Porto Seguro Presentation 2018 Index A familys dream driven by - - PowerPoint PPT Presentation

Porto Seguro Presentation 2018

• 2. Differentials

Index

• 4. Forward-looking

A family’s dream driven by human relationships and a keen eye for details turning into one

• f the biggest companies in Brazil
• 1. About us
• 3. Results and progress

• 1. About us

Over the last 70 years Porto Seguro has been recognized by its entrepreneurship and high quality services, responding rapidly to the changing environment ...

History

4

History and Companies of Porto Seguro

1976- 2002 2017- 2018 2010- 2016

2003

2004 IPO

2009

Launch of Azul

New Business Lines: Life and Pension, Health, Portopar (Asset), Consortium*, PortoSeg (Financing)

Partnership with Itaú

Launch of Credit Card, Health for Pet Porto Faz, Bioqualynet , Oxigênio (accelerator) and Acquisition of Auto Portfolios (Chubb and AIG) Mr Abraão Garfynkel bought Porto Seguro from Bradesco

* Pool Financing for Cars and Houses

44th Insurer 4th Insurer

1972 1945

Foundation

… resulting in the first non-life insurance group in Brazil underpinned by a robust operational structure, serving about 10 million clients and more than 20 million covered items

Who we are

5

Structure and Services

1st Non-life and 4th largest insurer group in Brazil 10 Million Clients and 20 Million covered items

Business and Market Position

R$17 Billion Total revenues 13K employees 35K independent brokers 16K exclusive service providers 48 Million inbound calls / year 1.7 Million home repair services / year 2.3 Million roadside assistance services / year 3,6K Itaú banking branches

(bancassurance distribution agreement)

R$19 Billion Market Cap Market leader in Auto, Homeowner and Landlord Rent Guarantee Insurance

Porto Seguro Cia de Seguros

(Auto, P&C, Financial Risks)

Portomed (HMO)

*Controlled by Jayme Garfinkel Free Float

Azul Seguros

(Auto)

PSIUPAR 70.8%

Porto Seguro Health Insurance Porto Seguro Life and Pension Porto Seguro Uruguay

(Auto, P&C, Financial Risks)

Portoseg

(Consumer Finance and Credit Card)

Portopar

(Asset Management)

Porto Seguro Consórcio (Pool

Financing Auto /House)

Porto Renova

(Recycle and Dealer Car Parts)

Porto Faz

(Convenience Services)

Porto Seguro Medical Services

(Bioqualynet, ASO)

Insurance Financial Services General Services

Porto Seguro Dental Porto Capitalization

Itaú Unibanco

43.0%

Porto Seguro Controllers*

57.0% 29.2%

Porto Seguro Surveillance

Free Float Shareholders Breakdown

(June, 2018)

The Company consists of insurance, financial and general services business lines - Garfinkel family holds control and Itaú Unibanco is a strategic shareholder

24% 38% 29% 6% 3%

Brazil USA Europe Asia Other

Carro Fácil

(Long Term Car Rent)

Health for Pet

Internal Services

(Call center, sales support & Business accelerator)

Businesses Organizational Structure

6

Diversified top-of-mind portfolio with products leading in the auto, homeowner and landlord rent guarantee insurance posing a significant market share

Source: Susep / Porto Seguro

Portfolio of Products

P & C

10.5% 2.6 million

Market Share Insured Items

R$ 1.4 billion

Written Premiums

Health + Dental

3.1% 765 thousand

Market Share Insured Members

R$ 1.3 billion

Written Premiums

Credit Card

2.4% 2.3 million

Market Share

R$ 1.1 billion

Revenues Units

Life

2.6% 7.1 million

Market Share Insured Members

R$ 781 million

Written Premiums

Consortium

1.4%

Market Share

R$ 282 Million

Revenues

136 thousand

Clients

Client’s average expenditure In number

• f houses

2nd 3th

5.3 million R$ 9.6 billion

Auto

27.6%

Market Share Vehicles Written Premiums

7

56%

# of Total Revenues # of Total Revenues # of Total Revenues # of Total Revenues # of Total Revenues # of Total Revenues

8% 7% 5% 7% 2%

Main Products (2017) Insurance Non-Insurance

Strategy and Positioning

Our strategy is build on strong human relationships, delivering valuable services and focusing on the broader needs of our customers throughout their lifetimes

Strategy

8

• Deliver high value added

solutions for customers, avoiding commoditization

• Brand Segmentation Strategy
• Focus on retail (individuals and

SME´s) and diversified ‘small’ risks

• Profitability is more

important than growth

• Provide great experiences to

customers and brokers with a ‘personal touch’, even in a digital environment

• Successful strategies are proved

in the long term

• Brokers are essential for
• ur success and market

development

2.Differentials

Why We Are Different

Innovative solutions DNA and first- mover advantage Consistent underwriting and

• ne of the highest

profitability over time Breadth of products offerings provide full solutions for clients and distribution channels Most valuable insurer brand High quality-services and best auto insurance retention rate of the industry Top insurer choice by broker Go beyond insurance (ecosystem of interconnected services)

A unique business model which combines strong culture and operational capabilities – our competitive advantages are meaningful and hard to replicate

10

Strong Relationship Culture

Our Culture

The pursuit of happiness for clients, employees and thereafter shareholders is the reason for our growth, rather than aiming to be the biggest and most powerful company

• Relationships are our

strongest assets

• Detail-oriented driven
• Entrepreneurial and

Innovative Spirit

• Employee empowerment

and team-work

• Being humble and

transparent

11

Brand Value

Porto Seguro is the 1st insurance brand in Brazil and the most searched insurer on the internet

Source: BrandZ Brasil Top 60 – Kantar & WPP (2018)

12

2018 2017 1º Beverage 8.263 8.146 1% 2º Financial Services 7.018 4.438 58% 3º Financial Services 6.198 4.359 42% 4º Beverage 4.478 4.385 2% 5º Media 4.318 4.123 5%

U$$ Million

Brand Segment Variation (%) 2018 2017 15º Insurance & Financial Services 922 640 44% 19º Energy 788 719 10% 20º Retail 768 442 74% 21º Mining 767 396 94% 25º Financial Services 634 730

• 13%

Segment Variation (%)

U$$ Million

Brand

1º

22%

2º

9%

3º

5%

4º

4%

Top Most Valuable Brands in Brazil Most Popular Web Insurers - 2017

The only carrier in Brazil that offers different value proposition throughout three brands

• specific products for distinct customer´s needs and preferences …

Auto Insurance

Besides the auto insurance,

• ffers several additional

services to vehicles, residences and people

Auto Premium

Product focused on luxury cars with exclusive services and special benefits (e.g. concierge)

Auto Mulher

Exclusive services and benefits for women

Auto Jovem

Use of telematics for young people (between 18 and 24 years)

Auto Senior

Focused on customers over 60 years of age

Azul Seguros

Auto Insurance

Auto insurance with basic coverage

Itaú Seguros

Auto Insurance

Mostly offered to Itaú clients

13

Brand Segmentation in Auto Insurance Porto Seguro Traditional Products

… in addition, it enables us to enlarge insurance penetration – the affordable products already represent 10% of our insured fleet

14

Azul Leve Itaú Auto Roubo Azul Master Porto Seguro Moto

✓ 540k insured vehicles (+17% vs. 1S17) ✓ Loss Ratio below 50% ✓ Coverage flexibility (Theft, Collision, Third Party) ✓ Payment flexibility (80% of Azul Leve clients pay in 10 instalments) ✓ Low cost products ✓ Untapped market and low product cannibalization

Brand Segmentation in Auto Insurance Affordable Products

✓ 333 Porto – Client remembers Porto Seguro in emergency situation ✓ Anhangabaú Flood – Porto Seguro Service provider helps people and saves non-insured flooded cars ✓ Baby in car – Our call center

• perator suggests that the client

breaks the car window to save the baby ✓ Calling the boss – agent calls the client’s boss to explain that she would not be able to work due to a car accident

Customer Services

Top customer services nearby – going the extra mile to exceed customer expectations

✓ Most beloved Brazilian brand in the Auto Insurance category (Consumidor Moderno Magazine) ✓ Most reliable Brazilian insurer (IBOPE + Seleções Magazine)

15

✓ Most remembered brand by costumers in the Insurance category (Top of Mind Premium) ✓ 1st place in the Satisfaction Ranking of Auto and Homeowner Insurance (Estado de São Paulo – Journal)

Awards Received in 2017 Services Stories

89 88 79 70 65 41 14 2 2 6 25 6 10 5 9 10 15 5 29 49 81

USA Italy Germany Brazil Spain France UK

Brokers+Agents Bank Channel Alternative Channel¹

Channel Distribution by Country (Life and Non-Life Products, % premiums – 2015)

Our broker engagement makes the difference to foster growth - Independent brokers dominate Auto, P&C and Health segments in Brazil whilst Internet is still beside the point

• “Open doors” policy
• Monthly meetings with Porto Seguro leaders (CEO, officers and

managers) and nationwide brokers

• Operations support (mobile, website development, advertisement and

training)

• Business office room (used by 30% of brokers)
• Brokers Portal that integrates information, sales and auto service
• PortoServ (polices renewal services available for brokers)

¹ Sales by Internet, phone, e-mail and commercial partners Source: McKinsey Research / Porto Seguro

Participation of brokers on sales in Brazil

Auto

80%

P&C

75%

Health

93% Brokers in Porto Seguro Key Relationship Elements

High satisfaction rates about Porto Seguro Represent over 90% of our sales force

16

Broker Assistance

Entrepreneurship and Innovation

• 1982: Anti-theft devices (tracking)
• 1984 Anti-theft system (“vacina”)
• 1985: Launch of 24h Call Center
• 1987: Brake Light
• 1994: Kit lanche (Snacks for Clients)
• 1997: Porto Seguro Residence Services
• 2001: Auto Jovem
• 2003: Launch of 24h Automotive Center
• 2004: Porto Palm (Previous Inspection);

333-PORTO Campaign

• 2007:

Launch

• f

Porto Seguro Credit Card (loyalty program)

• 2008: Help/Assistance by Bike
• 2016: Affordable Products (auto

insurance); Porto Oxigênio (Business Accelerator)

Timeline – Innovative Solutions

Innovative developments have been generating a sustainable competitive edge and higher clients retention ratio 1981----------------------------1990 1991----------------------------2000 2001----------------------------2010 2011-----------------------------2018

17

Sophisticated Risk Selection and Pricing

One of the lowest loss ratio in the market, bolstered by a sophisticated risk selection and pricing discipline

Driver Profile

Accurate risk analysis questionnaire

Telemetry

Customer behavior analysis

Automotive Material Parts

Biggest Brazilian automotive parts purchaser

Track Device

Higher recovery rates of stolen cars (500 thousand traced vehicles)

Claims Inspection

Proprietary budget and risk analysis system

Exclusive Service Providers

Fist-rate quality service and assistance on claims inspection

Auto

Porto Seguro: 57.2%

(-9.4 p.p.)

Market (ex Porto): 66.6%

P&C

Porto Seguro: 31.9%

(-5.6 p.p.)

Market (ex Porto): 37.5%

Landlord Protection

Porto Seguro: 27.4%

(-10.3 p.p.)

Market (ex Porto): 37.7%

Loss Ratio

Porto vs. Market (2017)

Health

Porto Seguro: 79.3%

(-4.7 p.p.)

Market: 84.0%

Source: Susep/ANS

Auto Claim Process

18

Telematics contribute to improve underwriting and create new businesses

Porto Seguro Telematics

Auto Jovem

Porto Seguro has launched an initiative to stimulate Young Drivers to drive safely through a “Gamification” Program

Safe Driving Program Tracking Device

19

New Business Opportunities Operational Enhancements

Better recovery ratio than police force Driving Behavior Control Download app and register Drive safely and earn points Do the online course “Driving Safely” Get up to 35% discount according to your score Win a prize if you are in the top 10 ranking

Tting

The integrated business model goes beyond insurance, raising both clients and brokers retention rate, leveraging cross–selling and enhancing profitability

Cross-Selling

Sales expansion of complementary products: Auto + Credit Card; Auto + Homeowner; Credit Card +Theft Insurance Usage of the power brand to launch innovative products and tap into new market niches: Health for Pet, Carro Fácil, Porto Faz, etc..

Profitability

Business risk reduction: know-how of the insured clients base (Credit Card , Financing, Landlord Rent Guarantee insurance) Scale gains through synergetic (interconnected) products : Costs saving through the acquisition

• f car parts from Porto Renova

Retention

Focus on long term relationship: High service level based on “personal touch” and differentiated loyalty programs that offer price discounts on the insurance policies Segmented Solutions (services, prices and specific groups): Auto Jovem, Auto Mulher, Itaú Roubo, Azul Leve, etc. Additional offers for Brokers: focus on advisory, new sales opportunities and additional income

Relations between products

Integrated Business Model

• 2,1 million clients
• R$ 6 BI Credit Portfolio
• NPL below market average
• Higher retention rate on Auto

Insurance

Examples

Key examples

• Auto + Homeowner insurance
• More than 1 million clients

20

• 3. Results and Progress

61% 54% 10% 14% 7% 8% 8% 7%

4% 4%

10% 12% 2013 9M18

We are maintaining our competitiveness in the Auto segment and continuing to expand our participation in other business lines

Business Growth

7,7 8,6 9,1 9,4 9,6 7,4 1,2 1,6 1,8 2,0 2,2 1,8 0,9 1,1 1,3 1,3 1,4 1,1 1,0 1,1 1,2 1,2 1,3 1,0 0,5 0,5 0,6 0,7 0,8 0,6 1,3 1,5 1,7 1,7 1,6 1,6 2013 2014 2015 2016 2017 9M18

Porto Seguro by LOB* (R$ Billion) Porto Seguro Break Down * (%)

CAGR: 5%

12.7 14.4 15.5 16.2 13,5

CAGR: 12% CAGR: 7% CAGR: 14% CAGR: 6% CAGR: 16%

Auto Financial and Service Businesses P&C Life Other Insurance Health

CAGR: 8%

22

17.0

* Premiums written and revenues of financial and services businesses

CAGR 2013 > 2017

26.0% 26.3% 26.6% 27.4% 28.7% 27.6% 2012 2013 2014 2015 2016 2017 0.9% 1.0% 1.8% 1.9% 2.3% 2.5% 1.3% 1.6% 1.9% 1.9% 2.1% 2.4% 4.0% 4.1% 3.7% 3.3% 3.1% 3.2% 7.7% 8.1% 8.3% 9.7% 10.2% 10.5%

Credit Card (Revenues)

Market share increased in our key products, especially in higher margin and lower penetration

Source: Susep / Sincor / CardMonitor

Auto P&C Life Health

Market Share – Main Products

Market Share Evolution

23

106.9% 103.9% 101.7% 93.8% 94.2% 98.6% 98.5% 96.2% 99.3% 99.0% 96.0% 96.5% 96.5% 99.1% 96.9% 92.4%

Insurance Operational Results

*CDI – Interbank deposit certificate, Source: CETIP

% Average CDI % Combined Ratio % Amplified Combined Ratio

90,2% 91,4% 89,0% 81,4% 83,5% 89,8% 90,0% 88,5% 90,6% 90,3% 92,1% 90,1% 89,6% 91,8% 91,7% 87,5% 23,3% 16,2% 19,0% 15,0% 11,8% 12,4% 9,9% 9,7% 11,6% 8,4% 8,1% 10,8% 13,2% 14,0% 9,9% 6,5%

Porto Seguro Operational Performance vs. Interest Rates (%)

Stable profitability throughout challenging economic environments, even with the falling interest rates

24

Porto Seguro’s Performance x Market Auto Insurance

Market Loss Ratio Market Premiums and Loss Ratio Variation

(vs. same quarter of previous year)

64.1% 61.9% 65.2% 64.0% 61.1% 2014 2015 2016 2017 9M18

Average Loss Ratio 2014 - 2017: 63.8%

Loss Ratio

Porto x Market¹

26.6% 27.4% 28.7% 27.6% 27.6% 2014 2015 2016 2017 9M18

Porto Seguro Market Share

Porto Seguro has leveled up the difference from 9 p.p. to 12 p.p. compared to the market average, and furthermore preserving its market share (2014 x 2018)

6.1% 5.4% 7.3% 7.2% 5.6% 4.1% 1.9% 1.6%

• 0.2%
• 2.0%
• 3.9%
• 3.0%
• 4.9%
• 3.3%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

• Var. Premiums (%)
• Var. Loss Ratio (p.p.)

7.7% 9.2% 8.9% 10.2% 12.6% 8.8% 10.2% 9.4% 9.4% 11.6% 2014 2015 2016 2017 9M18

• vs. Top 3
• vs. Market

Source: SUSEP ¹ Ex Porto Seguro

25

Insurance Expenses

Investments made in technology have shown its worth and led to a significant reduction in expenses

Expenses Ratio¹ – Porto Seguro

¹General and Administrative Expenses (Excluding profit sharing) + Operational Expenses PS: As of 2018, adjustments were made in our financial statements as a result of the Initial Hiring Costs, which are now recorded as Deferred Acquisition Costs (DAC), following the same appropriation system of the results according to the term and risk. This regulation does not affect the Combined Ratio, representing just adjustments between accounts . However, adjustments were made in the numbers of the Press Release 2018 (pro forma) to maintain the same basis of comparison.

19,7% 19,6% 20,0% 19,3% 19,1% 16,9% 2013 2014 2015 2016 2017 9M18

26

*CDI – Interbank Deposit Certificate

Remarkable progress in our financial outcome is due to our active portfolio management and long-term strategic view - the returns reached 105% of CDI on average, since 2014

¹ Futures exposures included.

Allocation¹ (ex-Pension Funds) Annual Performance Revenue from Investments Assets

(R$ Million)

Net Asset Value

(R$ Billion)

Financial Investments Results

27 10,4% 12,3% 14,7% 10,8% 6,0% 108% 93% 105% 103% 129% 96% 93% 105% 109% 124% 2014 2015 2016 2017 9M18

Nominal yield (ex-pension funds) % of CDI (pension funds included) % of CDI (ex-pension funds)

27% 60% 53% 65% 44% 31% 3% 12% 7% 7% 24% 28% 25% 22% 44% 15% 7% 7% 4% 3% 2,8% 1,7% 3,4% 2,7% 2,5% 2014 2015 2016 2017 9M18 Equities Corporate Bonds Inflation-Linked Bonds (Tips) Fixed Income Floating Rate Notes 158 224 195 142 150 7 25 25 18 35 61 114 101 62 88 2014 2015 2016 2017 9M18 Insurance Others Pension Funds 226 321 363 222 273 6,6 7 7,5 8,7 9,5 2,7 3,2 3,9 4,6 4,9 2014 2015 2016 2017 9M18 Pension Funds Other Assets 9,3 11,1 10,2 13,3 14,4

578 734 896 793 974 849 711 883 1,009 923 1,108 931 16.5% 17.2% 18.6% 15.5% 15.1% 18.9% 21.4% 22.7% 24.7% 17.4% 16.2% 24.6% 133 149 113 130 135 82 2013 2014 2015 2016 2017 9M18

Total Net Earnings (R$ MM) Non-Insurance Business Net Earnings (R$ MM) Insurance Business Net Earnings (R$ MM) ROAE % ROAE % (Ex. Surplus Capital)

50.0% 60.0% 50.0% 35.0% 35.7% 40.0% 4.5% 8.8% 4.4% 3.7% 3.4% 4.6% 2012 2013 2014 2015 2016 2017 Payout Dividend Yield

Our balance sheet achieved solid results - the average ROAE¹ (ex surplus capital) has climbed up to 20.5% in the last 5 years

Profitability and Financial Strengths

Payout and Dividend Yield Average Growth – 5 years

2012 > 2017

Multiples

(09/282018)

15.4 Price Earnings 2.6 Price Book

Capitalization (9M18)

2.4 Billion Insurance

24%

Financial

7% 8% Recurring Net Income Total Revenues Above Minimum Requirement

Porto Seguro Net Earnings and Profitability*

(Recurring) 28%

Above Minimum Requirement ¹ Without excess of capital and considering an investment return of 100% of CDI

28

Solvency Ratio Surplus Capital

CAGR 2013 > 2017 CAGR: 12% CAGR: 0.3% CAGR: 14%

Market Cap 19

Since IPO, our stock value has more than tripled Ibovespa and surpassed main Brazilian insurance companies and banks in the last five years

Stock Variation

+99% +76%

• 2%

+50%

• 1%

2013 2014 2015 2016 2017 Sep-18 Porto Seguro Sulamérica B.B. Seguridade Itaú Bradesco

Porto Seguro vs. Peers Stock Variation

29

PSSA3 IBOVESPA 751% 230% Historical Variation* PSSA3 x Ibov

*From November 2004 (IPO) to September, 2018. Source: Porto Seguro

4.Forward-Looking

Relentless focus on developments to increase our competitive advantages and seize market

• pportunities

Portfolio diversification and cross-selling

Opportunities and Challenges

Source: Porto Seguro

Acceleration in digitalization Expand in insurance industry penetration Increase operational and capital efficiency Exploring start-up companies New Auto positioning implementation model and nationwide-expansion

31

Insurance Penetration by Country (2017)

Insurance Industry Penetration

The Brazilian insurance penetration rate is growing, but relatively low compared to developed (and some emerging) economies

Brazilian Insurance Penetration by Product

2006

2.8%

Chile

4.9%

USA

7.1%

Canada

7.2%

Spain

5.4%

Italy

8.3%

France

9.0%

UK

9.6%

Germany

6.0%

South Africa

13.8%

China

4.6%

Japan

8.6%

Australia

5.8%

30% 25% 12% 10% 10% 6%

Insurance Penetration- Brazil *

2017

4.0% Market Premiums Growth CAGR (2007 - 2017) Pension 15% Dental 12% Homeowner 13% Life 11% Health 13% Auto 10% Total Market 12%

*Overall written premiums as % of GDP, excluding Capitalization and Health Medical Operator segments Source: Swiss RE

Top Insurance Products Development

32

The auto insurance market remained resilient during the crisis - the current car sales rebound will be helpful for the sector

Industry Insured Fleet and Auto Premiums

Source: Susep; Autoseg Susep; Anfavea Porto Seguro Estimatives for Insured Fleet (2017)

Main Components for Growth - Auto Insurance Industry

Brand New Vehicle Sales and Insured Fleet Aging

15.9 16.8 17.1 16.8 17.8 18.0 24.8 29.4 32.4 33.3 32.6 34.7 2012 2013 2014 2015 2016 2017e Insured Fleet (Million)* Auto Written Premiums (R$ Billion) 3.6 3.6 3.3 2.5 2.0 2.2 3.5 3.5 3.7 3.9 4.4 4.7 2012 2013 2014 2015 2016 2017e New Brand Vehicle Sales (Million) Insured Fleet Average Age* (Years) 33

Competitive landscape and interest rates are key drivers to understand market behavior

Industry Auto Loss Ratio vs. Interest Rates¹

Source: SUSEP / CETIP

¹Annual average Loss Ratio and CDI for each 3 years period

70% 71% 64% 65% 62% 64% 18% 19% 13% 10% 9% 12% 00-02 03-05 06-08 09-11 12-14 15-17 Loss Ratio Interest Rates

34

Loss Ratio Market Behavior - Auto Insurance Industry

National Footprint – Auto Insurance

Source: Susep

NORTH NORTHEAST MID WEST SOUTHEAST SOUTH

2007 2017

• Var. p.p.

14.5% 16.1% +1.6 p.p. 2007 2017

• Var. p.p.

10.7% 20.3% +9.6 p.p. 2007 2017

• Var. p.p.

18.7% 27.6% +8.9 p.p.

BRAZIL

2007 2017

• Var. p.p.

25.0% 34.6% +9.6 p.p. 2007 2017

• Var. p.p.

3.9% 14.2% +10.3 p.p. 2007 2017

• Var. p.p.

9.7% 17.3% +7.6 p.p.

Regional Market Share – Porto Seguro (Consolidated)

35

Porto Seguro is already amongst the top auto insurance positions in all regions of the country – however, there is still growth potential, especially out of São Paulo

1st 2nd 2nd 1st 1st 1st

Auto Insurance Development Model

The new model focuses on increasing the profitability and growth. All brands moved from fixed towards flexible pricing - Meanwhile, Itaú is now co-branded (Porto or Azul)

New Business Model – Auto Insurance

36

Service level

Full Services (car, home, people) Basic Services (car) 100% Porto Seguro (High-End) 85%

No changes

Itaú (Bank Channel) Client´s shares of wallet 75%

Product Basket Pricing Brand Positioning New Old New Old

Porto Azul Itaú

New Old

Intermediate Services (Car/Home) Full Services (car,home, people) Basic Services (car) Client´s shares of wallet Azul or Itaú Porto or Itaú

New Old

Azul (Lean) Porto (Complex) Lean Complex Intermediate

Platform

Anchor Price

Azul (Low End)

2 client’s choice 3 client’s choice

87% 78% 58% 62% 114% 28%

Business Diversification

Various initiatives are boosting the growth of higher profitable products

▪ Cross-selling leverage (e.g. Credit Card + Auto) ▪ Up-selling (e.g.. Auto + Homeowner) ▪ Portoserv (e.g. selling cards on behalf of the brokers) ▪ Product specialists support for brokers (e.g. Life Product) ▪ Internet sales (especially for low average price segments – e.g. travel insurance and homeowner)

¹ Loss Ratio + Commission ² Poll Financing for Auto and Houses

37 Expenses¹ Growth

7% 5% 12% 14% 11% 15%

ROAE

Diversification Initiatives Operational Results by Business Lines

Digital Transformation

Capitalization in digital technology will enhance customer experience, create valuable support for brokers and improve efficiency

Self-handling Services

+ 1 Million of users downloaded our APPs (Auto, Health, Credit Card and Consortium)

Chatbot

Innovation on Customer Services (e.g. searching for hospitals network, claims status and payments follow- up) Broker’s program that works especially on sales arising from the internet, focusing

• n new customers attraction

OnCorretor

Broker's digital inclusion program to professionalize the sales actions through the internet

Multichannel

Health for Pet Auto Car tracking + Insurance Homeowner Travel Insurance Motorcycle

38

Process Improvement Sales by Internet

(In the pipeline)

• The real estate usage was optimized

(ex. home office, call center and ~R$100 MM in properties offered for sale)

Initiatives in 2018

• Capex reduction of 21% or 60

R$ MM (vs. 9M17)

• Extra dividends paid with a value
• f R$ 500 MM in the 1Q18

Capital Base

• Reducing capital surplus from 47% to

42% from the adjusted shareholders equity (vs. 9M17)

% Distribution of Dividends (Payout)

60.0% 50.0% 35.0% 35.7% 40.0% 8.8% 4.4% 3.7% 3.4% 4.6% 2013 2014 2015 2016 2017 Payout¹ Dividend Yield²

¹ Total Dividends Paid (Dividends + Net Interests on Capital) divided by Adjusted Net Income ² Dividend yield in relation to Stock Price (Total Dividends paid Divided by Stock Price on the last day in the period)

Increased dividend payments and thoughtful usage of our real estate have right-sized the Company’s balance sheet

39

New Businesses

Businesses under Development

Source: Porto Seguro

Carro Fácil

22 Million around 2 thousand

Revenues Active Contracts

+157% vs. 2016

H4Pet

13 Million 20 thousand

Revenues PETs

+127% vs. 2016

Porto Faz

12 Million 27 thousand

Revenues Services provided in 2017

+11% vs. 2016

Capturing opportunities and developing non-mature businesses

• Increase scale gains
• Optimize process
• Improve

communication and positioning

• Optimize process

40

Initiatives

▪ Develop a sophisticated digital delivery platform ▪ Innovate the process

• f

buying services ▪ Scale-up by cross-selling

Key Takeaways

❑ Under-penetration pave the way for a consistent and long-term growth ❑ Many business lines enable us to innovate, differentiate and excel (eg. Financial Services , Auto, etc..) ❑ Fluctuation in interest rates can be offset by improvements in operational results – long track-record of successful execution ❑ Valuable brand, solid relationships and emphasis on customer-oriented services lead to superior profitability ❑ The brokers/agents and new niches increase penetration, specially in non-mandatory insurance markets – new distribution channels are complementary ❑ Digitalization provides unique customer experiences in the future – senior management priority ❑ There are operational efficiency gains to conquer in regards to process improvement, non-mature businesses and right-sizing the capital base

41

The untapped market opportunities aligned with our initiatives to improve insurance products, expand diversification and operational efficiency can lead to better profitability in the years to come

Contact

Investor Relations Department

Alameda Barão de Piracicaba, 618 11th floor Campos Elíseos 01216-010 São Paulo, SP, Brazil Phone: (55 11) 2393-7092 (55 11) 2393-7093 E-mail: gri@portoseguro.com.br www.portoseguro.com.br