BB SEGURIDADE PARTICIPAÇÕES S.A. Interim Financial Statements - 3rd Quarter 2021
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BB Seguridade Participações S.A.
INDEX | |||
MANAGEMENT COMMENTS ON PERFORMANCE......................................................................................................... | 1 | ||
STATEMENT OF INCOME ................................................................................................................................................. | 5 | ||
STATEMENT OF COMPREHENSIVE INCOME................................................................................................................. | 6 | ||
BALANCE SHEET.............................................................................................................................................................. | 7 | ||
STATEMENT OF CASH FLOWS ....................................................................................................................................... | 8 | ||
STATEMENT OF CHANGES IN EQUITY........................................................................................................................... | 9 | ||
STATEMENT OF VALUE ADDED ................................................................................................................................... | 10 | ||
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS ...................................................................................... | 11 | ||
1 | - OPERATIONAL CONTEXT......................................................................................................................................... | 11 | |
2 | - ACQUISITIONS, DISPOSALS AND CORPORATE RESTRUCTURINGS................................................................. | 12 | |
3 | - PRESENTATION OF FINANCIAL STATEMENTS..................................................................................................... | 13 | |
4 | - DESCRIPTION OF KEY ACCOUNTING POLICIES................................................................................................... | 14 | |
5 | - RISK MANAGEMENT................................................................................................................................................. | 20 | |
6 | - SEGMENT INFORMATION ........................................................................................................................................ | 25 | |
7 | - INVESTMENTS IN ASSOCIATES............................................................................................................................... | 28 | |
8 | - COMMISSIONS INCOME ........................................................................................................................................... | 40 | |
9 | - COSTS OF SERVICES PROVIDED ........................................................................................................................... | 40 | |
10 | - PERSONNEL EXPENSES........................................................................................................................................ | 40 | |
11 | - ADMINISTRATIVE EXPENSES AND SALES .......................................................................................................... | 41 | |
12 | - TAXES ...................................................................................................................................................................... | 42 | |
13 | - OTHER INCOME AND EXPENSE............................................................................................................................ | 45 | |
14 | - FINANCIAL RESULT................................................................................................................................................ | 45 | |
15 | - CASH AND CASH EQUIVALENTS.......................................................................................................................... | 46 | |
16 | - FINANCIAL INSTRUMENTS .................................................................................................................................... | 46 | |
17 | - DIVIDENDS / INTEREST ON EQUITY CAPITAL RECEIVABLE............................................................................. | 47 | |
18 | - COMMISSIONS RECEIVABLE ................................................................................................................................ | 48 | |
19 | - INTANGIBLE ASSET ............................................................................................................................................... | 48 | |
20 | - OTHER ASSETS ...................................................................................................................................................... | 48 | |
21 | - CORPORATE AND STATUTORY OBLIGATIONS .................................................................................................. | 49 | |
22 | - PROVISIONS AND CONTINGENT LIABILITIES ..................................................................................................... | 49 | |
23 | - UNEARDED COMMISSIONS ................................................................................................................................... | 52 | |
24 | - OTHER LIABILITIES ................................................................................................................................................ | 52 | |
25 | - EQUITY..................................................................................................................................................................... | 52 | |
26 | - RELATED PARTY TRANSACTIONS....................................................................................................................... | 56 | |
27 | - OTHER INFORMATION ............................................................................................................................................ | 58 | |
28 | - EVENTS AFTER THE REPORTING PERIOD........................................................................................................... | 59 |
REPORT OF INDEPENDENT AUDITORS FOR FINANCIAL STATEMENTS
DECLARATION OF THE MEMBERS OF THE EXECUTIVE BOARD ABOUT THE FINANCIAL STATEMENTS
STATEMENT OF THE MEMBERS OF THE EXECUTIVE BOARD ON THE REPORT OF THE INDEPENDENT AUDITORS
MEMBERS OF THE MANAGEMENT BODIES
Interim Financial Statements - 3rd Quarter 2021
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BB Seguridade Participações S.A.
MANAGEMENT COMMENTS ON PERFORMANCE
Dear Shareholders,
- Seguridade Participações S.A. ("BB Seguridade" or "Company") reported a net income of R$975.8 million in the third quarter of 2021, down 10.9% YoY.
In the 2Q20, in order to contribute to the society with the responses to the impact of the pandemic, the Board of Directors approved a donation capped at R$40 million by BB Corretora to Banco do Brasil Foundation (FBB), aiming the acquisition of food and hygiene, cleaning and personal protection supply necessary for the social aid of the most affected people. Until June 2020, FBB demanded from BB Corretora the disbursement of R$37.9 million and the balance of R$2.1 million was disbursed between July and August 2020, with a total impact of R$26.4 million to the earnings after tax effects, of which R$1.4 million in 3Q20 alone.
Setting apart the aforementioned donation of the 3Q20, which was considered an extraordinary event and had affected the equity income, the adjusted net income in the 3Q21 dropped 11.0% over the same period of last year.
The 3Q21 was negatively impacted by the temporal mismatch in the adjustment of assets and liabilities pegged to IGP- M, related to Brasilprev's defined benefit plans. On a normalized basis, setting apart this effect which is neutral for the result in the long run, the net income would grow 7.1% YoY. In addition, the quarter was negatively impacted by the increase in 5 p.p. of the income tax rate (CSLL), which is valid for insurance and premium bonds companies, according to the Law 14,173 dated July 14, 2021, in force until the end of the year. This increase in taxes reduced BB Seguridade's net income in R$30.5 million, after discounting the positive effect of R$1.6 million related to the revaluation of tax assets of Brasilprev and Brasilseg. If it was not for this effect, the normalized result of 3Q21 would grow 10.2% YoY.
Not considering the normalization mentioned above, the adjusted net income decreased R$120.2 million over the 3Q20, explained by:
- Brasilprev (-R$146.0 million): due to negative mark-to-market result explained by the steepening of the nominal and real yield curve and the temporal mismatch in the adjustment of assets and liabilities of the traditional plans (defined benefit) pegged to IGP-M inflation rate. Brasilprev's result was also impacted by the higher effective tax rate, which amounted to R$10.8 million, due to the temporary increase of CSLL rate, net of a positive effect of R$269K related to the revaluation of tax assets;
- Brasilseg (-R$16.2 million): impacted by the higher loss ratio of life related and rural insurances, and by the increase in CSLL rate, which reduced Brasilseg's result in R$16.5 million.
On the other hand, the distribution segment, notably BB Corretora, sustained the growth dynamic (+R$32.6 million), with higher brokerage revenues supported by the solid commercial performance of insurances and pension plans, and with the improvement of the net investment income. The equity income arising from Brasilcap increased R$10.9 million, boosted by the positive result of hedge in the pre-fixed investment portfolio, partially offset by the negative impact of CSLL rate increase, amounting to R$3.3 million.
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Interim Financial Statements - 3rd Quarter 2021 | ||||||
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BB Seguridade Participações S.A. | ||||||
Table 1 - Adjusted Income Statement | ||||||
Parent | Chg.% | |||||
3Q21 | 3Q20 | |||||
Equity Income | 974,497 | 1,094,029 | (10.9) | |||
BB MAPFRE Participações S.A. (Brasilseg) | 242,185 | 258,346 | (6.3) | |||
Brasilprev Seguros e Previdência S.A. | 119,072 | 265,045 | (55.1) | |||
Brasilcap Capitalização S.A. | 39,633 | 28,715 | (38.0) | |||
Brasildental Operadora de Planos Odontológicos S.A. | 3,591 | 3,427 | (4.8) | |||
BB Corretora de Seguros e Administradora de Bens S.A. | 579,169 | 546,594 | 6.0 | |||
Other | (9,153) | (8,097) | 13.0 | |||
Other revenues and expenses | (1,925) | (960) | 100.5 | |||
Personnal expenses | (3,007) | (2,830) | 6.3 | |||
Administrative and sales expenses | (639) | (607) | 5.3 | |||
Tax expenses | (432) | (496) | (12.9) | |||
Other | 2,153 | 2,973 | (27.6) | |||
Earnings before financial revenues and expenses | 972,572 | 1,093,070 | (11.0) | |||
financeiras | ||||||
Net investment income | 4,021 | 3,925 | 2.4 | |||
Financial income | 4,628 | 3,993 | 15.9 | |||
Financial expenses | (607) | (68) | 792.6 | |||
Earnings before taxes | 976,593 | 1,096,995 | (11.0) | |||
Taxes | (772) | (976) | (20.9) | |||
Adjusted net income | 975,821 | 1,096,018 | (11.0) | |||
Table 2 - Extraordinary Events | ||||||
Parent | Chg.% | |||||
3Q21 | 3Q20 | |||||
Adjusted Equity Income | 974,497 | 1,094,029 | (10.9) | |||
Extraordinary Events | ||||||
BB Corretora: Donation against Covid-19 | - | (1,384) | - | |||
Equity Income | 974,497 | 1,092,645 | (10.8) | |||
In the 3Q21, the holding's other revenues and expenses increased 100.5% YoY, mostly due to a lower volume of revenues from the ADR Level I program (-28.5%), accounted in other revenues, and to higher personal expenses (+6.3%), explained by the collective bargaining agreement that adjusted the salaries in September. On the other hand, tax expenses dropped 12.9%.
The net investment income grew 2.4%, justified by the expansion in the average balance of financial investments and a higher Selic rate.
For more information about BB Seguridade's performance, including the managerial analysis of its investees, please refer to the MD&A, available at www.bbseguridaderi.com.br/en, section Financial Information, option Results Center.
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Interim Financial Statements - 3rd Quarter 2021
#interna
BB Seguridade Participações S.A.
RELATIONSHIP WITH INDEPENDENT AUDITORS
According to the CVM Rule 381/03, we hereby inform that, for the third quarter of 2021, BB Seguridade used the independent audit services provided by Deloitte Touche Tohmatsu Auditores Independentes ("Deloitte"), through a contract maintained by its controlling shareholder Banco do Brasil S.A.
When hiring services not related to the external audit, BB Seguridade adopts procedures based on the applicable law and on international accepted principles that preserve the auditor's independence. Such principles consist of: (i) the auditor should not audit its own work; (ii) the auditor should not perform managerial activities at his client management structure; and (iii) the auditor should not promote the interests of its client.
During the third quarter of 2021, there was a price adjustment of the contract between the controlling shareholder (Banco do Brasil) and Deloitte.
Company | Contract dates | Service | Fee (R$) | |
Start | End | |||
Audit services on the financial statements of Banco do | ||||
Banco do Brasil S.A. | 03/22/2019 | 03/22/2022 | Brasil Conglomerate, prepared in accordance with | 18,199,627.46 |
IFRS and accounting practices adopted in Brazil | ||||
Regarding BB Seguridade´s investees, there was no changes related to the signature, cancelation or modification of contracts with Deloitte.
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BB Seguridade Participações SA published this content on 08 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 November 2021 10:17:09 UTC.
