BB Seguridade (BBSE3) has strong results leading to increased guidance, analysts point out; action goes up

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BB Seguridade (BBSE3) released strong numbers for the second quarter of this year (2Q22) on Monday morning (8), which led to an upward revision of projections (guidance), commented analysts.

The result was “driven by the robust performance at Brasilseg, led by rural products related to life”, points out Credit Suisse.

The insurer revised upward the guidance for operating results, which should now grow from 15% to 20% (from 12% to 17%) and Brasilseg written premiums, which should grow from 20% to 25% (from the previous 10% to 15%), maintaining the expectation of growth in pension reserves of 9-13%.

According to analysts at Bradesco BBI, the upward revision of the guidance for operating results and premiums issued by Brasilseg for 2022 means that the “momentum should remain strong in the coming quarters”.

The session is one of gains for the assets, with BBSE3 up 2.07%, at R$ 29.07, at 10:34 am (Brasilia time) this Monday (8).

Brasilseg recorded a 23% growth in written premiums on an annual basis, with the main positive highlight being rural insurance and life insurance, while credit life growth remains moderate at 1%. The loss ratio, in turn, stood at 27.3%, significantly improving from 45.3% in 1Q22 and 51.1% in 2Q21, “mainly due to the better performance of the rural segment, with its loss ratio falling from 71% to 26% in the quarter”, comment BBI analysts.

Analysts also point out that BB Seguridade announced the payment of dividends in the amount of R$ 2.07 billion in the first half of 2022, implying a payout ratio of 80% of reported net income and 3.6% of dividend yield, which should be well received by the market.

Looking to the future, “BB Seguridade should continue to show good results in the coming quarters, mainly driven by its insurance results”, comments BBI. “However, the shares already seem to have anticipated good results, with BBSE3 up 12% against 6% of the Ibovespa last month and consensus expectations of R$ 5.3 billion for 2022, but he believes that the moment should continue to sustain multiples close to 2022. 9.5 to 10 times price to profit.” BBI has a neutral recommendation for BBSE3, with a target price of BRL 26, or a 9% drop compared to Friday’s close.

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