Porto Seguro SA
BOVESPA:PSSA3
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Porto Seguro SA
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Good morning, ladies, and gentlemen. At this time, we would like to welcome everyone to Porto Seguro's First Quarter '21 Results Conference Call. Today with us, we have Roberto Santos, the company's CEO and Investor Relations Officer; Celso Damadi, Executive Vice President of Finance Controlling Investments; Marcelo Picanco, Executive Vice President of Insurance; Marcos Loucao, Vice -- Executive Vice President of Financial Businesses and Services; Izak Benaderet, Managing Director of Porto Investments; and Emerson Faria, Head of Investor Relations. Please recall that this event is being recorded and simultaneously translated. [Operator Instructions] We have a simultaneous webcast at the address www.portoseguro.com.br/ir. Here, you will see the conference call banner that will lead you to the platform. Questions can also be posed through the webcast platform, clicking on ask the speaker icon. Now these questions can be sent at any time and they will be responded during the conference call.
Bear in mind that forward-looking statements made during this conference call referring to the Porto Seguro business outlook financial and operational goals are based on the beliefs and assumptions of the company and on information currently available for the company. They involve risks, uncertainties and assumptions as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Porto Seguro and lead to results that differ materially from those expressed in such forward-looking statements.
We would now like to turn the floor over to the company. You may proceed.
A good day to all of you. We would like to thank all of you in the conference call of Porto Seguro for the first quarter 2021.
On Slide #4, we highlight the following. Our net income grew 49% in the first quarter and the ROI annualized reached 14%, leveraged by the results of insurance verticals and the good performance of our financial investments.
We had a revenue growth in all verticals in this quarter. The insurance vertical had a growth of 6% with 6.7% for auto premium, 15.4% in individual life insurance, maintaining the growth that we observed in the fourth quarter 2020. Recurrent revenues of financial business grew 16.2%, mainly leveraged by the consortium with 29.7% and the financing portfolio with 39.1%.
The health vertical had an increase in premiums and revenues with a growth of 34% and the number of companies insured at 7.6% in the number of lives insured in the dental plan.
The service vertical had an evolution of 21.9% recurring revenues with a highlight for the increase of 43.9% in the profit of Porto.Pet and an increase in revenue for Carro Fácil. Now the health of the vertical strengthens our vision that we're on the right path to accelerate growth and business diversification, maintaining our assets updated and an attractive profitability.
The recurrent combined ratio reached 92.3% for the quarter, favored by the auto business that we still see claims in 6.2%, thanks to an enhancement in risk pricing and underwriting and the impact of social isolation due to the pandemic. We have fifth consecutive quarter of reduction in claims. Additionally, we had a drop of 0.3% in the recurrent consolidated ratio of SG&A and other expenses also contributing to a better ratio, thanks to the efforts we have done to increase our operational efficiency through investments in technology and process enhancements.
The NPL per credit operations continues to improve with a drop vis-a-vis the fourth quarter '20 and when compared to the full year 2020. The 90-day default ended at 4% at the end of the quarter, 0.2 percentage points below the market average. This shows the efficient management of the credit portfolio and the measures adopted to mitigate risk throughout 2020.
We reached BRL 194 million in our financial space, thanks to the investments in index securities, inflation and multi-market positions obtaining a return of 2.4% for the quarter, equivalent to 488% of the CDI for the period.
We ended the first quarter 2021 with BRL 2.8 billion in terms of cash availability, and this has remained comfortable during the pandemic. In terms of ESG, we highlight some initiatives that are part of Porto Seguro, Associação Crescer Sempre association, the apprentice program and the volunteer program, new initiatives. Porto Seguro is now part of the efficient carbon index of B3 and has become auditing for greenhouse gases.
We have mail program of Seguro that positively impacted the life of 20,000 people. We also have the program of warm food that is distributed in this difficult moment. We were certified by Women on Board as we have 2 women in our Board of Management.
In terms of innovation, we launched important innovation with the highlight to Bllu, the first subscription automobile investment that is contracted easily and with essential coverage. And with the potential of leveraging the growth of the portfolio in the company. Another news was the growth of Tech Fácil, a subscription program for smartphones. We also changed Porto.Pet for Petlove. We made an agreement with the largest online store in the country. We will transfer the pet operations to Petlove, and we will have 3.5% share in their capital. This operation is pending the approval of CADE. And experimentally, we're working with our SuperApp, an application that enhances the user's journey and our services are being used by more than 75% of our clients. We continue to move forward in terms of service offered with WhatsApp. 40% of our service goes through this channel. Besides enhancing the customers' journeys, it enables us to have efficiency gains.
To conclude, we're very satisfied with the results obtained. And this will enable us to reach our strategic growth of leveraging our customer base and enhancing the customer experience. We're determined in our purpose of being ever more a safe harbor for our customers.
I would now like to ask Emerson Faria to comment in greater detail on the evolution of revenues and profitability in the first quarter '21.
Thank you, Roberto. We continue on in Slide #5. Before continuing, a disclaimer. Beginning this quarter, we began to publish our results based on business verticals. And the revenues as of this quarter will also be posted by verticals. In Slide #5, you see the evolution of the quarterly revenue of the first quarter '21 vis-a-vis the first quarter '20 in each of our business lines.
In insurance, a growth of 6.6% and all the verticals had revenue growth. Here in insurance, we have Auto Insurance, P&C, rural and civil responsibility insurance. In financial businesses, the growth was 7.8%. This is the figure for the company as a whole. We had an impact on the [ IFTR9 ] model with an impact on revenues and in our NPL and coverage ratio. But further ahead, Marcos Loucao will speak about financial businesses and present these results. Excluding this effect, the growth here was 7.8% nevertheless. And financial businesses are made up of credit card, financing, financial risk that has moved away from insurance and entered the financial business area and risks relating to that.
Capitalization that also left insurance and is now part of financial businesses, consortium and asset management. Health has been separated from insurance. It is made up of corporate health, dental health and medical services, occupational health as well. We had a 5.1% growth in revenues. And finally, in services, and we have several new businesses that are part of services. It is made up of service Carro Fácil, Porto.Pet, Reppara!, Renova and the auto monitoring. These are the businesses that are part of services with a growth of 11%.
We go on to Slide #6, where we see the evolution of our profitability. To the left, our annual profitability; to the right, the quarterly profitability. We had BRL 297 million in the first quarter '21, as mentioned by Roberto, with an ROI of 14.7% and the growth vis-a-vis the quarter last year. And these are the financial results, the operational results.
And since the second quarter of 2020, you can observe that the operational results have become more relevant. And this is what the company wants. It wants to present operational results that can only depend on financial results, but the financial risk, so back our profit as a whole.
In Slide #7, we speak about each vertical business. This is a novelty for the quarter. Besides speaking of revenues, we speak about profitability for each business vertical. In the [ first ] quarter '21, you see that the insurance vertical represents 50% of profit in the first quarter. And besides the 4 verticals, we have the holding and part of the profitability, of course, is made up of the operation as a whole for the holding.
We go on to Slide #8 to speak about consolidated results. We show you profitability vis-a-vis the CDI in 2020 and in the first quarter '21, the growth was significant. The result was very good. And our ROAE was 14.7% vis-a-vis 12% in the first quarter 2020 with a percentage of CDI, that is 767% in the first quarter of 2021. This figure is somewhat higher than the historical average due to the low CDI. And with the expectation of a return of the sales, the CDI will increase, and we will go back to more realistic levels of 150% to 300% of CDI.
I will now give the floor to Marcelo Picanco, who will speak about the insurance vertical on Page 9.
Thank you, [ Marcelo ] and thank you for your presence in our call. A good day to you. I would like to begin on Slide #9 and the figures, I think, you are familiar with. I'm not going to present them in detail. I would like to say that strategically, for the second quarter, we have had expressive growth in insurance, even with a reduction in risk, which, of course, naturally reduced our pricing. We were able to grow, and this is an important goal for us, the number of customers that is at 120,000 with the pace accelerating in the last 2 quarters. We believe that this year will be very important in a sequence of over 10 years of growth in the fleet that has been insured the auto fleet. This resumption of growth in a more strategic and persistent way, of course, is very important.
And I would like to perhaps refer to the concept that we have of the insurance market and say that it is not mature. It is far from being mature and having good penetration as in other countries. Even though the auto segment is deemed to be mature, has only 30% of penetration in the fleet. And the way of approaching this potential has to do with innovative offers that are expanded that will bring more security, comfort and convenience in a country that needs this surely. Bllu is an example of this. It is in a pilot program in 2 important regions. And the market was [ suppressed ] by noninsurance solutions.
And it is a response of Porto as we understand the market is there, it should be addressed. It should not be ignored or seems to be marginable, we don't only want to gain market share, and I can say that this conclusion is even stronger in other insurance markets such as life and property and casualty. We have had consistent growth, but the potential is enormous. 80% or 90% of these markets have as yet not been approached, and we need more innovation. We need to simplify several things.
Our essence of being a safe harbor takes us back to bringing the people excellent services mixed with products that will truly offer a genuine offer of convenience and comfort. We're not only thinking of offsetting income or ensuring [ good ]. People are looking beyond this. They're looking at what is around them services and services in general. And it is important to mention what we think of insurance when it comes to the combined ratio and results, this is one more quarter where we are able to show that, yes, it is possible to have a pricing model, an intelligent model that takes into account financial variables.
That theory that with low interest rates, you cannot have profitability is not confirmed. This sector has been growing despite the drop in the interest rate. And of course, this refers to the enhancement in our operational results because of the work in a differentiated underwriting and pricing. And we will be doing this in other lines as well with the database that we have with our portfolios of more than 5 million people. This, of course, will help us to generate excellence even in moments of pandemic.
We will be able to segment portfolios that can benefit from this site people. This is a level of granularity that is made feasible through a sophisticated model and a truly large database. The first quarter was somewhat more difficult for insurance because of the natural seasonality. But once again, we improved the results vis-a-vis the first quarter of 2020, with a substantial increase of [ 195 to 219 ] revenues for the first quarter '21 and an increase of 15% in capital, 1.5x the capital of the company. In terms of administrative and operational expenses, we had a nominal decrease.
I'd like to look at the index and the nominal decrease and an improvement of 0.3 percentage points. We had some expenses with COVID. The contributions we made in this very difficult period of society. This is not part of the operation, of course, donations and contributions, although they are accounted for, and we eliminate apart from the mail Porto Seguro, where we offered more than 10,000 posts of work associated to the company. We continue on with this discipline, and we look upon this now as margin expansion. This is something strategic that will enable us to have more accessible products for consumers who are not willing to pay beyond a certain level, and we continue to do this to have the securities inclusion, which is strategic for us.
Finally, in the health vertical, despite all of the impact on companies such as unemployment, our portfolio is made 87% of corporate health. Unfortunately, because of the crisis, many companies have reduced their invoicing. But despite this, we were able to grow 5% in premium and add 70,000 additional lives, including dental health in the scenario.
Of course, this is not a growth that we would like to aim for. The health care model is undergoing a transformation. We are creating something, so we will have a more digital sophisticated company with an intelligence that sets [indiscernible] aside in terms of patients, physicians, the way of [ breaking ] together these issues. We have a partnership with joint ventures for technology and digitation. And as the pillars are spending and have become concrete in health care, this growth will be ever more vigorous.
Now some trends that are mentioned, the invoicing of insurance market in other countries where insurance is mandatory, this does not happen in Brazil in terms of vehicles, for example. So we have a great deal of room to expand penetration in income brackets that do not have this protection. Although we already have a strong penetration in the upper social bracket, where we have good inclusion in all the insurance lines, including health care. Only 20% of the population has access to complementary health and this level has not grown. We have a relatively low market share and a great deal of space to grow in that market and the market will also grow.
I would now like to conclude this part about insurance. And I will now give the floor to speak about financial businesses.
Thank you, Marcelo, and a good day to all of you. I will speak about the financial business vertical. And our revenue growth was 2 digits, 16.2%. A breakdown of revenues where we have credit cards, CDC, the consortium with growth as well as financial risk and capitalization and a growth in net earnings of more than 9% in the last quarter.
Highlight in our credit card and financing is the growth and the acceleration in the financing of vehicles. In the last year, we had a growth of 48%, whilst the market only grew 8% based on December. And this growth is leveraged by a sale and aid from the brokerage channel, which enables us to continue within the expansion scheduled for the year. We have 58% of our sales carried out through the brokerage channel.
Another important highlight is that even in credit cards, we have been able to grow our portfolio. A significant growth during this crisis have come limitation to consumption. We worked on wallets and [ buy ] per pay, and we grew above the market showing that our customers continue to use their credit cards, even in this access restriction scenario. The number of transactions went from 59% to 64%, which has also increased our efficiency when it comes to financial risk. We have our allocation done by brokerage in a partnership with real estate. We achieved 13% and we had 10% in the real estate companies carrying out transactions vis-a-vis the same quarter last year, showing the continuity of our expansion in this real estate ecosystem.
We created a product that is 100% digital with a connection to the customer [ tax ] number with a lighter price, and that represents 40% of our sales. Once again, this shows our footholds and our competitiveness in this sector. The growth of revenue, we have a change in the way that 2-step demand that you bring together the revenues, which now extend during the entire time of lease.
To speak about the consortium, we have an important regional plan. We had a growth of 29%. And here, we changed the profile of our internal consultants. We work remotely enabling us to have higher contracting and sales to more brokers. We increased the number of brokers by 69% compared to the previous year.
In our own sales channel, we were also able to have an extension with remote management to regions where we were not present physically, which shows that we're following the right strategy for growth, of course. When it comes to asset management, this drop in revenues is due to internal rates.
Now to speak a bit more about our credit operations portfolio, we observed continuous growth and our default level is very aligned with the market, which is interesting, given that we're growing above the market. And of course, we continue to have control default using the correct policies for this.
In terms of the services vertical, I would like to highlight our continuous growth in revenues of 22% and a better distribution of revenue. An important highlight for Porto Seguro Faz and the Pet sector, we have a breakeven in all operations. We have several innovation initiatives here. Now to speak about Carro Fácil, we had an increase in sales vis-a-vis the same quarter 2020, an increase of 57% and an increase of 30% in the average ticket as part of a significant expansion in cards through subscription.
In Porto.Pet, we have significant plans on average ticket that went from BRL 100 to BRL 183 and the growth in our portfolio from 36,000 to 41,000 the last quarter. Porto Faz and Porto Reppara!, these are the services that we offer as part of our structure. Reppara! is the first assistant planned for emergency services. We have reached 372,000 customers, and many of them are due to strategic partnerships that we have. And we had some [indiscernible] included in a specific operation for store maintenance. And Itau bank, among others. In other, we have Renova where we have increased our capacity to dismantle cards, practically doubling our capacity. And with this, we are able to use legal spare parts so that they can be used in other assemblies. Now these are the main highlights of the services vertical, where we have had an acceleration in the first quarter.
Thank you. I will now give the floor to Izak Benaderet.
A good day to all of you. Thank you for the opportunity to address with you. These are the results for the first quarter. Results of BRL 230 million with a nominal return up to [ 36 ]. Now this result is thanks to our public securities portfolio, we had a first semester with an [ EPPA ] with an increase of about 2%. We also had an increase in the IGM. All of this contributed positively to our securities portfolio.
Although there was a drop in the BOVESPA Index, our shares had an excellent result. We also had contributions coming from investments and funds in the multi-market. Finally, in terms of our investment portfolio, we had some moves this quarter increasing our stake in index securities and inflation. We went from 53% to 65% of our portfolio. Very generally, this is what we did.
I return the floor to Roberto, who will speak about our ESG initiatives.
On Slide 18, we refer to some of our initiatives that are part of the history of Porto Seguro. We have the association Crescer Sempre that has received help for more than 20 years. We have child education, high school, vocational courses for the community of Paraisópolis.
We also have the Young Apprentice program, offering education for life and trying to enter low-income, young people in the labor market. Finally, the Porto Voluntário program to foster the volunteering of employees, companies and working with social institutions and their beneficiaries.
We have additional and recent initiative. We hired 10,000 people for the program Meu Porto Seguro. We offer them an income of BRL 1,500 per month for 3 months. We, of course, had additional people who were not hired, but decided to follow the program, and we are offering them training available on the Porto Edu platform.
In the social field, we created a Quentinhas program. We are offering help to the Campos Elíseos neighborhood, highly impacted by the pandemic. We buy packaged food from 11 restaurants, and we offer meals to the community, the surrounding community. We have donated more than 20,000 meals with the deliveries being carried out by Porto Seguro's service providers. The company has already donated 6,000 food baskets that were given to 1,300 companies. We have 2 women on our Board of Management. Women on Board is an initiative supported by the U.N., incentivating the participation of female members in the Board of Directors.
And finally, we are now part of the ICO2 from the B3. And we have a government and social aspects that go back to contribution. And we have now begun our greenhouse gas inventory carried out by a third party, giving us more reliability and transparency in our processes. These are the main financial -- excuse me, environmental, social and governance factors that we wanted to highlight.
With this, we conclude the presentation, and we would now like to go on to the question-and-answer session. Thank you.
[Operator Instructions] Our first question comes from Mariana from UBS.
In many of your verticals, you have reached a breakeven point and some of them you had a growth of 50%. Now which is the vertical business that has had the greatest growth? And which is the one where you just had greatest opportunity?
Mariana, we had instability in your question, if you would please repeat it.
I do apologize. Is my sound better now?
Yes.
When it comes to your vertical businesses, insurance represents 50% of your total results. And most of your other verticals have reached a breakeven position. Now which will be the contribution of each of these vertical results? Which will have a greater growth? And in which of them do you detect greater opportunities?
Mariana, this is Roberto, and thank you for your question. Of course, the insurance vertical represents most of the revenue and profitability of the company. In the coming 5 years, we foresee a significant increase in health care and service verticals as well as in the financial business in that order. This doesn't mean that the insurance vertical will not extend. We imagine that it will have a greater share in revenue and profit in the health care verticals, services and financial businesses, more than in insurance.
If you could give us an idea of the percentages of this mix?
Our reading is that in the next 10 years, the insurance vertical will represent less than 50% of the total revenues and profitability of Porto Seguro simply to activate, so we're not stuck on this vision of a quarter where we have a compression in terms of insurance results.
If we go back to 2017, speaking about the insurance contribution, 68%, 67%, 65% in 2019 and 67% in 2020. For the annual contribution is of approximately 70% since 2017 between 65% to 70% is what we see in the year.
[Operator Instructions] We have a question coming from the webcast.
We have some questions actually from the webcast. I will read out the questions. The first question from Gabriel from Citibank. He asks us to speak about the competitive environment for the auto insurance and the increase in prices of new cars and used cars. Will this lead to a higher insurance price?
Thank you, Gabriel, for your question. Well, the environment -- the competitive environment is still quite balanced. There is no asymmetry. The truth is that prices reflect the following: a lower frequency that can be blamed on the pandemic, but not entirely. Before the pandemic, we had already reported a drop in frequency in robbery and theft. And for the entire market, there is a price reduction here that is not due to commercial aspect or the aggressiveness of players, but instead due to the reduction in risk when there is less risk. The price of insurance is lower when it comes to the increase in price of new cars. Yes, this should eventually balance out, but there are effects that decrease the price such as frequency and others and other factors that will increase the price. All of this is balanced. And when we say balanced, the companies, in general, are healthy, healthier than they were formerly perhaps. And naturally, the market in autos is quite competitive. It has been transferring the price increase, and this has not impacted the profitability of Porto or other relevant players in this business.
We have another question from Gabriel from Citi. It's also for you, Marcelo Picanco, If you could speak about the loss ratio of health care.
We saw something sequential. We have had higher costs due to COVID and elective procedures. Now I do want to be very fair. We had a bonus, a reduction of procedures in 2021. In 2020 and 2021, we see a resumption in elective procedures. You can simply not treat other diseases like cancer or other serious situations that get manned resources that are costly. And secondly, we had the treatment due to COVID-19 with a unit cost that is much higher than any other treatment. This is a disease that requires a great deal of resources and the per capita per patient is more costly.
In the first quarter, we had a loss ratio that is somewhat above what we were having and what we expected because of the reduction of elective procedure. We had a lockdown, greater isolation in the second quarter, but we do have this higher cost per COVID patient. We had a strong outbreak in the first quarter and in the second quarter. And of course, this will increase the loss ratio.
Now to continue on here another question from the webcast asked by Thiago from BTG Bank. Two questions.
The first, how can we think about the service verticals that have several businesses that are at an initial stage? Should we expect new partnerships in the coming months such as Petlove?
Thank you, Thiago, for the questions. This is Loucao. I think that we can think of the service vertical as a creation of several products that makes it possible to expand Porto Seguro and the services offered to people. We have the consolidation of cards through subscription. We have Reppara!, Renova and an interesting MVP in terms of Tech Fácil where we begin with smartphones at present.
When it comes to new associations of partnerships, we're always open to discuss them if they're aligned with our values and if they are aligned with our guideline for the next 5 years, yes. This is what we can expect a vertical with significant growth potential as we have seen in the last quarter.
The second question made by Thiago, if you could speak about the credit cards more. What can we expect for the future? Which are your plans? And which would be Porto's competitive edge in this segment?
In the last few years, we got prepared for a fully digital process and security in the use of the Porto Seguro credit card. 33% or 35% of our actual customer base does not have insurance. And this is a credit card that is preferred by the clients. In this segment, we continue to grow the portfolio, our revenues. We are the 8th largest credit card issuer with significant growth in terms of our portfolio vis-a-vis competitors. The strategy is that this will be a card that will be used considerably and not simply one more card.
Our models are ready for expansion into the open sea. We have a digital channel that represented 15,000 sales in the first quarter. And it is competitive with many other fintech. So yes, we are getting ready to technology. Our credit is based on a software called [ Power Curve ] that analyzes all of our clients based on the same model and same policies, enabling us great agility in all of our products. Now considering our strategy to grow through services, we also believe that all of these subscription services and the more accessible services that we have in the market will be absorbed entry for our financial products as well.
The next question comes from Guilherme from JPMorgan.
My question refers to the structural side, and I move away from the first quarter. There has been an exponential growth in the use of digital products. Some companies are beginning to offer auto insurance. And so insurance, well, it means that you have to know your client, but insurance already has a value perception on the part of the consumer. Now we see that very few fintechs are adopting the model. They're working more with an insurance company. Now we see the evolution of digital product, what do you see to be the potential of the insurance sector? And how will the digital programs impact your evolution?
Thank you for the question. This is Marcelo here. So we see this as an opportunity. We have spoken with several digital players, not only banks, and we see strong possibilities for partnerships. I think that the supply through different means is important to increase channel partnerships and formats. It is important to foster the inclusion of more consumers in the market.
The market is still very restricted. Only 30% of the fleet has insurance. What we observed is that most of them don't want to be underwriters. They think they are technological companies and the condition of having the risk of insurance regulation is not attractive for technological companies. Now for the American fintechs or the Brazilian fintechs, they need partners because they need to make adaptations in their model, the way of contracting the insurance has to be simpler. And we have to improve the customer journey, and we have made partnerships in this arena.
Another important point that I would like to highlight in Auto Insurance is that people speak about the contract in the initial contract. Once the person is in, there is an operational and physical chain. We have offices and other instances, so Auto Insurance is something that is very logistic. So we have to have a back office a service network that takes some time to set up. And these companies are not willing to set up thousands of offices throughout the country or [ winches ]. Once again, Auto Insurance is highly operational. It's different from other insurance where you do underwriting like life insurance.
I think we have a position that is very open and we're very willing to make the necessary adaptations to have these partnerships.
We have several questions that have come through the webcast. A question that comes from Gustavo from Interbank, which is the strategy to have more clients in the Pet platform.
Gustavo, thank you for the question. Our initial strategy is to continue the expansion in the network with Porto.Pet, and we're going to approve and develop the channel of brokers so that we can have a more digital, more simple sales always anchored through the brokerage channel.
We're now undergoing a regional expansion and more digital sales through our broker channel, especially as soon as all of this is approved by CADE with the help of Petlove in the distribution.
We have another question from [ Renato ]. Which is your view of the relationship between digital sales channels and brokers? Are we with a view towards selling your products to new customers?
Thank you for the question. This is Roberto. The insurance broker is our main distribution channel and they will continue to be for some time. We protect the insurance brokerage system. We try to avoid direct sales. When it comes to selling through Internet, we have broken the paradigm through the sale of the Bllu product that is sold through Internet and the broker can also help in this.
Now any product that is built by Porto Seguro can be distributed through a broker, but not necessarily only through the broker. We have solutions such as Bllu and the client can acquire this directly without hampering the work of brokers. And the aftersales will go to an insurance broker with a somewhat lower remuneration. We want to continue working with insurance brokers, but of course, we do want the younger generations to be able to acquire their products through Internet. This is a good equation that we have reached without hampering the brokerage channel, which has been moving ahead.
We will have a Porto store where people will be able to acquire our products directly through Internet without the intervention of an insurance broker.
We have another question from Thiago. If you could refer to the growth potential that you see in the financial businesses, you have 2.6 million credit cards, almost 9 million clients as a whole, better than several digital banks, which will be the evolution of the growth of your customer base products and profitability.
Thank you for the question, Thiago. We will continue to grow our base, now focus on attracting new customers with more competitive products, so that we can work with cross-selling and develop financial life of customers in Porto Seguro as an alternative to the fintechs that we see in the market. Our strategy is to speed up the growth of our customer base, but focus on products that will generate profitability and financial results. Very much aligned with what we had, but we're doing this through a more synergical outlook. Now we do want to have a greater market expansion at more competitive prices.
Another question about the IPO. If this can be used for service vertical?
Since 2014, 2015, our service vertical has enabled us to sell our products individually, and we do the distribution through Porto where since 2015, you can buy one of our products. And it's more about the digital sale of insurance, and we have to be more efficient in the selling conditions. Even with a drop in the after-sale commission, if the sale is intermediated by a broker.
Okay. Now that is very clear.
This is Roberto. With the digital sales channel, you have lower commissions, of course, but the commission is part of the cost of marketing, of upselling. And in the cost of selling, you have expenses that you don't have in the broker channel. You have to generate leads and you don't have to do this through the broker channel. So to respond in a more pragmatic way, the commission will be lower in this channel, but the cost of marketing as a whole will not because you do have the cost for the acquisition of leads.
I would like to compliment the response of Roberto with something when we compare the digital sale of insurance vis-a-vis the consultancy of brokers and other products. If you buy a smartphone through Internet or a machine or a bridge for your house, the sale of insurance in markets where insurance is not mandatory, we can't compare ourselves with Great Britain and the U.S., where insurance is mandatory, the rate of closing trough, a great deal when there is no support of the broker. We want to do something hybrid where the broker will close the deal. This is not only issue to harmonize the channel, we're being pragmatic, we want to sell. And even in developed countries, this is even stronger in insurance portfolio. In Japan, the direct sales of insurance do not amount to more than 10%. There is that pragmatic need to convince the customer about the product, which is not a desirable product, it's necessary and people need that consultancy to close. And I say this based on our experience with health [ pets ] that are 5 years old and that have begun using brokers to close the deal. In the United States, service combination of the 2 channels is something that we are investing in. And perhaps the cost of the acquisition of the client will not be the same, but we do have to invest in this.
Now to speak more specifically about the commissions that we have in some portfolios, we had a better sales performance. We carried out campaigns and the results are proof of this. When we grow, we increase our margins. We have more commissions because it's something meritocratic and still very good.
We have a last question that came through Internet. We're going to respond to it, and then we will end the conference call, which is the behavior of premium in the sector in Porto Seguro and vehicle, we're in a year where we have invested a great deal to resume growth. After several years of making adjustments, we had lower growth. And we want to have a vigorous growth this year as part of the market reality. We need more time for structural transformation. We're not going to change anything this year. Complex innovations do take time so that they can become more mature. We don't want to do something small and simple and think that this will change the market. We demand something more sophisticated that will take time, but this is a year that will be a differential in the growth of the auto sales. And of course, this will depend on the behavior of competition.
The market is quite competitive, as I mentioned. We have invested in very sophisticated underwriting and pricing model that consider the habit of staying home, not staying home, circulation patterns that are very different since we had the pandemic, the behavior of drivers that has changed. And perhaps next month, this behavior will change further in terms of consumers. And because of this, we have had to make adaptations in our model with a view towards the future looking towards the future and not looking backwards for auto insurance. All of this will lead to growth this year, and this is what we're investing for.
Very well. I would once again like to thank all of you for your participation, for your questions, the significant contribution and your interest in Porto Seguro. Should you have any additional doubts, please visit our page for investor relations or directly contact our Investor Relations team. Thank you very much.
The Porto Seguro conference call is concluded. We would like to thank all of you for your participation, and we wish you a good afternoon.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]