OREANDA-NEWS. August 3, 2011. Porto Seguro announced 2Q and 1H 2011 earnings.

Highlights

- Net Earnings (IFRS with Business Combination) of BRL  94.4 million in 2Q11. Excluding the IFRS and Business Combination effects, Net Earnings (BR GAAP) was BRL 103.1 million in the quarter.

- In the first half of 2011, recurring Net Earnings (BR GAAP without Business Combination and excluding the pension provisions effects) reached BRL  272.6 million, representing 2.0% of growth in comparison to the first half of 2010. In 2Q11, the recurring Net Earnings in IFRS (with business combination) was BRL  111.1 million.

- Total written premiums increased 9.4% in 2Q11 and 10.6% in 1H11.

- Net financial income reached BRL  183.4 million, an increase of 26.0% (YoY).

- Return on financial investments achieved 83.0% of the CDI (interbank deposit rate) for the year.

- Total loss ratio of 59.4% in 2Q11 and 59.9% in 1H11.

- Combined ratio of 100.2% in 2Q11 and 99.7% in 1H11. The Amplified Combined Ratio, including the financial result, was 92.5% in 2Q11 and 91.5 in 1H11.

- Itau homeowner potfolio increase it premiums by 14% maintaining the loss ratio stable.

Porto Seguro is one of Brazil's leading insurance companies. Since 1945 it has offered through its subsidiaries a broad range of insurance products, which include automotive, health, business, life and pension plans, property and cargo. It is the leader in auto insurance and homeowner also ranks third nationwide in corporate health plans, with these segments representing its main key product lines.

Message from the Management

In the second quarter the written premiums grew particularly in the regions outside of SP and RJ, aligned with our strategy of geographic expansion. In addition, premiums expanded through the bank channel, even though we are still adjusting business positioning, pricing and operation, especially in Itau brand. On the other hand, the loss ratio increased in auto from Azul and Itau portfolio, and also, in the Health product, mainly due to the change in the portfolio mix and by new risks underwritting. The financial result was below than we expected (%CDI), although showed higher nominal income due to elevated CDI. Finally, the administrative expenses raised moderately in order to renew our information technology systems, infra-structure and process improvement to sustain future growth.