Porto Seguro SA (BSP:PSSA3) (Q2 2026) Earnings Call Highlights: Record Revenue and ROAE Amidst ...

Q & A Highlights

Q: Can you provide more details on the source of the increased delinquency rate at Porto Bank, and is this a new permanent level of provisioning? A: Domingos de Toledo Piza Falavina (Investor Relations Officer) explained that the deterioration is coming from a specific customer profile: long-standing clients (3-4 years) who are entrepreneurs or work for small and medium enterprises, often with their first insurance policy and in lower tiers. This group has been less resilient to the current macroeconomic scenario than in past cycles. He clarified that the middle of the guidance is the company's best estimate for provisioning, but it is not necessarily a new permanent level, as credit cycles fluctuate. The company has already adjusted its credit models to block 93% of new credit card approvals that fit this riskier profile.

Q: What is driving the significant acceleration in auto insurance growth, and is this a result of a price war or new market segments? A: Patricia Jimenez (Executive Vice President - Insurance) attributed the 8% growth to a combination of factors: a reviewed product portfolio catering to different customer needs, sophisticated analytics leveraging Porto's critical mass of 6.3 million vehicles, unified technology platforms for brokers, and strong broker relationships. While competition remains intense, the company has avoided aggressive pricing wars. The growth is coming from various segments, including the Azul brand for price-sensitive customers, new products for rideshare drivers, and premium lines, all while maintaining a stable combined index.

Q: The auto loss ratio was very healthy this quarter. What is the outlook for this metric going forward? A: Patricia Jimenez noted that the loss ratio was under control due to disciplined pricing and subscription policies. The company has revised its full-year guidance for the loss ratio down by 0.5 percentage points to between 50% and 54%. However, Paulo Kakinoff (CEO) added that this is the 12th consecutive quarter of declining loss ratios, and the company expects a gradual sequential increase in the next cycles as it undergoes technical readjustments to reach target premiums, though new product launches have performed better than expected.

Q: Health vertical growth has slowed. Is this a competitive issue, and what is the outlook for growth? A: Paulo Kakinoff (CEO) clarified that the lower growth rate is due to a significant product mix shift. One year ago, the portfolio was 70% traditional and 30% new lines; now it is 50-50. On a pro-forma basis with the previous mix, growth would have been 23%. This mix factor will continue to pressure growth for a few quarters before flattening out. Competition remains aggressive, but the company is focusing on technical product strategies, expanding into new regions in Sao Paulo, and launching new products. He expects industry-wide loss ratios to increase slightly next year.

Q: Regarding the increase in commercialization expenses in the insurance vertical, is this a new level of spending? A: Patricia Jimenez (Executive Vice President - Insurance) stated that the higher expenses are related to new broker partnership programs tested this quarter. While commission levels are higher than the traditional market, some of these programs worked well while others are being retired. Therefore, the commercialization expense level is expected to decrease in the coming quarters as the company reviews and adjusts these programs.

Q: Can you provide an update on the banking product strategy and new revenue sources, particularly regarding the partnership with Itau? A: Domingos de Toledo Piza Falavina (Investor Relations Officer) confirmed that the internalization project for banking services is ongoing and expected to take place in the coming quarters. The company has reached 2 million accounts in its ecosystem. Paulo Kakinoff (CEO) added that the change in providers has extended the implementation program for enterprise customers, but the company is continuing with its plans to offer a full-service banking offer for enterprises, which will be discussed in more detail in future quarters.

Q: Is the recent IPCA data showing smaller increases in auto insurance prices an indication of a price war or a delayed effect of competition? A: Patricia Jimenez (Executive Vice President - Insurance) acknowledged that there is still price aggressiveness in the market, but it is far lower than in the second quarter of 2025. The IPCA data reflects a delayed snapshot. Porto's resilience during the toughest competitive period has allowed it to benefit now as the market shows more discipline. The company has also successfully implemented new AI-driven pricing strategies since the third quarter of 2025, which have proven efficient in keeping Porto competitive without engaging in aggressive price cuts.

Q: Is the growth in auto insurance coming from new products like electric vehicles or motorcycles, and do these have different loss ratios? A: Patricia Jimenez (Executive Vice President - Insurance) stated that the 8% growth is spread across several segments, from low-end products like Azul to premium lines. The company has enough critical mass with 6.3 million vehicles to price and predict risks for newer segments like motorcycles and Chinese/electric vehicles. They have dedicated service stations for these vehicles, which contributes to a healthier portfolio. The combined index for the quarter is stable, and the guidance for the loss ratio was revised positively by 0.5 percentage points.

Q: There seems to be a contrast between the improving insurance segment and the worsening credit area. Is this the new reality for the company? A: An unidentified company representative explained that Porto has doubled its client base, leading to a more diverse customer profile that includes lower-income segments. This has required adjustments to credit models. Paulo Kakinoff (CEO) added that this customer profile was previously resilient but is now showing higher delinquency. Domingos de Toledo Piza Falavina (Investor Relations Officer) noted that the company does not expect these clients to recover in the short or medium term, which is why provisioning levels have been increased. The group's strength lies in its ability to absorb variations between different business verticals, delivering consistent results despite macroeconomic volatility.

Q: What is the outlook for Net Interest Income (NII) at Porto Bank, given the recent reduction? A: Paulo Kakinoff (CEO) stated that the company is reviewing total revenue positively and does not expect a reduction in NII. While interest earnings from credit cards did not grow, the company expects contributions from other products. The guidance presented to the market does not anticipate a significant NII variation, and the current situation is in line with the company's slightly conservative guidance philosophy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .