results are very similar to linear deferral and recording of premium according to IFRS for. In terms of equity accounts, you can see here that the net equity has gone down, it reduced. So this is the impact of traditional owners, and today, thinking it has no impact in our capital, and we didn't have that impact in our bottom line, but we had excess capital, and then we had this being booked.

Now as to Brasilseg, we have the net income of BRL 423 million, and especially because of the products that I mentioned, credit life and others. So we have no more linear deferral and the results now comply with the dynamics that we are seeing company's track record in terms of receiving premiums and payments in the flow of expenses. And here, especially at Brasilseg we have the record of results is faster than we used to have in the previous standard. So there is a bottom line being recorded at the beginning of the season that is higher than we used to record in IFRS 4. So for this reason here, net equity, the net equity has gone up in 2021 because of the advance of this result. This will also explain, if you look at the right-hand side, the 2 charts, so when we have the equivalent of Brasilseg and being lower with IFRS 17 than it was with IFRS 4. So in season of 2021, we booked more according to IFRS 17 that with IFRS 4, thereby increasing shareholders' equity. So that's why, the net income is going to be lower. As those seasons go by '24, '25, this difference is likely to go down. This is what we expect. On the other hand, at Brasilprev, the results being booked is higher with IFRS 4. So especially, the main explanation is because the longer deferral, which in IFRS 4 we deferred about 3 years and now we have a longer period according to how long contracts stay in IFRS 17 then with IFRS 4. And this is the main reason explaining the higher Brasilprev numbers.

So in closing, it's important for us to remember that SUSEP has not received IFRS 17, but IFRS 17, it translated in the national level at it's recognized by CVM and ASP. So the flow of dividends for SUSEP will continue the previous accounting standard, IFRS 4, especially because as SUSEP is not adopting it, all the companies that are impacted Brasilcap, Brasilseg. Brokerage houses do not suffer the impact of IFRS 17 and it's just an impact, and they will continue managing capital based on the account -- the previous accounting standards. For this reason, we continue to publish our financials in compliance with the previous accounting standard to be on a comparison basis with the market and also to facilitate the understanding of the new standard. We have published materials today, together with our financials that were published today, giving details of how the accounting standard impacts the company, and how this dynamic will work in terms, and it's going to be reflected in our numbers as we adopt IFRS 17, considering that SUSEP has not adopted it. So we are going to have a parallel reporting of our numbers that we are going to have unaudited financials to keep it on a comparable basis, until we have a full transition to IFRS 17, and it takes place in the future. In the meantime, we are going to have 2 records in parallel. So, now going to the next page, in terms of net income, as we said, we have BRL 1.8 billion, 49% growth as compared to Q1 last year. And this quarter specifically, the impact of the temporal mismatch in terms of assets and liabilities of plans would defined benefits had a negative impact in the result of BRL 26 million, whereas Q1 '22, we had a positive effect of BRL 52 million, If we take out this our net income would be BRL 1.786 billion, one of the best results ever in our company and special highlights because it is booked in the first quarter, which is usually the weakest quarter in the year, but on an annualized basis, this has been one of the best quarters in the company ever. On the right-hand side, you can see the consolidated net investment income. That is the number after tax, we had a contribution of BRL 338 million to the profit in terms of net investment income growing 47% year-on-year.

Next page, you can see the evolution of the main component. So this is the growth of BRL 481 million as compared to Q1 last year and 82% of that growth comes from the operation, 18% of that growth comes from net investment income. One of the highlights of operational performance. You can see the strong performance in sales, especially insurance reduction of loss ratio of crop insurance, impacting Q1 with quite significant impact in Q1 last year, and then was a reversal and the growth of revenues with management fees at Brasilprev, one of the main drivers for the growth in operational income. Here on the net investment income, you can see a growth in volume of funds, which is natural. Stronger commercial performance increase in the financial margin coming more directly because of the increase in the average Selic interest rate, and also the rate of reinvestment of funds and also because of reduction in the cost of liabilities because IGPM is still going down and closed in terms of year-to-date numbers, it's the negative well, 0.6 positive, better saying, very close to IGPM and IGPM with deflation. So we have been observing a quite beneficial behavior for our results in terms of IGPM and lower marking-to-market performance. So here, we have a gain of BRL 20 million compared to the results that we reported in Q1 2022.

Now going into more details about the growth of each one of our operations. So in terms of insurance premiums have grown 35% year-on-year getting to BRL 3.7 billion, in terms of overall credit life with the top positions with a highlight, as the main business lines and then the combined rate as you can see here on the bottom on the left-hand side, almost 17 points, a reduction in loss ratio and strong contribution of the crop insurance and also a marginal reduction in commission rates in terms of G&A ratio. Net investment income has grown 45% year-on-year with an increase of average rates and also because of volume and also premiums earned an improvement with net income growing 156% getting to 910 in Q1 '23.

Now on Page 13, you can see that collection has grown and net inflows of BRL 1.9 billion, reversing the negative performance Q1 last year, also because of the reduction of redemption rates that was lower, portability and more inflows, so we had a positive result in our net inflows. In terms of reserve, the 10% growth in 12 months, getting to BRL 355 billion driving the growth of 5% with in management fees. And as it is clear here, the growth in revenue ends up being slower than the growth of res -- which is a result, as you can see here on the upper right-hand side, reducing the share of multi-market with more risk aversion by customers, even though the flow is positive, this flow is concentrated in conservative products which annually charge a lower management fee. And for this reason, our growth in revenues is slower than the growth of our reserve balance. And here, our net investment income has grown 28%, as I said before, because of an expansion of the net investment margin because of the reduction of our -- the cost of our liabilities and with this growth in revenue and then, net income has grown 9%, getting to BRL 438 million in Q1.

And now on Page 14, you can see our premium bonds with a growth of 4% quarter year-on-year, an expansion in the balance of funds with an increase of 0.3 percentage points, and the net investment income has contributed to a growth of 18%, getting to BRL 63 million.

Now going to our brokerage in our distribution operations, so revenue got to BRL 1.2 billion, and it's because of everything that I said before. This is especially driven by a very strong performance that we had in credit life, rural and pension. So we had better net investment income because of the higher Selic rate and almost all of the company's funds are invested in LFT and other bonds indexed by the Selic rate, so we have more revenue, higher margin, 23% growth of net income getting to BRL 708 in Q1 '23.

And in closing our presentation, this is the guidance for 2023. So we are exceeding all our parameters, we exceeded. We were expecting this behavior last year, last year in Q1, in terms of operational results with concentrated 1/3 of all our expenses of claims in the year. The comparison basis ends up being kind of weak and in terms of premiums written, 2022 started much more tentative especially with credit life and rural. We were expecting these numbers in Q1 this year. And as a consequence, for the following quarters, we are likely to see a slowdown in this rate that is very strong in terms of growth converging to our guidance -- to the range of our guidance before the end of the year, but it's always good to emphasize that even though we expected this, it ends up being slightly bigger than we expected. Once we structure these intervals, we have 2 main variables of uncertainty. The loss ratio of our crop insurance and a total volume of funds that is going to be allocated, so the first one in terms of the crop insurance is much better than we expected. And we were already calculating the [Indiscernible] effect, but the impact was concentrated more on the south of South America, extreme south of South America. And in Brazil, only the state of Rio Grande de Sol had the impact. So this effect alone, if we look at the guidance of operational results, so this better loss ratio than expected would be enough to position us, on the top half of this [Indiscernible]. Volume that should be allocated in terms of funds to our plan. We still do not have a very good visibility. We can't really see it, and we hope that towards the end of the second quarter and beginning of the third quarter of the year, we can see better the amount of funds that is going to define and the basis for the growth of written premiums for the year.

Now, if we look at PGBL and VGBL pension plans and the reserves of Brasilseg, this is here as you see. It's within the range. So this is everything that I wanted to say in the presentation, and now we move on to the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from Antonio Ruette from Bank of America.

[Antonio Gregorin Ruette, analyst]

One is about the guidance and the other one about commissions. So the first thing you have just said, that there was an operational surprise with a better loss ratio than expected. Were there any surprises in terms of the growth of premiums, and also here, in terms of commissions, on my second question. How do you see this product mix? So we had a product mix that did not favor brokerage, in terms of the products. How do you assess the product mix, looking into the future and trying to understand what we should expect in terms of revenue from brokerage?

[Ullisses Christian Assis, executive]

I am going to talk a little bit about the performance of products that you have mentioned. Well, first of all, the first quarter, when we analyze credit life, especially, and we see that in the past, even in the first half of last year, we had a performance that was slightly lower as compared to credit life. And then, we had a change level in terms of contracts. So in terms of credit life premiums, I can say that we were surprised. We weren't. We keep a dynamic -- we're keeping the virtuous cycle that we started in Q2 last year, and this is something that has come to stay the new level of contracting. Of course, this is due to more operations eligible and some improvements to this product has been made available to contract INSS and others in terms of inventory. We also improved our contracting process for the digital channel as part of credit operations. So there are many improvements that we have implemented for the product, but it is especially due to a new dynamic, a new cycle that had started in the second half of last year, and this continues. And now, going to the second part of your question and then Rafael is going to help. First of all, crop insurance, we have a very good performance in Q1, but what we expect for crop insurance will depend obviously very much on the Safra plan. Of course, we expect a robust year-on-year growth as much as possible in terms of product pricing [Indiscernible] in a customer base that has been taking place year-on-year. And as we said, claims are our best add. So every year, we can see that there is higher demand for this product. And for other items, when we talk about commissioning, we already have some of those items such as, for example, life insurance that we have a completely different approach from the first quarter and also because of the dynamics of what we have defined with the bank, in terms of work of the sales force. Last year, you remember, well, in the Q2, we had the highest sales incentive campaign in the history of Banco do Brasil, and now as you know we have repeated this campaign now in Q1, and we hope that everything that we have in terms of sale in Q2, we can see the products that we're lagging behind a little bit in Q1, they are recovering at quite interesting speed. So we have [Indiscernible] delivering the goals for the year that we have and also the products with more appropriate commissioning.

[Rafael Sperendio, executive]

Just complementing. It's always good to remember. At the end of last year, we reviewed the compensation of some products and now included performance and the brokerage that was variable. We've definitively been incorporated into products. And what this means is that once those payments and whenever sales targets are exceeded, and results were immediately recorded, when they are incorporated in brokerage, they are deferred along the effect while the product is in effect, or during the life of the product. So the most appropriate way to look at results would be together with the variation of commissions to be sold. So we had BRL 3.7 billion. It has grown 29%, almost BRL 1 billion, and it has grown 5% in the quarter, as compared to December. So this is future results. When I talk about future results, there is less volatility in the company's performance and it's no longer related to portfolio. It's definitely incorporated to the product. We receive it in cash, especially here in terms of credit life and with this change. And so here, in the brokerage [indiscernible] in unearned commissions, which is about that will be earned in future cycles. This is just a complement.

[Operator]

Tiago Binsfeld From Goldman Sachs.

[Unknown Analyst]

This is Rafael Filipe. Well, I would like to ask a question about the guidance. What you said about the Safra plan, and do you remember how much it was last year? And what are you expecting for this year? For us to understand what is the expectation from now on, and at what point in time you would consider revisiting this guidance? Could you give us some more color on pension, talk about management fees. It looks like the allocation in multi-market is stabilizing. So any color that you could give us for us to understand the main trends here?

[Rafael Sperendio, executive]

As to the plan of Safra crop plan, it was BRL 340 billion for '22 to '23. It had gone 36% as compared to the previous plan. As to '23, '24, it's difficult for us, and our expectation is very difficult to predict. We don't know how much it's going to be. And then, our results for Q2 is going to be published in August, and then, we expect the current plan '23, '24 made available. And we understand that the variation may be above expected for the growth of premiums and then, we can review it. But for now, and everything is still just a possibility. We do not have enough information to change our premium growth projections. As to your second question, I'm not sure I got it. It was about the dynamics of the pension plan market management and allocation strategies. Is that right?

[Unknown Analyst]

Yes, that's right.

[Rafael Sperendio, executive]

Well, as you can see in the behavior along the first quarter, it even exceeded a little bit our estimates. In terms of gross inflow for the quarter, we expected these funds to be better distributed along the business year. We had a very strong Q1, which is not what happens for pension. So on a historical series, we see that Q1 is always a weaker quarter, especially because it's the beginning of the year, people are paying taxes vacation and everything. But this year was different. We noted a quite beneficial behavior in terms of gross flows and reduction year-on-year went down, portability went down, an allocation was very much cost-centric on more conservative alternatives and a drop in average management fees. So customers are extremely adverse to risk in this risk aversion was intensified because of everything that happened in Q1 this year, especially in terms of private credit assets, everything that happened in retail, with energy companies. But in the case of Brasilprev, our exposure and in our private numbers ex financial institution is less than 5% of overall. So our total exposure in these assets that had problems is even smaller. It's really residual. So it did not affect the profitability of our projects. But it intensified [Indiscernible] according to May numbers, this is not changing. So we are still betting in the context of a version, if it [indiscernible] on this trend of drop and then it's more than we expected in terms of [Indiscernible]. So in principle, one thing is better than the other. We don't expect that much will change in terms of expected in terms of pension, from now to the end of the year.

[Unknown Analyst]

If I could follow up. If we look at your monthly numbers, we see the average daily production, both in insurance and pension was affected. Is there any reason for that to happen in April and May?

[Rafael Sperendio, executive]

I'm going to start to go first here, and then you can complement. Well, this sometimes happens. Because of the sales dynamic, because the network gets an input in terms of budget for the period, and we have noted in January, in February that sales volume was above the budget. So whenever you have an intense movement in the first month, there is an equation to deliver the final numbers after the end of the period. And this is what happened. And then obviously, we have [Indiscernible] for each one of those products along the year. Some of those curves are not so steep, and also in accumulation products, we carry them over a little bit more in the beginning, so that we [Indiscernible] sometimes one month, we have something that exceeds more. And then, when we see year-to-date numbers, it kind of balances out.

[Ullisses Christian Assis, executive]

Our next question comes from Pedro Leduc from Itau BBA.

[Pedro Leduc, analyst]

The topic related to channel, especially digital media. There were some slides showing the amount that the amount of business is done through digital channels has grown 43% with premium bonds, credit life. One has driven that growth? Is it a new technology, price adjustments, journey. And as it gains share and I think it will, what about the economics of businesses originated in digital channels.

[Ullisses Christian Assis, executive]

Okay. Pedro, I'm going to give you an overview, and then Rafael is going to complement if he finds it necessary. Well, this is a little bit of everything. Obviously, as I said, in terms of investment in technology. The first thing that we had, what we used to have before considering everything that we had last year, to invest more than BRL 0.5 billion in digital transformation. We had a great difficulty in terms of times and launching a new product. Today, we can launch a new product very very easily. It takes only a few days. This both to meet the needs of internal BB channel and also to meet the needs of any of our commercial partners that we've been prospecting. So the dynamics in digital channels, we have an appropriate product for that channel, we really value analytics to understand the clients that are most likely to use it in different timing life, and we have changed the journey to contract those products. Even the call today, we can be much more effective in getting the customers' attention in the bank app. In a very simple way, for example, [ overall cap ] we have oftentimes said, "Well, do you want to get rich, your dream fulfilled or your money back." So we can make them interested in the product with this strategy, and we really intensified sales so much so that in a few weeks, we have more sales in the digital channel than in the physical channels. When we talk about other products, credit line within the credit journey is also a product that, as we advanced more widely accepted. Remember, in the past, we review the entire portfolio for credit life products, we used to say it's going to be a little bit cheaper because it follows the dynamics of the overdue balance, and this has been materialized and also personnel items insurance. We launched it this year, and it was very attractive, and it had an impact in the number of sales. When we analyze it quantitatively, the digital channel has been growing. And as I told you, it's grown 42% and 16% in the total of our sales in terms of quantity. When we think of the ticket of digital sales and physical sales is completely different. So there's another dynamics and the physical products have a higher ticket than those sold through the digital channel. And when, we look at the market as a whole, if we think of the Brazilian and global market, we don't really have a long tradition of insurance products being sold exclusively by digital channels. But we are very successful in terms of offering appropriate products with completely different mode of contracting that we used to have and with more services added. So it has for us to talk in terms of our bottom line, how much this is going to represent in the midterm. It's difficult for us to tell and Rafael can talk a little bit more about that. But, our main mission right now is to have a product that will be increasingly more appropriate at the right time for the customer [Indiscernible]. Certainly have their services management in the day-to-day of our branches, and that's why, we have more low-cost products to sell in the network through the relationship customer. It ends up being expensive for us. And for example, for the personal belongings insurance, we only sell it through digital channels.

[Operator]

Our next question comes from Kaio Prato from UBS.

[Kaio Penso Da Prato, analyst]

I have two very quick follow-ups. First rural, if you discussed the guidance. So, we think of the rural loss ratio, which is better than expected for the quarter, which helps in the operational result. In the first 1.5 months of Q2, what about rural insurance? Is this the loss ratio better than expected? And number two, looking into guidance, which other metrics do you see that mark help to improve operational results even more than expected. You talked about the current plan and the loss ratio. Is there anything else that is clearer or is there any clear opportunity?

[Ullisses Christian Assis, executive]

Kaio, thank you for taking -- for asking your question. So in terms of rural, we are ending the La Nina cycle. Now we are in transition time that is neutral. So according to this configuration, the La Nina had an impact in the center and south of the country, especially with soybeans and corn, that are harvested between January and March within that time frame. So what happens is that when [Indiscernible] expected. And in March, it's closer. From now on, we have the interim season, and then we're not expecting anything unusual. So for Q1, traded in its region. The harvest season has ended. Loss ratio was better than expected from now on. We expect that the behavior will be as expected. We don't expect anything unusual. And this should be enough to drive us away from the bottom, and we are going to go to the middle of the guidance to the upper point upper limit of our guidance. As to other products, we are not expecting any major surprises in terms of loss ratio. And the crop plan may impact written premiums we lower sensitivity in terms of operational results, is also because most of the impact is related to our crop insurance with 20% of the risk, 80% goes to reinsurance, it impacts more premiums written, less on the operational results. And in terms of positive surprises that we can still, so this is where we can have a potential.

[Operator]

We have a question one, actually two, from individual shareholders that have been posted on the chat. And we have talked about strategy here, but they want the company to talk a little bit more about how we see the market in the next 5 or 10 years. And how we are positioning ourselves in which are our initiatives to position ourselves considering the competition and to keep those very high growth levels?

[Ullisses Christian Assis, executive]

Well, number one, we see a very, very promising market in the future also because the penetration of insurance products in Brazil is very low. We know that. We are aware of that. And also, we see in sake the market has communicated a plan for the insurance market for the next 2 years, when we expect that insurance will represent 10% above the national GDP. So we have a business model end products that are likely to grow in the Brazilian population. And I think, that each one of the main players and each one of the insurances should be positioned in a way that we will take more information to the population. And we've been working very much in terms of financial education and that we position ourselves that something that will add value to the lives of people. I see very good prospects, the role of insurance, if we look at planted area as compared to funded areas, this is there is a big gap there that is very positive for us. And what we see technology and product will somehow at some point, they are all going to be on a good basis. And so, we should comply with the pace of the market, this is what we've been doing. This is what drove us to make the decision to double the investment in technology and to have strong investment this year. This is fundamental appropriate product for sure, we've been reviewing portfolio, and we've been -- you've been monitoring new residential with many different assistances. And then, our business product that is very, very successful. So we've been trying to improve all our products. So product and technology they're all going to have it at some point in time. We've been investing, and we have an obsession for customer experience. And what we've been seeing over the last 2 years, we have advanced greatly in terms of segmenting our customers presenting an appropriate value proposition relationship program to offering the appropriate product at the right time in life at the appropriate prices, investing in analytics, so there's a whole range of situations and things. It's not just one thing. There's no [Indiscernible], but it's many investments that we've been making in terms of making our products more popular and having a more seamless interactions with our customers. In terms of what we've been monitoring in the market, we are on the forefront with regards to those pillars, technology and also advancing in terms of customer experience to make our company bear in better positions. And as a reminder, we have a really great sales force that very few insurance companies have in the market, which is Banco do Brasil network, and we want to create a new sales channel, diversifying the channels to sell our products. And we can see that in a very short time in increasing premiums written and a growth that is robust. And as I said last year, we wrote almost 1 million premiums just in crop insurance. We would be #2 insurance company in crop insurance, only losing to ourselves in the BB channel. And we built all of this in just 1 year. And we hope that in the future years, we will be able to develop the strategy even better because this will help us, as I said, to have a better penetration for our products.

[Operator]

And one last question also from an individual shareholder posted in a chat asking about our dividend policy. What are your expectations in terms of payout, and also in terms of flow to improve the frequency of payout of dividends?

[Ullisses Christian Assis, executive]

Well, as to pay out, we hope that we can practice something that is very close to what we said last year. We are not seeing anything different. All companies are very well capitalized then also with a surplus. Operational result is very good. Net investment income too. So the level of payout of dividend last year was very good. By doing that, we still were able to make all investments. We think this year, it will also be sufficient. So the company is using [ 80-90 ], last year was [ 90 ]. So, we think that this year is going to be the same in terms of payout. Of course, variations may happen, but we think that we are going to keep at similar levels as we been having.

[Operator]

We have no further questions, neither live nor in the chat.

[Ullisses Christian Assis, executive]

Now we end our virtual conference to release the results of the first quarter. I would like once again, to thank everyone for your presence, for your questions. And our team is here fully available to you to answer any questions you may have. And as a final message, we are very optimistic with the strategy that we have adopted in recent years with our strategic pillars, we see that they have been very good. We are very successful. I'm sure that we are building a very strong company to fight in the market for future periods. Thank you very much.

As one last reminder, we are going to see a link to answer a feedback questionnaire. And we are grateful, if you can answer that question there. Have a good day. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]