Corporate Presentation 031014 PORTO

PORTO SEGURO PRESENTATION

OCTOBER/2014

Agenda

Insurance Industry Overview

• Market Development

• Competitive Landscape

• Key Growth and Profitability Drivers

Recent Results - 2Q14 and 1H14

• Insurance

• Non-Insurance Businesses

• Financial Results

Porto Seguro at a Glance

• Business Portfolio

• Strategy and Key Differentials

• Long-Term Results

• Stock Performance and Dividends

INSURANCE INDUSTRY OVERVIEW

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2.7% 2.7% 2.7% 2.8% 2.9% 2.9% 3.1% 3.1% 3.2% 3.6% 4.0%

Brazilian Insurance Market Penetration*

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

Worldwide Insurance Penetration (premiums as % of GDP - 2013)

Japan: 11.1%

Source: Swiss RE/Fenseg

The Brazilian insurance market still offer significant opportunities, despite the fact

that in the last 10 years premiums have been growing steadily (CAGR 15%)

CAGR - 15%

< than 2% ≥ 2% < 5% ≥ 5% < 8% ≥ 8% unanalysed

Brazil: 4.0%

Argentina: 3.6%

Canada: 6.9%

UK: 11.5%

Italy: 7.6% USA: 7.5%

Chile: 4.2%

Russia: 1.3%

China: 3.0%

India: 3.9%

Germany: 6.7%

South Africa: 15.4%

France: 9.0%

Mexico: 2.2% Spain: 5.3%

Australia: 5.2%

Japan: 11.1%


4

AXA

Allianz Allstate

Progressive

ACE

AIG

ChubbSul América

BB Seguridade

Porto Seguro

Admiral

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

-5% 0% 5% 10% 15% 20% 25% 30% 35%

Brazilian Insurance companies have higher growth and ROAE when compared

to American and European peers

Premiums Growth vs. ROAE

(last 3 years average)

Combined Ratio

(last 3 years average)

Source: investor relations companies websites

Growth

RO

AE

106.2%99.4% 98.1% 97.4% 97.3% 97.0% 94.1% 92.2% 92.2% 89.9% 88.6%

Global Insurance Companies - Operating Results and Returns


Brazilian Companies International Companies

5

A market of R$ 183 Bi, driven mainly by pension, auto, life and health products

– insurance penetration of main lines does not exceed 30%

Brazilian Premiums by Segment (2012)

10%

25%

12%

30%

6% 10%

0

15

30

45

-7 3 13 23 33 43 53 63 73 83

Pen

etr

ati

on

- %

Premiums (R$ Billion)

Homeowner Health Life Auto Pension Dental

Main Insurance Products - Penetration vs. Premiums (2012 - Estimate)

Source: ANS, SES-SUSEP, CNSEG and Porto Seguro estimate

71%

29% 17%

54%

16%

13%

47%

28%

25%

Life Non-Life

R$ 130 BI

R$ 53 BI Auto

P&C

Other Life Capit.

Health

Pension

(PGBL + VGBL)


6

12.1

13.413.6 15.3

17.4 20.0 21.324.8

29.4

59.177.4

111.6

139.1

157.3185.9

244.9 242.2228.6

1.7 1.9 2.5 2.8 3.1 3.5 3.6 3.8 3.8

2005 2006 2007 2008 2009 2010 2011 2012 2013

Auto Premiums (R$ billion) Auto Financing Credit (R$ billion)

Car Sales (million)

797

679

607 593 591 584 572519

314 293 275249

200 184 165

Emerging Markets

Developed Countries

8.49.5

10.711.7

12.814.3

16.016.9

19.521.3

22.414.1%

13.1%12.6%

13.4%

13.0%

10.8%9.3%

6.5%

7.4% 6.6% 6.8%

25.0%26.4%

28.4%30.5%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GDP per capita(R$ thousand)¹

Price of carinsurance overincomepercapita²

Auto insurancepenetration³

Higher household income and credit expansion has contributed to Auto

insurance expansion in the last 5 years Brazilian Income and Auto Insurance Penetration (%)

29%

41%

2008 2011

+12 p.p.

Source: Serasa Experian / Booz & Company

% Class C on the Brazilian Auto Insurance Market (2008 vs. 2011)

Vehicles per 1,000 inhabitants

Source: World Bank Data

CAGR: 18%

CAGR: 12%

CAGR: 11%

Source: SUSEP, ANFAVEA and ANEF

Auto Market Growth - Brazil

400

¹Annual GDP perr capita

²Porto Seguro average auto insurance price over annual GDP percapita

³Considering only passenger cars

Source: IBGE / FENSEG / Denatran/ Porto Seguro


7

8.9

6.8

-2.5

6.4

8.8

8.3

0.4

9.7

12.1

3.2

4.0

6.1

5.2

-0.3

7.5

2.7

0.9

2.3

2005 2006 2007 2008 2009 2010 2011 2012 2013

Auto Premiums Growth GDP Growth

There are no strong correlation between Brazilian GDP and Auto Insurance

growth – competition plays a key role and affects pricing

Brazilian Auto Insurance and GDP Growth (%) - Real

Source: CNSEG/SUSEP/IBGE


8

2.1%1.4%

0.1%

-3.8%

-5.4%

0.2%

2.7%

0.0%

-0.2%

1.3%-0.8%

-3.1%

71.1% 72.5% 72.6%68.8%

63.4% 63.6% 66.3% 66.4% 66.2% 67.4% 66.7% 63.6%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Competitive environment leads to loss ratio variation regardless of the robbery

and theft frequency

Source: SUSEP


9

National Auto Insurance Claims Behavior (Loss Ratio and Variation vs. Previous Year)

National Auto Insurance Loss Ratio Variation vs. Previous Year

Ma

rke

t S

ha

re

(%)

Concentration of Brazilian Market Share (Top 5 Players and Porto Seguro)

Non-Life Auto Homeowner

P&C (Ex Homeowner) Life (Ex VGBL) Health*

45.2%50.0%

10.5%

16.6%

2005 2013

Top 5 Porto Seguro

51.9%

68.4%

17.0%26.3%

2005 2013

Top 5 Porto Seguro

29.9%

64.3%

5.6%

27.6%

2005 2013

Top 5 Porto Seguro

30.8%

48.5%

2.9%3.8%

2005 2013

Top 5 Porto Seguro

49.4% 51.8%

2.2% 1.8%

2005 2013

Top 5 Porto Seguro

90.5% 93.4%

6.4% 4.9%

2005 2012

Top 5 Porto Seguro

The market is highly concentrated in all segments


Source: SUSEP/ANS/Sincor

*Not including HMO

10

The Brazilian insurance market is dominated by brokers in the Auto/Health

segments and by banks in Life Products – no clear “universal distribution

model” to be adopted

37

8

63

2034

7

56

37

25

47

47

45

7

12

6

14

8

68

40

31

4

15

1

12

2 4

1124

15

USA UK Germany Mexico S.Africa S.Korea Brazil

Other

Direct

Banks

Brokers

Agents

59 54 52 47

3336 34

33

8 10 14 20

1995 2000 2005 2011

Tied Agent Independent Agent Direct

Auto Insurance Channel Distribution - USA (Premiums %)

Life and Non-Life Products

Channel Distribution by Country (Premiums %)

Source: CEA Insurers of Europe – III On Line/UK-ABI Key Facts / Swiss RE

Global Insurance Overview


11

PORTO SEGURO AT A GLANCE

57%65%

Porto¹ Market

Brands Strength Distribution

Channel

Assistance

24/7 Average

ROAE

17% Net

Earnings*

+21%

Total

Revenues*

+19%

Total

Premiums*

+19%

Other

Business

Revenues*

+37%

Recurring

Payout

50%

Profitability (2009-2013)

Overall Combined Ratio (2013)

Auto Loss Ratio (2013)

Porto Seguro At a Glance

*Source: 2012 IBRC and Revista Exame

**2013 Ranking Brand Analytics/Millward Brown

A history of focus, growth and profitability through our 3 brands

1st Non Life Insurance 1st Insurance Customer Service* 4th most valued Insurance brand**

27,000 Brokers 5,000 Itaú Bank Branches

15,000 Service Providers - Roadside - Appliances - Repair - Help Desk - Plumbing - Locksmith

Porto Seguro Portfolio (Revenues - 2013)

¹Including Porto Seguro, Itaú and Azul Brands

Source: SUSEP

Porto Seguro

Brands

-8 p.p.

*CAGR considering recurring results

¹Including Financial Results

58.1%

7.7%

7.1%

4.7%

3.8%

3.8%

2.6%

7.5%4.8%

Auto

Credit Operat. 96.0% 92.5%

Combined Ratio ¹Amplified Combined Ratio

13

*Controlled by

Jayme Garfinkel

Free Float

Itaú Seguro de

Auto e Residência

Azul

Seguros

PSIUPAR 70.8%

Porto Seguro

Heatlh Insurance

Porto Seguro

Life and Pension

Porto Seguro

Uruguay

Porto Seguro

Cia de Seguros

Portoseg Consumer

Finance and

Credit Card

Portopar

Asset Management

Porto Seguro

Consórcio

Porto Renova

(Recycle Car Parts)

Porto Faz

(Convenience

Services)

Portomed (HMO)

Porto Seguro

Medical Services

Insurance Financial Services General Services

Porto Seguro

Dental

Porto Conecta

(Mobile Operator) Porto

Capitalization

Itaú

Unibanco 43.0% Porto Seguro

Controllers* 57.0%

29.2%

Porto Call Center Porto Seguro

Surveillance and

Monitoring

Free Float Shareholders Breakdown (August, 2014)

Porto Seguro is composed of insurance, financial and general services

businesses

25%

32%

29%

14% Brazil

USA

Europe

Other

Operational Structure


14

Segmented Value

Propositions • 3 brands to attend different needs and preferences

• Different value propositions – service, price, specific affinity (Itaú)

Strong Relationship

with Brokers and Clients

• High service level

• Focus on long-term relationships, not product transactions

• Retention rate higher than market average

Innovative Products

and Services

• Innovative and synergic product portfolio (cross-leverage)

• Expanded services (for home, car and individuals) – beyond basics

• Services as key for value recognition

Sophisticated Risk

Selection and Pricing

• Conservative, profit driven underwriting

• Leverage of huge database and sophisticated quantitative models

• Loss ratio historically below market average

• Majority of short tail business

We based our strategy on four cornerstones

Our Strategy


15

Focus on Differentiation

High Service Level

Value added products and services

Higher level of

operational flexibility

Sophisticated risk selection and pricing

Brand Loyalty

Specific benefits for

Itaú clients

Convenience

Sophisticated risk selection

and pricing

Price Brand

Lean Products and

Services

“Lean Manufacturing”

Operations

Sophisticated risk selection

and pricing

The Group has three distinct value propositions through its brands - not a “one

size fits all” approach

Segmented Brand Strategy


16

P&C Auto Health Life Homeowner

Market Position

1º 3º insurance only

6° considering Health

Operators

2º 8º 1º 14º

Market Share

26.3% 4.8%* *Data from 2012

8.1% 3.8% 27.6% 1.0%

Premiums (R$ Million)

7,972 1,022 954 366 588 473

% on Total

Premiums

69% 9% 8% 3% 5% 4%

Premiums CAGR

(5 years)

20% 10% 28% 11% 54% 13%

Insured Items (thousand)

4,663 620 2,050 366 1,684 5,969

Main

Insurance

Products (2013)

Source: Susep/Sincor/Porto Seguro

Offering a wide range of insurance products

Ex

Homeowner With

Homeowner


17

Surveillance and

Monitoring Credit Card Consortium

Market Position

13º 8º 2° * 1º *

Market Share

0.7% 3.5% - -

Revenues

(R$ Million)

568 184 81 55

% on Porto Non-

Insurance Lines

45% 15% 6% 4%

Revenues CAGR

(3 years)

51% 11% 12% 239%**

Clients/Items

(thousand)

1,376 111 28 422

Main

Non-Insurance

Products (2013)

Source: Banco Central/Card Monitor/Porto Seguro

Other non-insurance business increases the bottom-line, creating a stronger

customer connection that intensifies loyalty and cross-selling opportunities


Occupational Safety

and Health

Carro Fácil

(long term rent + services)

Porto Faz

(convenience services)

Mobile Operator

Brand New

Services

* Porto Seguro estimative

** Acquisition of Bioqualynet company in 2013

General Services Financial Services

18

First non-life insurance company in Brazil – consistent revenue growth

2.9 3.4 3.9 4.4 5.1 5.87.9 8.6 9.6

11.60.3 0.5 0.6 0.4 0.6 1.0

1.0 1.3 1.51.5

10.6% 10.8% 11.4% 12.3% 11.7%14.3%

17.7% 16.8% 16.7% 16.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Insurance Premiums Other Revenues Non-Life Insurance Market Share¹

2.0

2.3

2.4

2.4

3.3

3.3

4.3

4.9

6.5

9.5

Caixa

Zurich

Aliança

HDI

Sul América

Allianz

Itaú

Bradesco

Mapfre + Brasil Veículos

Porto Seguro Group

1.0

0.9

1.4

1.6

2.0

2.1

2.8

3.1

4.4

7.7

Marítima

Zurich

Tokio

Liberty

Allianz

HDI

Sul América

Bradesco

Mapfre + BB

Porto Seguro Group

Source: Susep / Porto Seguro

17%

11%

9%

8%

6%

6%

4%

4%

4%

3% 3%

26%

15%

10%

10%

7%

7%

6%

5%

3%

Porto Total Revenues (R$ Billion) and Market Share (%)

2013 Auto Insurance Premiums

(R$ billion) and Market Share (%)

2013 Non-Life Insurance Premiums

(R$ billion) and Market Share¹ (%)

¹Excluding Life, Health and Pension


19

2010 2011 2012 2013

Porto Azul Itaú

-7.6%

-6.0% -5.8%

-8.2%

2010 2011 2012 2013

Since 2010, our market share remained relatively stable with lower loss ratio (vs

market average) - Azul, our price brand, has grown faster than the other brands

Auto Premiums by Brand

26%

17%

56%

Porto Auto Premiums Consolidated (R$ billion)

and Market Share

Difference Between Porto and Market Loss Ratio on Auto Insurance *

* Market Excluding Porto Seguro Group / Source: SUSEP

25%

22%

53%

5.4 5.7 6.5

8.0

27.1% 26.9% 26.1% 26.3%

2010 2011 2012 2013

Premiums Mkt Share


20

23%

6%

33%

16%

Southeast Other Regions

2004 2013

We are further expanding our national presence - other regions have been

evolving rapidly and we still pursue opportunities to deploy our model outside

the southeast region

24%

22%

54%

Porto Auto Market Share Expansion

44% or 10 p.p.

Southeast 76%

São Paulo 59%

Rio de Janeiro 10%

South 9%

Northeast 8%

Mid West 6%

North 1%

Porto Auto Regional Premiums

(2013)

Brazil Market Share : 26%

Source: SUSEP

North: 20%

Northeast: 19%

Mid West: 22%

South

12%

Southeast: 33%

São Paulo: 37%

Rio de Janeiro: 31%

Porto Auto Footprint

(2013)

167% or 10 p.p.


21

273 569 545 593 578 33

90 71 109 133

306

659 616 702 711

14.8%

19.6%

16.6% 17.3% 16.5%

2009¹ 2010 2011 2012 2013

Total Net Earnings (R$ MM)

Non-Insurance Business Net Earnings (R$ MM)

Insurance Business Net Earnings (R$ MM)

ROAE %

¹ Without Itaú Auto e Residência Company that was incorporated in 4Q09

Source: Porto Seguro

Porto Net Earnings and Profitability (IFRS without Business Combination)

In the last five years, we have posted an average recurring ROAE of 17.0% -

total net earnings has increased steadily through insurance and non-insurance

business (CAGR 23%)


CAGR: 23%

CAGR: 42%

CAGR: 21%

22

34%

12%

PSSA3 IBOVESPA

22%

168%

-1% -41%

55%40%

-25%10%

27%28%33%

44%

-41%

83%

1% -18% 7% -15%

2005 2006 2007 2008 2009 2010 2011 2012 2013

PSSA3 Ibovespa

Annual Variation (%) 7.4

2.1

7.1

11.3

8.6

6.0

8.2

10.010.8

16.1

5.9

2.7

5.47.4

8.9

8.2

11.512

4.0

5.9

8.9

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Porto Seguro Sul América Brasil Insurance

Performance PSSA3 vs. IBOVESPA (Last 12 months)

Stock Annual Variation (versus on previous year)

Stocks Daily Negotiation

(Average - R$ million) *In addition to the positive results in 2006, we highlight the “Follow On”, the sale of

individual Health portfolio to Amil and the PIS COFINS tributary lawsuit gains justifying

the great stock appreciation in this year.

The Company has exceeded the Ibovespa benchmark historically and in the

last 12 months – liquidity reached R$ 16 MM per day (+49% vs. 2012)


23

Variation 2013 vs 2012 2013 vs 2011 2013 vs 2007 2013 vs 2004

Porto (%) 27 40 35 336

Sula (%) -1 22 82 -

Brasil Insurance (%) -9 7 - -

30.4%32.3% 32.3% 31.6% 31.4%

40.0%

50.0% 50.0%

60.0%

7.3%9.6%

3.2% 3.8%1.9% 3.0% 4.2% 4.5%

8.8%

2005 2006 2007 2008 2009 2010 2011 2012 2013*

Payout (3) Dividend Yield (4)

Payout has been growing since 2005. Nearly R$ 850 millions returned to

shareholders in 2013

*In 2013 we had a non-recurring income arising from the gain of the tax process (COFINS) of Porto Cia and Porto Vida e Previdência companies amounting to R$ 702 million (net of

tax, profit sharing and attorney’s fees). This amount was being provisioned since 1999 and reverted in the 4Q13. This event increased the payout ratio from 50% to 60%.

PBV (12/30/2013) 1.6

P/E (12/30/2013) 13.8

Porto Payout and Dividend Yield


24

RECENT RESULTS

2.7 3.1

5.3 6.0 0.5

0.6

0.9

1.3

2Q13 2Q14 1H13 1H14

Insurance Premiums Other Revenues

Porto Revenues Development (R$ Billion)

+16%

Porto Revenues by Segment

Total revenues in 2Q14 increased 16% and total premiums grew 12% mainly

because of auto products growth and higher financial revenues

83.7% 81.3%

3.7% 6.1%

6.8% 7.3%2.6% 2.3%

3.2% 3.0%

2Q13 2Q14

Other Services

Pension

Financial Services

Financial Results

InsurancePremiums

+17%

3.2 3.7

6.2

7.3

Recent Results – 2Q14 and 1H14

26

53.8 56.0

19.2 19.5

19.0 19.1

2.5 1.3

2Q13 2Q14

Tax

G&A + O.E.*

Comission

Loss Ratio

Porto Combined Ratio (%) Porto Amplified Combined Ratio

94.5 95.9

+1.4 p.p. -0.9 p.p.

*Administrative Expenses + Other Operational Expenses/Revenues

Porto Written Premiums Distribution

Combined Ratio increased in the quarter due to the rise of auto products loss

ratio (+3.0 p.p.), mitigated by lower health products losses (-3.3 p.p.) and

insurance tax expenses reduction (-1.2 p.p.)

90.6% 89.7%

2Q13 2Q14

67.7% 67.5%

9.2% 9.0%8.8% 8.6%

4.4% 4.2%9.9% 10.7%

2Q13 2Q14

Other

Life

P&C

Health

Auto


27

16.9% 16.5% 17.4% 16.6% 15.7% 15.2% 15.4% 15.3% 15.4%

2009 2010 2011 2012 2013 2Q13 2Q14 1H13 1H14

Porto Insurance Administrative Expenses – G&A ratio

Insurance expenses ratio increased 0.2 p.p. in the quarter particularly due to

advertising expenses that were realized in the first semester – excluding this

effect it would reduce 0.2 p.p., as a result of efficiency gains


28

51% 55%

15%14%

12% 12%

22% 19%

2Q13 2Q14

Other

Medical Services

Consortium

Credit Operations

32 34

60 52

16 15

20

14

2Q13 2Q14 1H13 1H14

Net Earnings % On Total Net Earnings *

314 376

604

726

2Q13 2Q14 1H13 1H14

22.5 21.6 20.8 18.2

2Q13 2Q14 1H13 1H14

Net Earnings

Revenues Development (R$ Million)

ROAE (%)

Revenues by Segment

* In relation to the Company net earnings without business combination with Itaú and non-recurring effects

-0.9 p.p

+20%

+7%

Non-insurance business rose 20% in the quarter driven principally by credit

operations expansion – ROAE achieved 21.6%, a decrease of 0.9 p.p. explained

by the early results of start-up businesses

+20%

-12%

-2.6 p.p

Porto Financial Services and General Services

(Non-Insurance Business)


29

Porto Financial Returns on Investment Assets ¹


In 2Q14, financial results (excluding pension funds) produced a nominal yield of

2.8% (111% CDI) – a strong improvement versus 2013 and more in line with our

historical performance

¹ Since 2009 the return of investment portfolio reached 106% of CDI* on average * CDI – Risk Free Rate (Similar to LIBOR) 30

11.3%10.0%

11.6% 11.2%

6.3%

1.5%2.8%

2.3%

5.0%

117 114

98

159

5528

110

31

102

115103

100133

7982

111

67 101

2009 2010 2011 2012 2013 2Q13 2Q14 1H13 1H14

Nominal yield (ex-pension funds)

% of CDI (pension funds included)*

% of CDI (ex-pension funds)*

¹ Futures exposures included. ² Brazilian Futures Exchange (BM&F BOVESPA) stress scenarios.

Porto Net Asset Value (R$ Billion) Porto Revenue from Investment Assets (R$ Million)

Porto Assets Allocation¹ (ex-Pension Funds) Porto Risk Exposure² (ex-Pension funds)

Total portfolio of R$ 8.8 BI produced a financial revenue of R$ 239 MM in 2Q14.

Portfolio ex-pension was R$ 6.3 BI, generating a financial income of R$ 176 MM

93 97 115 142 148

4 23 18 11 28

-46

38 6 45

63

2Q13 3Q13 4Q13 1Q14 2Q14

Pension Funds Others Insurance

158

198

51

139

239

6.3 6.3 6.4 6.7 6.3

2.4 2.4 2.6 2.4 2.5

2Q13 3Q13 4Q13 1Q14 2Q14

Pension Funds Other Assets

9.0 8.7 9.1 8.8 8.7

48%

24%

53% 42% 44%

24%

40%

24%

17% 18%

11% 16%

3%

20% 19%

16% 17% 17% 18% 17%

1.1% 2.6% 3.0% 2.7% 2.4%

2Q13 3Q13 4Q13 1Q14 2Q14

Equities

Corporate Bonds

Inflation-LinkedBonds (TIPS)

Fixed Rate

Floating RateNotes

1.0%

0.3%

2.0% 1.7%

1.0% 0.6%

0.62%

0.54%

0.67% 0.71% 0.72%

0.69%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Stress %NAV Annual. Vol


31

132.8 132.8103.4 103.4

60.3 68.2 115.6 104.4

193.1 201.0219.0 207.8

Actual 100% CDI² Actual 100% CDI²

193.4 193.4149.1 149.1

108.0 141.2 222.5 213.9

301.4334.6

371.6 363.0

Actual 100% CDI² Actual 100% CDI²

18.1%17.2%

18.2% 18.9%14.8%

14.4%14.0%

15.7%

Porto Net Earnings¹ (R$ Million) and ROAE¹

(without business combination)

Net Earnings ROAE Operational Result Financial Result

2Q13 2Q14

¹Considering the whole Company (insurance and non-insurance). Total Net Earnings and ROAE with Business Combination. Other values without Business Combination

²Result (pro forma) considering a return on investments of 100% of CDI and excluding client’s pension provision.

*From 2006 to 2012 the average return from the financial investment portfolio was 106% of CDI (without pension reserves).

Better financial results have offset a lower operational income, delivering net

earnings of R$ 219 million (+13%) in the quarter – ROAE reached 18.1% (-0.1 p.p.)

1H13 1H14


32

87

188162 166

60

19

4462

85

44

39

70 96 58

34

37

6653

35

32

32

2010 2011 2012 2013 1H14

Other Intangible

Furniture/Fixtures/Vehicles

Hardware and Software

Systems Development

Real Estate

25%

52%

47%

25%

39%

Porto Seguro CAPEX (R$ million)

183

369 374 376

Our CAPEX has been driven by geographic expansion, process improvements

and new business development

% of Investments on Cash

Flow Generated

171


Investments Highlights 2014

Real Estate acquisitions and maintenance

(administrative and sales offices)

New Call Center Building

System Development (CRM, SAP, among

others)

New Business (Conecta, Porto Faz , Carro

Fácil , Porto Renova)

33

Porto Seguro is well capitalized – around R$1.4 Bi of capital surplus


34

3,421 2,672

749

448

386

62 586

3,869

3,058

1,397

Adjusted Equity¹ Solvency Margin² Sufficiency³

Insurance Companies Financial Companies Holding

Capital Requirements – 2Q14 (R$ million)

¹ Equity adjusted by additions and exclusions according to agencies standardizations (SUSEP, BACEN and ANS)

² Necessity of Capital required according to regulators (SUSEP, BACEN e ANS)

³ Refers to the difference between adjusted equity and necessity of capital requirement

2Q14 and 1H14 Summary

INSURANCE WRITTEN PREMIUMS, PENSION AND CAPITALIZATION REVENUES 2Q14 2Q13 Var. % 1H14 1H13 Var. %

Porto Seguro – Auto 1,094.8 955.0 14.6 2,167.3 1,874.1 15.6

Azul Seguros – Auto 467.7 391.0 19.6 934.8 776.7 20.4

Itaú Auto e Residência - Auto 492.6 487.4 1.1 958.9 900.2 6.5

Total Auto 2,055.1 1,833.4 12.1 4,061.0 3,551.0 14.4

Health 249.7 237.5 5.1 502.5 471.0 6.7

Dental 13.6 10.1 34.7 26.4 19.7 34.0

Portomed (health care plan premiums) 11.3 2.3 391.3 19.6 3.6 444.4

Total Health (Health + Dental + Portomed ) 274.6 249.9 9.9 548.5 494.3 11.0

Life 128.0 117.9 8.6 240.4 237.8 1.1

P&C - Porto Seguro and Azul Seguros 155.9 124.4 25.3 295.4 233.9 26.3

P&C - Itaú Auto e Residência 105.3 113.0 (6.8) 221.4 206.6 7.2

Total P&C 261.2 237.4 10.0 516.8 440.5 17.3

DPVAT 113.8 73.2 55.5 258.2 180.8 42.8

Financial Risks 97.2 90.6 7.3 185.2 174.7 6.0

Cargo 32.3 32.3 0.0 62.0 60.2 3.0

Porto Seguro Uruguay 34.0 31.6 7.6 73.7 65.9 11.8

Written Premiums VGBL 43.2 39.0 10.8 82.6 84.3 (2.0)

Other 4.8 2.1 128.6 5.7 12.4 (54.0)

Total Written Premiums 3,044.2 2,707.4 12.4 6,034.1 5,301.9 13.8

Total Earned Premiums 2,904.8 2,585.4 12.4 5,756.5 5,021.1 14.6

Total Pension Revenues (PGBL + VGBL) 83.7 84.0 (0.4) 165.3 172.6 (4.2)

Capitalization Total Revenues 2.5 0.8 212.5 4.6 1.4 228.6

OTHER BUSINESS - REVENUES

Surveillance Services 20.5 18.0 13.9 40.4 34.6 16.8

Consortium 50.8 46.9 8.3 100.4 89.7 11.9

Credit Operations 209.2 162.0 29.1 400.5 319.5 25.4

General Services - Porto Services 3.9 8.3 (53.0) 6.8 19.1 (64.4)

Call Center - Porto Atendimento 29.6 26.5 11.7 57.4 46.1 24.5

Asset Management - Portopar 8.1 6.5 24.6 16.5 12.6 31.0

Medical Services 45.0 37.1 21.3 87.2 67.9 28.4

Other 8.4 8.6 (2.3) 16.3 14.1 15.6

Other Business - Total Revenues 375.5 313.9 19.6 725.5 603.6 20.2

Financial Results - Insurance 198.4 113.6 74.6 397.1 201.2 97.4

Financial Results - Other 28.2 4.6 - 39.2 10.6 269.8

Total Financial Results 226.6 118.2 91.7 436.3 211.8 106.0

Real Estate 2.6 2.4 8.3 5.1 4.9 4.1

Total Revenues 3,691.9 3,187.7 15.8 7,288.3 6,211.9 17.3

INDEX (%)

REVENUES (in R$ million)

35

2Q14 and 1H14 Summary

INDEX (%)

LOSS RATIO 2Q14 2Q13 Var. % 1H14 1H13 Var. %

Porto Seguro – Auto 55.0 50.7 4.3 55.8 51.1 4.7

Azul Seguros – Auto 61.1 59.3 1.8 63.1 60.1 3.0

Itaú Auto e Residência - Auto 61.1 59.6 1.5 62.7 61.4 1.3

Total Auto 57.9 54.9 3.0 59.2 55.6 3.6

Health 77.6 80.9 (3.3) 74.7 78.6 (3.9)

Dental 50.2 53.8 (3.6) 46.6 48.8 (2.2)

Portomed 86.6 54.2 32.4 87.8 61.1 26.7

Health (Health + Dental + Portomed) 76.6 79.5 (2.9) 73.9 77.2 (3.3)

Life 27.9 31.0 (3.1) 26.4 29.5 (3.1)

P&C - Porto Seguro and Azul Seguros 27.6 33.1 (5.5) 32.6 38.6 (6.0)

P&C - Itaú Auto e Residência 27.0 25.9 1.1 29.8 28.7 1.1

Total P&C 27.3 29.9 (2.6) 31.3 34.1 (2.8)

Total Loss Ratio 56.0 53.8 2.2 57.1 54.8 2.3

INSURANCE COMISSION RATIO

Acquisition costs - Insurance 19.5 19.2 0.3 19.4 19.4 -

INSURANCE - OPERATING AND ADMINISTRATIVE EXPENSES

G&A – Insurance 15.4 15.2 0.2 15.4 15.3 0.1

Tax - Insurance 1.3 2.5 (1.2) 1.2 2.5 (1.3)

G&A and Other Operatinal Revenues/Expenses - Insurance 19.1 19.0 0.1 19.6 19.3 0.3

MARGIN AND PROFITABILITY

Combined Ratio - Insurance - var.p.p 95.9 94.5 1.4 97.3 96.0 1.3

Amplified Combined Ratio - Insurance - var. p.p. 89.7 90.6 (0.9) 91.0 92.3 (1.3)

Shareholder's Equity with Business Combination (R$ million) var. % 5,755.2 5,150.5 11.7 5,755.2 5,150.5 11.7

Shareholder's Equity without Business Combination (R$ million) var. % 4,954.7 4,342.4 14.1 4,954.7 4,342.4 14.1

Net Earnings with Business Combination (R$ million) var. % 217.1 191.2 13.5 367.8 297.6 23.6

Net Earnings without Business Combination (R$ million) var. % 219.0 193.1 13.4 371.6 301.4 23.3

ROAE with Business Combination - p.p. 15.4 15.1 0.3 12.6 11.7 0.9

ROAE without Business Combination - p.p. 18.1 18.2 (0.1) 14.8 14.0 0.8

EPS with Business Combination (R$) var. % 0.67 0.59 13.6 1.14 0.92 23.9

# of thousand shares¹ - var. % 323,293 323,293 - 323,293 323,293 -

36

Contact

Investor Relations Department

Alameda Barão de Piracicaba, 618

11th floor

Campos Elíseos

01216-010

São Paulo, SP, Brazil

Phone:

(55 11) 2393-7090

(55 11) 2393-7093

E-mail:

[email protected]

www.portoseguro.com.br

37

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