Porto Seguro SA

BOVESPA:PSSA3

Earnings Call Transcript 2022-Q3

[Operator]

Ladies and gentlemen, at this time, I would like to welcome everyone to Porto Seguro's Third Quarter '22 Conference Call. Today we have with us Roberto Santos, CEO and Investor Relations Officer; Celso Damadi, CFO; Marcos Loucao, CEO, Executive Vice President of Financial Services and Business; Lene Araujo, Corporate Vice President; Mr. Arruda, the Marketing Vice President; Izak Benaderet, Managing Director of Porto Investimentos; and Aleksandro Borges, the Coordinator of Investor Relations. We would like to inform you that this event is being recorded and simultaneously translated and the slide is available in our site. [Operator Instructions]

Before proceeding, let me mention that forward-looking statements will be made during this presentation. These are based on the beliefs and assumptions of Porto Seguro's management and on information currently available to 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 in the future. Overall, economic conditions, industry conditions and other operating factors could affect the future results of Porto Seguro.

I would now like to give the floor to Mr. Roberto Santos, who will begin the presentation.

[Roberto de Souza Santos, executive]

A good day to all of you. We would like to thank you at our conference call for the third quarter '22 for Porto Seguro. In Slide #4, we present the main highlights of the period. Our revenues grew 35% in the third quarter '22. 29% in the 9 months of the year vis-a-vis the previous year. In both periods, all of our verticals had an expansion of more than 20%, leading to revenues that has gone beyond BRL 20 million for the year. In Porto Seguro, besides the expressive growth of 34% in premiums and revenues when we compare this to the third quarter '21.

The highlight was the improvement of 3 percentage points in the Auto segment in the quarter. The cost of repairs also has led to a higher loss ratio, but we have seen a gradual trend for improvement in this indicator, the fleet ensured continued to show resiliency with a slight recession despite the strong price increases carried out. In Porto Saúde, we had an increase of 50% in the health premiums, with an increase of 100,000 lives in the last 12 months. On the other hand, the loss ratio was impacted by an increase in frequencies and the continuous cost related to COVID.

Now the Porto Seguro Bank revenues grew 20% vis-a-vis the third quarter '21. And this vertical reached BRL 3.7 million in businesses through the implementation of more than 340,000 new contracts. The NPL of credit operations is still suffering because of the macro scenario, but there are signs of stabilization and is once again below the market average. In services, we had a growth of 65% in Carro Fácil and the expansion of the operation with the arrival of a new client that has a fleet of 180,000 vehicles and 90,000 residences in line with our idea of expanding services to new audiences and segments.

Regarding the operational efficiency, we had a significant improvement in the volume of expenses and revenues. Total revenue grew 35% in the quarter, where administrative expenses increased only 1% during the period, continuing on with the work that we have observed in the last few years. Regarding our financial investments, our return was 62% of CDI. Now this result results from the deflation that we recorded in the semester impacting assets indexed to inflation. Despite this, we reached BRL 160 million in the third quarter, surpassing that of the previous quarter last year, we had 62 million in the quarter, an increase of more than 32% on recurring results of the third quarter '21 and threefold greater than those obtained in the second quarter '22.

We are returning to a double-digit return on average equity. Thanks to the actions we have adopted to recompose our margin something that is in accordance with our profitability. We're also increasing the exposure of our brands for the eighth consecutive year -- Porto Seguro was elected as the top of mind insurance company. We were present in very important events. For example, we have our participation as Porto Saúde in Rock in Rio and Porto Seguro Bank was very present in Formula 1 with a great success of commercialization of a special edition of the credit card and a special stand part that happened this weekend.

Now to close, I would like to highlight our achievements in -- great Place to Work. We were considered the third largest and best company to work in to become a safe haven for people ever more. Throughout 76 years, we have translated the essence of our company, and that is why we take care of our almost 3,000 employees with a great deal of respect, and we're also very careful with our 13 million customers.

With this, I would like to thank everybody, and I would like to give the floor to Celso Damadi, who will speak about the evolution of our revenues for the third quarter.

[Celso Damadi, executive]

Thank you, Roberto, a good day to all of you. It is a pleasure to have you here. On Slide #5, we show you the evolution of our revenues. We had the best expansion of our revenues in the last 10 years. All of the business verticals had considerable growth -- we had a growth of almost BRL 4.5 billion in premium in these 9 months. In the third quarter, we grew by BRL 2 billion, a growth of 35%. So the third quarter had a growth that is much higher than the other 2 quarters. When we look at the business verticals, insurance grew 39% held 49.2% and the service vertical, 41%.

Now here, we're going to speak about this in greater detail. Roberto and others will refer to this. In the third quarter, we grew 33% and 44% in health and 43% in services, 20% in financial businesses, which means that our tariff recomposition continues to be very good with an improvement of loss ratio in each vertical for the coming quarters and for 2023 as well. Our price recomposition continues. We continue to enhance this. And I think the revenues point to this very clearly. We're growing more in premium and with the price increases.

In the next slide, Roberto has already mentioned this, a better return on average equity of 11% with a trend of improvement in the coming quarters. To the right, we can see the evolution of our historical profitability. We have always worked with a profitability within our expectations. We went through the first 2 quarters with returns below expectation. Now this quarter is still not according to our expectation. But as remarked in previous calls, the trend is to return quarter-on-quarter to a historical series that we have had since 2010. I do believe that in the fourth quarter, the profitability will be compatible with what you see in this chart.

I will now give the floor to Sami to speak about -- oh, I'm sorry. He says I'm going to give the floor to Roberto, the CEO of the Insurance vertical until September 30. Roberto, you have the floor.

[Roberto de Souza Santos, executive]

Well, thank you, Celso. We go on to Page #7 to speak about the revenues of Porto Seguro. We ended the quarter with BRL 5.2 billion in premiums, a robust growth vis-a-vis the same quarter last year, a growth of 33.6% always underscoring the growth in the Auto insurance business, P&C and Life insurance as well. As you can observe, all of the business lines had a significant growth of 2 digits. There's a special highlight for the Auto business, as mentioned at the beginning and an expressive increase in the average ticket of Auto insurance, this to be able to deal with the average cost of loss ratio and the increase in automobiles carried out by FIPE.

We go on to Page 8 to speak about the Porto Seguro's profitability. We obtained the best results obtained in the last 5 quarters, BRL 208 million, which corresponds to more than 21% when compared to the third quarter of '21. And here, we reached an ROAE of 21.4% in the insurance vertical. To the right and still on Page 8, when we look at the combined ratio, you can observe that in all of the lines of the combined ratio, there is a drop, showing the efficiency of our operation, a drop in the loss ratio, and what draws the attention specifically is the drop in administrative expenses and operational expenses of 1.4% for operating expenses and 12% to 11.8%, which is a trend where we are seeking operational efficiency on Page #9, very interesting information.

And to the left of the page, I highlight a graph with information showing us that beginning in July of '21. This graph shows us the reaction of the insurance market as a whole. And what happened in the last few quarters, you can observe through the yellow curve, the increase, the exponential increase in July '21 of the market value of semi-new vehicles stabilizing beginning in January according to the FIPE table. And in July of '21, a recomposition of prices in a rather fast pace compared to the speed of growth of semi-new vehicles, precisely to be able to tackle the increase in loss ratio. Therefore, in auto insurance, we had an increase in the average ticket. And this shows you the reaction, which, of course, has already been dealt with, with a problem of loss ratio in the FIPE table.

On Page 10 and still referring to the loss ratio of autos, we see that the first quarter of '22, there is a strong increase in the premiums written. And in the darker blue curve, the premiums because of deferment compared to the earned premiums. And this shows you the trend of increasing this written premiums to the right, despite having a low loss ratio, what I would like to highlight since the first quarter of '22 up to present this quarter, a reduction in the evolution of the load of the loss ratios that had been retained and that had been growing. This speed has been reduced.

So this combination at the right of the loss ratio stabilizing with a slower growth compared to the left, a trend for a strong increase of written premiums, vis-a-vis the earned premiums that have already been granted. Now this shows a very positive trend in terms of recomposing our results when it comes to the auto loss ratio. This is what we observed in the third quarter, a very strong growth, continuity, a quest for operational efficiency, stability in our commercialization costs and mainly a reduction in loss ratio in all of the businesses that are part of the Porto Seguro vertical.

I would now like to give the floor to Sami Foguel, who will present the Porto Saúde vertical.

[Sami Foguel, executive]

Thank you, Roberto. Good day to all of you. In Health, we had the continuity in growth for the eighth consecutive quarter. We reached almost 413,000 lives with a growth of 96,000 lives in 1 year, 150,000 lives in 2 years. I would like to underscore the growth of 30% of the base with a growth of 51% in the premium issued. Now this shows you a very robust relationship between the customer base and the growth. In the second quarter, the base increased 4.5%, and the premiums increased 9.3%, once again, leading to a price recomposition very similar to what Roberto had mentioned for the Auto vertical. We have come to BRL 860 million in terms of total premiums and revenues in the health care vertical, showing you the growth and the mission that we have, including Porto Saudi as part of Porto Seguro as a whole.

Now there was a very challenging semester for the sector in terms of loss ratio. And this is impacted by the increase in the frequency and the continuity of cost with COVID. We reached an average of 38%. And this is a quarter that seasonally tends to be more challenging. So we had a loss of BRL 6 million, still better than the same quarter of 2021. And with BRL 50 million accrued in terms of profitability. In the next page, I would like to highlight 2 initiatives mentioned by Roberto in the opening. We will continue to make significant investments in the brand, of course, with the goal of ensuring that Porto Saúde increasing its share.

We participated in Rock in Rio. We're continuing to consolidate the brand of Porto Saúde as a very important health provider. And the continuity of this initiative was launched in the last quarter. We see that Porto has been a success and plays a very important role in the future of the vertical and in the control of loss ratio. In 4 months, we had more than 36,000 appointments and the customers seem to be extremely happy. We have more than 220 professionals, a large number of specialties, we carried out a pilot this quarter, and we're going to launch Porto Health no appointment needed care unit. Now we will have 2 points in Sao Paulo with very good recognition and search for these services. We have worked diligently on the construction of this team of professionals.

Now with this, I would like to give the floor to Marcos Loucao, who will speak about the financial vertical.

[Marcos Loução, executive]

Good morning and thank you, Sami. In a general and very consolidated fashion during this quarter, we began to perceive all of the benefits of the readjustments that we did in our credit policies, especially in our portfolio. We have had changes in our lines of credit. We also have a different approach for our better-known audiences. And the revenues have increased, and we have seen the NPL indicators stabilizing, and we observe a very positive trend since the first quarter, and of course, an enhancement, which will bring good results in our credit portfolios.

The revenues, as you can see in the chart, with a growth of 7% vis-a-vis the second quarter in terms of credit products. We also had the portfolio from the viewpoint of risk in terms of rentals, reaching BRL 20 million with a growth of 4%. Now the highlight is credit cards, which turned out to be a record in the issuance of credit. We had a specific product with 115,000 sales in a single month. Of course, this has allowed us to return to have an adequate growth based on our strategy of working with our internal public. Well, I believe that these are 2 slides. I do apologize here.

Let's go back to the credit cards. We also had active accounts reaching 2.40 million, which means 3 million credit cards. Now on a very positive tone, our activation of cards continues to be of around 65%, a significant activation and the amounts transacted were BRL 12 billion, a growth of 19% compared to the same period in '21. In terms of vehicles, we have 126,000 contracts, and we have relaunched a credit for vehicle warranty with very good [indiscernible]. We have more than 1,500 contracts in the month of September, 3 or 4x the amount we used to carry out in previous months.

And of course, we have some fintechs working in this segment. And this offer is being done for the vehicles insured in the company, which allows us to work with a very controlled risk. In terms of rental warranty, we continue to grow, but we have altered our credit policies, and we have a significant opportunity with the real estate expansion. We were not selling this insurance product, we were selling alternative products, and we observe a retraction and there is room for growth here. We have 21,000 real estate agencies registered and 6,000 of these real estate agencies producing these figures.

Now when we look at the diversification of Porto Seguro products, we have significant diversification. We have all of the credit products that, of course, entail a risk because of the macroeconomic scenario. But we also have a significant generation of revenues that is unpacked from the risk of credit. What we call accumulated businesses. Consortiums, for example, are one of the leaders in the market, and we're speaking about real estate consortium. We already have BRL 21 million of managed credit in this area of these BRL 18 billion have been contemplated, which means a client has already been chosen or the client already lives in the billion, and the rest of the clients will end up acquiring their real estate. This is a significant source of revenue generation unpacked from credit risk.

We have 29,000 quotas, and we are the player with the greatest production in August. We also have 2,800 brokers that are marketing this product. And in this August campaign, we had the entry of 1,000 new brokers. And these are beyond the point of sales, which shows a very positive outlook for these products in terms of capitalization. This is an alternative to the rental warranty, and this ends up being an important product for our portfolio. It had a growth of 4% with a highlight here in some of our securities.

Now when we speak about Services, in terms of Porto Assistência, a revenue of BRL 124 million, with a growth of 71% vis-a-vis the same period last year. Of course, this is due to the new composition of Porto Seguro Assistência that allowed us to put the company into operation. We have 3,600,000 services rendered until present. In terms of Carro Fácil, we continue to grow our revenues significantly with a policy of adapting prices and the mix of vehicles. We have a higher average ticket, which enables us to attain greater profitability in this business. The active fleet grew 35%, and we have 12,000 active contracts. We don't have any contracts with a period that is lower than 12 months. So we're speaking about longer periods of rentals and an EBITDA of 47% in the last quarter.

Now these are the highlights that I wanted to address. I will now give the floor to Izak.

[Izak Benaderet, executive]

Well, thank you, Loucao. We have a portfolio of BRL 10.1 billion. It increased 0.5% in the quarter. And well, one of the detractors was a strong deflation that we had during the quarter. And of course, we have a huge exposure in our investment portfolio. We also had an interesting return in variable income and in the market funds. But in terms of this, the deflation did have a huge difference. And in allocation, we have had a change. It continues to be very similar to what we had in the last quarter.

Now that is all, I will now give the floor to Mr. Araujo.

[Lene De Lima, executive]

Thank you, Izak. Good morning to all of you. I would like to highlight the main actions that we carried out in ESG. Well, initially, we won the third place as the biggest and best company to work in from great place to work in a company with more than 10,000 employees. And we're going to continue to make sure that everybody wants to work in our company, thanks to our daily efforts. Our employees truly are a priority, and we invest in the integral health and quality of life of the teams of their physical, mental health and, of course, being extremely respectful and being ever more inclusive.

Additionally, to this, as one of our main projects, we recently created a partnership with the Porto Seguro Institute called Tech Access. We have this institute geared to the low income bracket, and it's geared towards training people in their digital careers. And this is offered freely through the partnership we have with the Porto Institute. We also have an initiative to reuse water since 2014. We're using this reuse water for watering gardens, washing external areas and flushing toilets. And the amount of water reused will increase its efficiency ever more. Another recent initiative, which we deem to be very important is an incentive in terms of raising awareness among our employees of attempting to cut down on the number of disposable plastic cups. This, of course, will generate an impact in the company.

Now these are the main operational and financial aspects of ESG that we wanted to highlight in the presentation. And with this, we conclude the presentation, and we can go on to the question-and-answer session.

[Operator]

[Operator Instructions] We already have a first question here from Citi, Gabriel.

[Gabriel Gusan, analyst]

We have 2 questions here. First, in the health area. We have seen a rather concerning trajectory for the loss ratio in the third quarter, which are the next steps for this portfolio to correct the course? How are you going to redress this? And do you think there will be a slowdown in growth to be able to readjust profitability in that portfolio.

Now the second question refers to your financial statement, there is a return that is below the CDI at present. Is it going to remain at this level -- this has been 3 quarters. Annual results have never been below the CDI. Now is there something that needs to be done? Are you going to take on losses in your investments, which is your outlook for this portfolio, therefore.

[Sami Foguel, executive]

Gabriel, this is Sami addressing you. We did have a peak of loss ratio this quarter that is a fact -- we have had, of course, the continuation of our cost in COVID-19. Now we're observing a very important process of price recomposition. And it's important to keep this in mind. We do have a portfolio, and we also have pricing that comes from the past, and we have the present day pricing and the new portfolios. So I would like to speak about our direction, a very clear direction.

The new products will fit in very well with this new reality that we will permanently live with COVID. We will have higher loss ratios. You will see that our written premiums increased double the amount of lives. So what we observe is that gradually we will have a seasonality during the next 2 quarters. Typically, the last quarters are quarters with lower frequency. We observed that this is coming back, and we will also see the maturity of our newer products as part of this portfolio. We're quite confident in this direction that we have chosen to follow.

[Roberto de Souza Santos, executive]

Gabriel, this is Roberto. Allow me to add to what was said. Yes, we do continue with a growth agenda despite the impact of the loss ratio that was very clearly explained by Sami. This agenda is ongoing with strategic planning and also thinking about geographic expansion. We're thinking of opening another unit going forward.

Our financial revenues, of course, have been impacted by the CDI for the last year. Now we're looking towards the medium and long-term understanding that the assets of Porto, our business lines will be preserved in the long-term. This is something that we have been doing for some time already. And if we think of 2019 until 2021, we were working quite strongly in this because we had real interest rates for the long term that were changed because of the pandemic.

And we continue on with this, and we should understand that in the medium and long-term, the real interest rate will remain at the present day levels, which gives us the opportunity of thinking of hedges, if we have any stronger risks, and perhaps the interest rates will be somewhat lower. You can observe that our allocations are almost 50% done in real interest rates, but they are in the long-term. Now as soon as the CDI returns to a lower level and the real also reduces its level, we will have a highlight. We will stand out once again in terms of the CDI. Is that -- does that answer your question?

[Gabriel Gusan, analyst]

Yes.

[Operator]

Our next question comes from Guilherme Grespan from JPMorgan.

[Guilherme Grespan, analyst]

Well, in truth, I have 3 very quick questions. There are technical questions. First, when it comes to financial services, there has been a change in the history of NPL. It wasn't very clear what happened in the release. And what is it motivated that change. Now when we look at the loss ratio, we see that your historical results have changed. It has nothing to do with a service company that is a spin-off. If you could clarify what has changed.

Once again, I was not able to understand what has changed in the historical results and an accounting question in terms of the banks, the consortium last semester and this quarter, they were impacted by a new standard that defers the recognition of some products within the consortium, and there was a relevant drop in the consortium during the quarter. This doesn't seem to have happened with you. Are you expecting to have this change in terms of accounting in following quarters? Has this already happened? And I didn't notice this.

[Marcos Loução, executive]

This is Loucao speaking now. There was a correction and an adaptation. And what did we do in terms of this. We did this especially in our Vehicle portfolio. When the customer has a delay, there is no change, and we maintain this client within our accounting. Now we have made adaptations in this, and this is the alteration that has been done.

Now let's speak about the impact of this. We're speaking of 0.6% of our portfolio and an index of 0.5, which is truly not very material, and it doesn't impact our indicator. This is a correction that we have done vis-a-vis the market. Now when it comes to the consortium, there is that need to defer revenues and we have already implemented this now, the revenues of BRL 132 million would, in truth be BRL 117 million to give you an idea. This quarter, the BRL 132 million of revenues already contemplate that need. I think that this response to your question.

So with the spin-off of our assistance operation that went from Insurance to Services, we had a change in the line items. And what we did this quarter was the following the previous quarter, we had carried out a management change in the release going from deal to loss ratio. But we had not done this again. And this impacted the second quarter. The change happened in mid-quarter, and we also impacted the second quarter by reprocessing previous quarters. This was simply a managerial adjustment without a big impact. Simply a follow-up [indiscernible], so the loss ratio before 2022 has also changed. You're doing these managerial adaptations, because the history of the loss ratio has also changed. Are you referring to the conference call or to the release?

[Guilherme Grespan, analyst]

I'm referring to the press release comparing the third quarter '21 and the one now, the loss ratio was 57.5%. If I look at the one of the third quarter '21, the loss ratio was lower. It was 55.9%. So there was a change in your graph.

[Marcos Loução, executive]

Yes, that is it. In the recent quarters in the second and third quarter, we impacted the past. We carried out a migration of expenses written down as insurance. We're now being accounted for as loss ratio. I see this is part of your managerial allocation.

[Operator]

The next question is from Antonio Ruette from Bank of America.

[Antonio Gregorin Ruette, analyst]

My question once again, refers to the loss ratio of Auto and Health, which is your vision of the last days and the last weeks, the evolution of prices of the used cars? Does this point to an enhancement, and what is happening in terms of your pricing? Because we see that the loss ratio has been quite steep. I would like to know if you have had negative surprises in the last few months vis-a-vis what you were expecting. And in terms of Health, Porto Saúde, we have not seen the figures referring to COVID throughout the country. Why is it that in your case, therefore, the loss ratio is somewhat higher than expected? Is this related to COVID in truth? Or is it just simply a recurrent loss ratio?

[Roberto de Souza Santos, executive]

Well, Antonio, this is Roberto speaking to you about the first part in terms of the Auto segment. What we have observed is stabilization, and of course, all of this is based on the FIPE table for semi-new vehicles. All of this has stabilized in the last 9 months. It reached a high level but stable, nevertheless, perhaps a minor retraction, which is positive because it means that we have to -- we don't have to increase the prices to reduce the loss ratio. It won't be necessary.

Now the impact on spare parts is completely under control and has been fully priced. To respond to your question in an objective way, I can say that this situation is fully under control despite the impacts of the FIPE table and the partial loss in terms of spare parts and the cost of labor. The cost is quite adequate vis-a-vis our pricing. And all of our new harvests or new products fit into this. They already project a loss ratio, which is within the loss ratio that we are currently observing. It is under control. And I suggest that you once again look at the graphs in Page 9 and in Page 10, where we can have a vision of what is coming going forward.

Let's begin by the end. If you allow me, if you observe the publications of last night and the day before, this systemic problem does not pertain to Porto. The magnitude is similar, perhaps a little higher, lower than ours. But we do remain having problems with COVID, the hospitalizations, some people with comorbidities, treatments, tests that have to be undertaken, and of course, this does have an impact. And we are aware that the loss ratio that we have shown already goes through a range.

Well, this is a systemic issue that tends to be more permanent, of course, because this is something recurrent differently from the past, of course, we're pricing this based on a much broader range that used to be our original assumption. And of course, the forecast is a decrease of COVID during the year. For some months already, we have properly priced the issue of COVID. There has been an increase in this third quarter to address your question. There has been a gradual increase of the frequency, I can say.

The third quarter once again has observed a rather high frequency. And well, these are issues that come after the pandemic post-COVID and there was a slight drop in October and November, along with the new waves that we have. Well, everything will be very similar to what we have now. And gradually, we will be able to return to our historical levels. Now if you look at everything we do, nothing is back to the loss ratios that we had before COVID, especially in health. And we know and we believe that this will gradually return to the normal levels we had.

Now to add to what Sami said, there is an important characteristic in the health business, and this is a seasonality. We're referring to a quarter where we normally have an increase in frequency when we look at the coming quarter, the fourth quarter and going forward, we will have the World Cup, the end of the year, the vacation period. This is when people do not plan for elective surgeries, and this will have a great impact in our loss ratio load that you can continue on, of course.

[Antonio Gregorin Ruette, analyst]

Now what is it that you think of in terms of health, in terms of pricing vis-a-vis the competition, if you will be able to be ever more competitive. And what is it that you're thinking strategically about health?

[Roberto de Souza Santos, executive]

I believe I understood your question. The -- our competitiveness in terms of pricing and health. Yes, that was precisely the question. We do not intend to be a low-cost player. We do have some lives with a low cost, but we have a price positioning that is very close to that of our competitors. Now because of the entrepreneurial nature of this, we do have a dynamic where pricing -- we don't have individual people as part of our plan, and this is very important. We send quotes to medium and large companies, and then there's the issue of implementation of the health plan. This is how the market operates.

Within that dynamic, of course, there are price readjustments, stable readjustments. On 1 month, we may perhaps have higher prices than every other company or vice versa. But once again, our vision is not to be the most expensive health company. We work with enterprises. We do want to offer good quality in health. And certainly, we will never be low cost in terms of health. We don't have a network for this.

Topic that is very important in health that is strategic for us. Our growth is expressive at present, we have been able to enhance our portfolio, and we do carry out monthly readjustments because of the loss ratio that we have. And through time, this will allow us to have a better product differently from other companies that negotiate case by case. Presently, our company is at 50% of PME. A few years ago, the PME was 30% vis-a-vis total revenues. And this will also help us in terms of our pricing position in the present day products.

[Operator]

We have a question from [indiscernible], an independent investor. He would like to know if there's any change in the dividend payout policy?

[Roberto de Souza Santos, executive]

We don't have a policy. What we have is a practice. In the last few years, it has been 40% to 50% payout. Now this year, the Board has already approved the payment -- we still have not fully defined this, but we will stand at 40% payout of dividends this year because we will be paying taxes on our shareholders' equity. We will require more capital this year. So probably, the payout of dividends will not be higher than 40% this year.

Well, I believe that, that was our last question. Once again, I would like to thank all of you for your participation at our results conference call. Also, thank you for the very proactive questions and the contribution and for your interest in Porto Seguro. Should you have additional doubts, please contact our team, all of the information and contacts are available at ir.portoceguro.com.br. Once again, thank you very much, and we hope to see you at our next call.

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