Porto Seguro SA
BOVESPA:PSSA3
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Porto Seguro SA
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Good morning to all of you, and welcome to the earnings result call for the fourth quarter and year 2021 for Porto Seguro. Today, we have with us Roberto Santos, the CEO; and the IRO; Celso Damadi, CFO; Marcelo Picanco, the CEO from the Insurance vertical; Marcos Loucao, the CEO from the Financial Businesses and Services CEO; Sami Foguel from the Health vertical; Izak Benaderet, Director of Porto Investments; and Emerson Faria, Head of Investor Relations.
We would like to inform you that this presentation is being recorded and translated into English. The slides presented are available for download at our IR site. And on the chat, we will put the link.
Please press the interpretation button on the bottom-right side of your Zoom application and choose audio in English. The slides presented during the call are in Portuguese, but there is an English version available for downloads in the Investor Relations website of Porto Seguro at ir.portoseguro.com.br (sic) [ ri.portoseguro.com.br]. And also it's available in the chat space of your Zoom application.
[Operator Instructions]
As a reminder, forward-looking statements made during the conference call regarding the Porto Seguro business outlooks are based on the beliefs and assumptions of the company management as well as on information available -- currently available to the company. These forward-looking statements are no guarantees of performance. They involve risks and uncertainties, and because of future events and the general economic conditions and other operational factors can also affect the future performance of the company. .
Roberto, I would now like to give you the floor to begin the presentation.
A good morning to all of you. We would like to thank you for your participation at our conference call for the fourth quarter and full year 2021. We're going to go straight to Slide #4, where we present the main highlights of the period.
In 202, our revenues reached BRL 21.5 billion, a growth of 13% vis-a-vis the previous year. For the first time in history, we went beyond BRL 20 billion in annual revenues, also delivering a 2-digit expansion in all the business verticals. In the fourth quarter, we also had this performance with an increase of 13.6% in revenues vis-a-vis the period 2020. This operational performance allied to efficient financial management allowed us to deliver net revenues higher than BRL 1.5 billion in 2021. This represents 16.9% over net equity. In the fourth quarter, net revenues were BRL 533 million with annual return of 23.1%.
Now the year 2021 was very positive in terms of the growth of our customer base in all verticals. Jointly, they amounted to 11.7 million customers at the end of 2021. In the Insurance vertical, we had an increase of the insured fleet of 311,000 cars, reaching 5.8 million vehicles insured. In Life Insurance, we had an increase of 190 (sic) [ 190,000 ] people insured. In CNP (sic) [ P&C ], we had an increase of 127,000 items. In the Health vertical, we reached 1.2 million lives covered with an increase of approximately 100,000 beneficiaries of health and dental insurance.
The Financial Businesses vertical attained 3.5 million contracts with a highlight to more than 320,000 credit cards issued, 70,000 contracts for lease and capitalization in the portfolio and an increase of 22,000 active businesses in the consortium. We closed the year with a credit portfolio of BRL 13.3 billion, recording another historical record in our business.
Finally, in the Insurance vertical, we had an increase of 70% in the business portfolio by subscription, reaching 50,000 contracts. We carried out 4.5 million assistance visits to homes and vehicles, 7% higher than the previous year.
If we consider all the Insurance business, the combined ratio is 94.9%. And the consolidated loss ratio was 53.1%, 1 percentage point better than the average in the last 10 years. In the fourth quarter, the consolidated loss ratio was 57.2%, pressured by claims for auto insurance due to inflation in the spare parts and the increase in the price of used vehicles. We highlight that our subscription pricing models are appropriate for this new reality and they should have a positive impact on the loss ratio, helping us to gradually bring it back to historical levels. And we should be able to go back to our levels of 2019 through pricing adjustments.
Life insurance was benefited well because of a reduction in hospitalization due to COVID-19. In terms of financial applications, we reached 184% of CDI in 2021. In the securities indexed to inflation in the fourth quarter, the return was equivalent to 93% of CDI impacted by variable income assets. In the fourth quarter, we had a nonrecurring impact of reversion of BRL 245 million on income tax and social contribution, contributing positive to the quarter results and the yearly results.
Innovation agenda. Among the organic initiatives, we highlight the launch of Bllu, our monthly subscription auto insurance. We launched VidaOn, an insurance with life benefit for our customers. And we also created the SuperApp, simplifying the relationship with customers through a sole application for the different products that we offer. In the inorganic initiatives, we had the creation of Mobitech in partnership with Cosan to offer innovative mobility solutions, the purchase of 50% of Conectar and the incorporation of share of Petlove, and among other investments in start-ups. These and other initiatives reflect an even greater opening where we're rethinking formats and setting up changes, enabling us to strengthen our pillars and broaden our innovation at all, which has been part of our DNA, offering transformative experiences to our customer and creating value for the company.
To end, I would like to thank the trust of our employees, brokers, service vendors, suppliers, customers and other stakeholders of Porto Seguro. I would now like to give the floor to Celso to continue the presentation and to speak about the evolution of revenues and the profitability of the fourth quarter.
Thank you. A good morning to all of you. I would like to highlight what Roberto has just said with greater emphasis. The opening of our growth of revenues, we had a double-digit growth for the quarter and the year with a very favorable performance in all of our business verticals. Our revenues grew almost 14% in the fourth quarter and 13% for the year. Perhaps what is more important is that in all business verticals, we grew in the fourth quarter by double digits in Insurance, 3%; in Financial Businesses, 25%; in Health, 29% in the fourth quarter; and in services, a growth of.
42%. When we analyze the growth of verticals, 11% growth in Insurance, 20.9% in Financial Businesses, 16% in Health and 31.5% in Services. Our growth is for -- our strategy is for growth and diversification in all businesses, and this is what we have obtained in 2021. And all of this will be further explored by Izak and others for each individual business.
On Slide 6, our recurrent profitability was of 2 digits for the year, showing the resiliency vis-a-vis the challenges that we faced during the period. And this explains our return on equity was almost 13% for the year, a recurrent result. When we compare our profitability for the quarter, we also attained 12% as something recurrent. We had a nonrecurring result of BRL 240 million in the fourth quarter, leading this result to above BRL 500 million for the fourth quarter. But for the recurrent one, it is BRL 297 million.
In Slide #7, we show you that we have achieved consistent results despite the interest rate. We do like to show this slide because our return on investment has been higher than the basic interest rate. When CDI reached the minimum historical levels, we had a return on CDI of approximately 267,000, 293,000 and 287,000. What does this show us that our pricing is highly aligned with the advance of the CDI. We have looked at the increases of CDI, and our pricing is always one step ahead, and Marcelo Picanco will be speaking about this in further detail when he speaks about the Insurance business.
I would now like to give the floor to Picanco to further explore the insurance vertical.
Thank you, Celso. A good morning to all of you. I would like to speak about our strategy and the results for the fourth quarter. Even with the leadership position that we have, in general, we had another year of growth, a growth of 11% approximately, and we reached an increase of 25%, which is very important for the leading brand and the leading position in the two main businesses.
Now further ahead, I will speak about the historical growth. But for the year, we reached a revenue of premiums of almost BRL 15 billion for automobile. We had a growth in a difficult market for the quarter. We still had very strong growth, double digit. In P&C, we also had a double growth of 3%. In Life Insurance, we have had a resumption. Well, we do have a lower market share, but we have attained historical figures, 18%, 20%. And in other businesses, we had a minor drop.
Now I would like to speak to you about the results and profitability. Now the profitability for this quarter, even with a slightly greater compression in terms of the loss ratio, maintains itself at 13%. And we have capital with an insurance company, and we're highly focused on all the positive points worldwide. And here, I would like to clarify that we have a profitability level that is much higher than at the beginning of the pandemic. Our combined index for 2021, of course, we closed somewhat above 2020, the situation was somewhat more intense in terms of autos in 2020. We did have a very positive result of 7.3%, but this is still below the pre-pandemic indices. Now if we put these results in perspective and think of the last few years, I think you married a longer explanation.
On Slide #10, we have three main businesses that I would like to show you where we have a leadership position in auto. Even with a leadership position of 30%, we had a growth throughout 2015 to 2021 of 1.5x that of the market. We had a growth of 1.2% growing above the market. And in Life, an emerging position. We had a growth of 2x the result, and this shows the potential of growth that we have regardless of the very strong positions of leadership that we already hold. And the loss ratio for the year 2021, based on our historical average of the year 2015, 2020, that is to say 6 years, was even greater in automobiles. It went from 9.3 percentage points to 13 percentage points. In the corporate part, we went from 16 percentage points with a growth in 2021. So we had a stronger growth in loss ratio.
Now thanks to our pricing, we were able to reduce the impact in portfolios such as the residential one. We have a loss ratio that is somewhat above that of the market because of the format of this channel and we explore the services to customers much more in this channel, and structurally, the loss ratio tends to be higher here. Most of our residential distribution is based on this, and we have a difference of 3 percentage points.
And in Life, we have a loss ratio. In 2021, it was 12.5% above the market variation, and we know that this will be returning to historical levels.
Now I would like to highlight that this was important for launches. We were seeking the expansion in some markets. And we have the car insurance through subscription. This is for those who do not have insurance. We offer this in a very simple and accessible way so that they can attain the stronger distribution channels. And they can do this digitally in a very streamlined fashion without working with our consultants. We have the VidaOn, a totally digital experience. We also have life benefits, Vida do seu Jeito, which is customizable, intelligent for the consumer. And we also launched the bike insurance, a very encompassing solution coupled to our strong service ecosystem. So we not only protect the company, but we're also protecting the customers.
Well, having said that, this was a year with significant growth. We, of course, are dealing with a very important phenomenon, inflation, which is impacting our business. We had a devaluation of the dollar as well. And in some of the portfolios, of course, we tended to have a greater impact on the lighter insurance portfolios. This has been a significant phenomenon, a new one in the last 20 years where we were working without inflation. Now we believe that there are new signs for the decrease of this entity. But of course, it does have an impact from the viewpoint of the portfolio and accrued revenues. Now this year has -- will be important for the releases to continue on with the expansion.
And I would now like to give the floor to hear about the results.
Good morning, Picanco. It is a pleasure to be here to celebrate the Health verticals. We have had 6 consecutive semesters with the growth. We reached 100 and some customers in Health. And in the second semester of 2021, 7,000 new lives, showing you the significant growth, attaining BRL 2.3 billion for this Health vertical. Now what is important, we see that the loss ratio goes back to the pre-COVID levels. And for the quarter, we reached BRL 42 million for the quarter, BRL 77 million for the entire year.
Now to go more in-depth on the next page. We see a constant growth in the number of lives, reaching 350,000 lives for the fourth quarter. And this accompanies the growth of premium. There is obviously a mismatch with the lives and the premiums that will be coming in throughout the coming months. So this also projects a growth of the average ticket. The profitability during the quarter, BRL 42.2 million. If we compare this with -- to '19 BRL 77 million for the year, we see that the profitability was very strong for the fourth quarter '21, something that is very positive.
Regarding the loss ratio. In the previous calls for the third quarter, we already spoke about this trend that through time, we would return to historical levels. And of course, this was confirmed through the two factors that we see here. First of all, a normalization, a decrease in the number of COVID cases, especially the more severe cases and an adjustment of the premiums. And we are working with the understanding that COVID will become something endemic. Now this is a new appreciation, of course, and it brings us a new pricing because of the COVID price. Now all of this reached loss ratio of 77.8% in the fourth quarter after a very difficult period and potentially, it points towards a normalization of COVID and the resumption of historical levels.
I would now like to give the floor to Marcos Loucao to speak about the Financial Businesses vertical.
Good morning. And to speak about the Financial area. In 2021, we were able to work with dissemination and ensure that all of the customers at Porto Seguro became aware of the products that we have. And as part of this strategy, we want to accelerate even more our offer of financial products. And for this, I would like to speak about the digital evolution. It has been our agenda in the last 2 years. We end the year 2021 highly satisfied with the results that we already have obtained and confident that this digital evolution will enable us to become evermore assertive, ensuring that the customers will have a better product offer, a better interaction and a smarter interaction with Porto Seguro.
We launched the platform, Olho Magico, magical eye, that enables customers to announce real estate for rent. And it brings together real estate companies that can become digital and work with a more digital way of thinking. So we have taken a step into the real estate ecosystem where we are quite relevant and present through our guaranteed rent products.
Another important delivery of the year 2021, 1/4 of the credit card sales were done digitally. The work that we did in 2021 was finally put in place, and we have made great strides with this product that will be associated to a digital account and will enable us to navigate through all of the products of the Financial vertical as well as other verticals in the last 2 years.
Now in funding businesses, a strong growth of business of 27%. This is the business that suffered the most because we have the cost of funding that increased 5x in the last two years. This, of course, exerts pressure on our production. And we also had an increase in default costs due to the macroeconomic instability and some of the sales activities that we carried out that we have now corrected.
Now I would like to speak about default. In Credit Card, the default indices continue to be stable, even better than before COVID. In other areas, they're slightly above those of last year, but this is what we expected because of the growth of our portfolios, and we're maintaining our protection here. What is important here is that despite having the market comparison, we're somewhat above the market. But our risk provision already captures this and brings it to present value, which means that we don't have a pressure on our results. What will happen is that because of the accelerated portfolio growth, we will have default indices that will be somewhat higher than the market.
Now to speak about the guaranteed brand solutions, the portfolio, this is a product that arose during the pandemic. And once again, it was digital. It made it easier to market. It represents 23% of our portfolio. It is also very good because of Olho Magico, where it reaches 37,000 announcements and more than 200 partners.
In guaranteed rent, we have strong work with the real estate companies, 7,000 real estate companies working with us. And this gives us the security that we're helping all of these entrepreneurs to become digital and to concentrate their production with us. Now this platform, Olho Magico, of course, could be made available to the end consumer. This is a possible strategy. And it has a higher growth of -- revenues of BRL 758 million.
Now in the next slide, we show you the Consortium with a growth of managed credit, 32% vis-a-vis last year. The quota sold a growth of 21% higher than last year. The credit sold BRL 8.7 billion, a growth of 37%. Default and cancellations, quite stable because this is extremely important for this product. We launched new real estate products, and we were also able to expand our capillarity. We had a national expansion and the conversion of more brokers to work in this area.
Now to speak about capitalization, our asset portfolio had a growth of 29%. We ended the year with 71.4 (sic) [ 714,000 ] securities in effect, and we collected BRL 871 million. Now the capitalization is very important, and the guaranteed contract has to be appropriate based on the rent contract, and this will bring a greater return to the consumer.
Now the business of the Financial vertical was this, and I would now like to refer to our Services vertical. The Services verticals, as other verticals, had significant growth in terms of number of customers, revenues and profitability. We had a net revenue of BRL 9 million, a highlight to 49,400 subscriptions; and in terms of auto, 544,000 passengers; in spare parts sold, 38,700; cars that were dismantled, 1,273 cars. Thank you very much.
Thank you, Loucao. I will now speak about our financial applications. This is Izak Benaderet. We ended up with a return of 1.7%, 98% of the CDI if we look at ex pension. Now in the titles indexed to IPCA, we had losses in the applications with variable income. And we also had a lengthening of our portfolio because we're seeking better profitability in the coming years. I would also like to highlight the new weight that we have given to our investment portfolio, giving more importance to the prefixated part and our allocations in private credit.
I would now like to give the floor back to Roberto.
Thank you, Izak Benaderet. On slide #19, we speak about our ESG initiatives, the contribution that we offer to the society during the pandemic and the social activities carried out through some of the projects that we support. I would like to highlight the support we give to the Associação Crescer Semper that transforms the life of youngsters and others in the community of Paraisópolis in São Paulo. We had 320 students that concluded their studies in regular schools, 209 students in high school and 100 students in a reinforcement project for Portuguese and mathematics.
I would also like to highlight the work that we do in terms of peace. We hire people who have left the penitentiary system, and we sell recycled spare parts. The goal is to resocialize those that participate in the program, and we avoid recurrence of crime. Now during the pandemic, we helped more than 3,000 families through our Life Insurance. We also offered coverage to 8,600 beneficiaries of Health Insurance who needed to be hospitalized, and we carried out more than 160,000 COVID tests. These are the main factors that we would like to highlight for ESG.
We would now like to go on to the question-and-answer session.
[Operator Instructions]
We are going to begin here with Flavio Yoshida, Bank of America.
I would like to explore two topics here. First, the auto, understand the growth outlook and the loss ratio outlook for the coming year. We see an interest rate of practically 11%, which could lead to greater competitiveness with other insurance companies. At the same time, we see that the sale of new cars is still faltering and the price of spare parts, very high, which is your outlook for this year.
Secondly, I would like to speak about the credit portfolio. The pace of growth is still very strong, 33%. Although it has slowed down, but there has been an increase in default to 5.3%, which is above the system. In the recent past, you were operating below this level. So how can this impact not only your results, but also your appetite for growth in this vertical going forward?
Flavio, this is Marcelo speaking. Now which is the goal? We had an inflation with the spare parts of vehicles, and this is a phenomenon that we haven't faced for years. Of course, we believe that this is a very short-term phenomenon that is impacting us. On the other hand, it does bring about a positive aspect in the long term, which means that we will change the price of insurance of autos for the longer term.
The growth in premium will be a robust growth, and we see that this growth continues to happen. In terms of the CDI, we do not believe that this will take to a price war. Now all of this is done in an integrated way. And we have observed not only a compression in the short term, but also very healthy reaction, a rational reaction to increase the value of the product insured. Now -- so we don't systematically observe in the market an unhealthy price war.
Now speaking about autos. Ever since credit become more restricted and because Brazil is also facing structural and other problems, the sale of new automobiles has decreased. But the growth of the market here will depend less on the sale and more on an increase in penetration. Obviously, not all cars can become insured, but there will be a significant growth in this field. So the more we sell new cars, the greater the penetration of insurance. And we don't consider this to be something problematic.
Now in terms of loss ratio, we are working with our new harvest. They're selling, they're moving towards healthier levels as we have increased that issue of inflation in mobility. And in 2022, once again, we should attain historical levels following our history in the last few years.
I will now give the floor to Marcos Loucao.
Flavio, thank you for the question. Now to answer, specifically, in previous periods before the pandemic, our market reached 5.8% in this market indicator. It was 0.8% at the time, and we had a more timid growth. We also got to 4.7%. Now during the pandemic, obviously, these figures changed and the consumption of people decreased. We had the acceleration and we -- postponements, but now everything is being resumed.
Now if we put aside the growth portfolios that we have, our indices that is 5.3% and in truth would be 4.7%. If we isolate this, we can see that we have had greater pressure of default in the CDC. And of course, we have allowed for a release of this to make the necessary adjustments, greater capitalization, and we have been able to decrease this denominator.
Well, in terms of our appetite, it continues to be the same. We have a growing portfolio and very appropriate profitability. Why is it important to speak about the growth of the portfolio? Although we are above all of the provision models, anticipate a very good result. To give you an idea with a delay of 90 days, 75% of our portfolios already have been provisioned.
Now when we think about market outlook, we understand that there will be fluctuations. There will be pressure due to the macroeconomic indicators and cost. But because of our long-term strategy, all of this makes sense. When we look at the cost of risk as a part of total revenues, we're operating based on the same indicator, and we're quite confident and comfortable with these fluctuations. And we're focusing on delivering a growth of our customer base a sustainable growth based on revenues and profitability.
We would now like to offer Marcelo Telles from Crédit Suisse Bank to ask the question.
I have two questions. The first, I would like to explore the question made by Flavio referring to the high loss ratio. It's very interesting when we look at the loss ratio figures in the system above the loss ratio of Porto, which indicates, as you said, a positive environment when it comes to the new pricing. And we look at the default -- the loss ratio figure at the end of the year, it was greater than you had at the beginning of 2021. Which part of the year would you reach a normalized ROCE ratio level for the year of 2022? Would this be in the second or third quarter? And which is the normalized level? I do recall some previous conversations where you signaled that the normalized loss ratio level could potentially be lower than the levels that we observed in 2019. Is still -- is this still the case because of the inflationary situation, the premiums?
Now the second question refers to the growth expectations for premiums. For the other verticals, you ended the year 2021 with a very good performance, clearly, and growth in the vertical. Which is the scenario that you foresee for 2022 in terms of the increase of premiums? And if you can repeat this growth, if it will continue to be a 2-digit growth?
Thank you for the question. This is Marcelo speaking to you. First, I would like to open up parentheses, our approach in terms of results and pricing and other levers for the coming year. We have a highly integrated vision, we cannot look only upon one of the variables. Why? Because we have several phenomena that happened at the same time. And we have three phenomena that go in-depth, and we have to consider them.
First of all, we have had a great deal of growth of inflation in mobility. Now this is the first factor, and it implies a reduction in the relative administrative cost. You have a bonus because of the growth of the premium. Secondly, you have a growth in the Financial vertical. We're entering a year with a much higher CDI than last year, and I'm not even referring to Services.
With all of this here, we believe that, first of all, the loss ratio depends on a good delivery of the budget. It has to be aligned with what we have been speaking about, and also with a restriction of mobility, it's very difficult to give you a precise date of when this will become normalized. Yes, we are expecting normalization during the year.
Now with this phenomenon of growth, we're speaking of a variable, a growth of 2% or 3% a month. Our pricing model is already including growth going forward. All of this has already been priced. And it will depend on the model of our portfolio. It will depend on the new harvest that we have, and all of us are subject to this new appreciation and cost of vehicles for the next 12 months. So we believe that this will lead to normalization above or below that loss ratio.
But what is important is what happens with the capital at the end. Looking at all of the parts of the equation, including the financial part, when it comes to the growth of premium and the growth of other verticals, yes, we will be growing at double digit. Because of some restrictions, we could have a limitation to growth. In Life especially, we have quite a bit of space to grow. We don't fully depend on the market. We have had greater relevance and growth in the Life Insurance.
And we're still growing organically without any acquisitions. And we do believe that the growth in premiums will come about in a very healthy way in the verticals and in autos as well when we think about premiums. There will be a lower growth, of course, because of the growth we had.
Marcelo, this is Roberto. Simply to add to what you have said, I would like to speak very directly and state that we have a structured strategic plan that is robust for the coming years, and that the name of the game here is growth. We have an intense growth agenda, intense growth in all of the business lines, of course, in a different way. I can highlight Insurance, of course, but you have seen the growth in Health where we have made great strides and our ambition in the Financial Businesses and Services as well. So we do have the expectation of maintaining our pace of growth in the coming years.
Marcelo, we have a question that was sent through the Q&A. Fabrizio Lesa, who asks, could you please give us more details on the losses in variable income? Izak, if you could refer to this?
Thank you for the question, Fabrizio. Basically, we have a strategic allocation in variable income assets and investment funds, part managed by Porto Seguro in investments with outside funds. And we had a quarter where while the BOVESPA Index that we use as a benchmark was negative, less than 7%, our portfolios during that quarter had a performance that was worse than the benchmark. There was a strong highlight in commodity assets. [indiscernible] another [indiscernible], we don't have securities with them, and that is why our performance was below the BOVESPA indices and below the CDI itself. Now this explains our losses in variable income.
Our next question comes from [indiscernible] from InterBank.
I would like to gain a better understanding of the law of incentive to technology and the net results of the insurance company and understand which will be the dynamic in the coming quarters, the coming year and to understand the impact this quarter.
Mateos, this is Emerson from IR. If you could please pose your question closer to the microphone because we had a great deal of noise.
Once again, I would like to gain a better understanding of the impact of the law of incentive for technology and the results of the Insurance vertical and see what will happen with future results.
Thank you for the question. This is Celso. We have a policy of the -- of having this benefit for some years. We have had the approval of the Ministry for some years. And as we have these approvals, we have some projects underway. Especially this year, we have a technological innovation project that will be called Auto 2.0. So this benefit is not a recurring one. We cannot say that it is recurring. It depends on the project and the size of the vertical. We have CapEx investments for 2022, which means we will continue on with our investments in different amounts. Once again, it is not recurrent. But it will not only happen in 2021, it will be repeated in 2022, perhaps at a lower level.
Our investments at Porto, our CapEx, 95% has been done in technological innovation. We're demobilizing real estate. For example, in 2021, we sold BRL 90 million in real estate. And in 2022, we will sell BRL 90 million or BRL 100 million in real estate. So we're selling off real estate, we're reducing our branches, and we're investing more in technology.
Now these process and technology bring about a cost reduction as we have shown you in the last few years and use part of this law. And as we invest, we return this to our portfolio. So this year, I think it was 25%, 27% in automobiles and the Insurance portfolio. We made the investments of this benefit of the law of good in the Auto 2.0. This is not something recurrent, but as we do have projects for 2022 and CapEx for this, we will have the same benefit for this present year.
We will now offer the floor to Guilherme Grespan from JPMorgan.
I have two questions. First, in the Health segment, if you could give us more color where your growth is coming from? You have had expressive growth in the premiums and the customer base, and you're reformulating the operation. Where have grown more? What has changed? We would like to hear about your strategy.
Secondly, a question about auto, a structural question. We have spoken a great deal of our penetration, but we have not seen an increase of penetration in the industry. If we look at the growth breakdown, it is similar to the industry, those who have higher and lower tickets. I would like to hear from you which could be your strategy. What you have done differently to increase this penetration? And if you could speak about the profitability of the new auto products, if Bllu has a high profitability? And what will happen with your other auto products?
This is Sami. Thank you for the question, Guilherme. I will answer the first part. The initial growth of Health comes from some dimensions. First, the geographic dimension, which is very concentrated in the city of São Paulo. What we're doing is expanding this to the state of São Paulo. And recently, we have had some growth in Rio de Janeiro. We believe that this will continue to be our focus, especially during 2022, where we have significant capacity. And I do believe that we have to go more in-depth in the places where we have a footprint, which means we're going to go deeper in the state of São Paulo and the main cities in Rio de Janeiro. We're doing out this work strengthening our activity.
Secondly, we're working with the brokers. There is a positive side that our production is highly fragmented with additional brokers at Porto. And we have carried out an educational exercise to activate the base of brokers that sell health, our loyal brokers that have been working historically with Porto. So this is something that is very strong. And we have a significant ambition of increasing the number of brokers that will sell for us.
And finally, we have worked on processes to make this a more friendly process with a new issuance system, easier and friendlier processes for the brokers and for the end customers. And this is bringing about a certain facility in enhancing the brand image. We have several HR directors or owners of companies that did not know about Porto Seguro. So we're speaking more about Porto Seguro. So we want to give Porto Seguro the right dimension, the dimension that it deserves.
This is Marcelo. We have worked with more accessible solutions. And when I speak about affordable solutions, I refer to products that have lower structural prices. We have a network that is focused on comparisons. And of course, digital hiring will lead to being able to work with lower prices. And we don't only have one product. We're working to enhance this digital dimension. We're working with Azul. We're also working with classical products, and we have had a very important inclusion of insurance here. We have master that is focused on another type of vehicle, the vehicles we have in our fleet. So we have been able to bring this into our insurance company and accelerate the process. Now profitability is similar.
Now Bllu, we have to wait for some more time because this is a new portfolio. We cannot come to hasty conclusions about this. We have to think more strategically. For the time being, it is doing very well, but we need to wait longer. And if the results are lower, this will not be a problem, as long as we generate value for the shareholders. There are several factors that are happening at the same time in the market. The challenges are greater, and this would lead these popular products to become more expensive. Now this is a reality that we are facing because of our activity. And we can continue to use our leverages that can be used in auto insurance, repairs, spare parts as well as other levers.
We're now going to open the floor for the last question of Kaio Prato from UBS. Before allowing Kaio to pose a question, I would like to mention that we do have a long line of questions, but because of our time constraints, this will not be possible. Of course, our IR is at your disposal. Please go in at gri@portoseguro.com.br.
I have two of them. Follow-up in terms of auto, we saw that the share of the written premiums was much higher than the others. I do understand the premium dynamic, but I would like to hear your vision about this mismatch in coming coasters. And I have noticed a significant increase in expenses, especially administrative expenses not connected to Insurance. Could you give us more details on this? And which is your expectation going forward as well as expenses in the administrative lines?
Kaio, this phenomenon that you're referring to, we have a ramp-up in terms of price. And what we're projecting is that all of these readjustments will become important and relevant in our portfolio. Of course, this process will take some time, but in fact, they are increasing and -- because of the inflation in mobility. So this is something that is very natural for us. to have this increase in expenses.
Well, the noninsurance expenses, we had a launch. And there is a benefit post-employment, a policy that we have at Porto, a benefit for people who have been working for us for very long, and they receive additional benefits. As we have changed this benefit, what we do is an actuarial update, and we have recorded in our balance BRL 20 million. This is for future use. And it's a post-employment benefit. It's not something operational. This had an impact on the quarter, and it is not something recurrent. It is an actuarial expense so that we can comply with this change of policy in terms of benefits. This has a nonrecurrent impact, and it impacted our administrative expenses. Once again, it doesn't impact our business. It is something prospective that will be an effect in the 20 coming years. This is the main factor, I believe.
We would like to thank all of you for participating in our results conference call. I would now like to give the floor to Roberto for his final remarks. .
Once again, we would like to thank all of you for participating in the conference call, your questions and your interest in Porto Seguro. Should you have additional doubts, please contact our IR team. All of the information is available in our IR website at ri.portoseguro.com.br. 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.]