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BB pulls in 26% more from insurance, pension units in 2008

Bnamericas Published: Thursday, February 19, 2009
Brazil's federally controlled Banco do Brasil ( BB) took in 1.51bn reais (US$648mn) in what it terms added value from its insurance, private pension and savings bond operations in 2008, up 25.9% from 2007, the bank said in its latest financial statements. BB calculates the value-added figure as equity income plus revenues from fees, commissions and asset management. This translates into fourth quarter contributions to BB's bottom line of 416mn reais compared to 274mn reais in 4Q07, an increase of 51.8%, based on calculations made by BNamericas using the bank's financial statements. In 2008, BB had 513mn reais in equity income from these businesses, up 61.3% on 2007. On the year, written auto premiums totaled 1.02bn reais and health had 165mn reais, while life and other insurance premiums came in at 1.48bn reais, up 17.6%, 26.9%, and 13.3% respectively over 2007. The group's pension plans had 3.84bn reais in contributions, increasing 19.6% on 2007, while savings bonds increased contributions 7.12% to 2.03bn reais. Overall, the businesses had a combined ratio of 77.3% in the fourth quarter, improving from 84.0% in 4Q07. For auto coverage, this was 92.6%, worse than 87.9%, in the same comparison. Life and other coverage saw the ratio improve to 65.1% from 80.6%. BB operates in the insurance market through a mix of subsidiaries and joint ventures. Recently passed law MP 443 could give the bank an opportunity to reorganize its holdings in these segments without explicit congressional approval for each acquisition. The bank bought out its former partner in August 2008 and now fully owns P&C and life insurer Aliança do Brasil. BB has 70% of auto insurer Brasilveículos and SulAmérica has the rest. BB holds 49.99% of BrasilPrev, while Principal Financial Group (NYSE: PFG) has 46.01% and federal development agency Sebrae 4%. The bank owns 49.99% of savings bond company Brasilcap, with other stakes held by Icatu Hartford, SulAmérica and Aliança da Bahia. BB owns 49.92% of Brasilsaúde, with the majority stake held by SulAmérica. BB also owns 12.1% of export credit insurer SBCE. BB reported profits of 2.94bn reais in the fourth quarter and 8.80bn reais in 2008, which make these insurance, private pension and savings bond stakes amount to 14.1% of its quarterly profits and 17.2% of its annual total.

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