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SulAmérica H1 net income shoots up 214%

Bnamericas Published: Friday, September 01, 2006
Brazil's second largest insurance group SulAmérica reported a 214% rise in first half net profits compared to the same period last year. First half net income came in at 100mn reais (US$46.8mn) compared to 31.9mn reais in 1H05, the insurer said in its latest financial statements. ROE climbed to 12% in the first half compared to 4% in 1H05. The combined ratio ducked below 100% in the first half, improving to 99.5% from 104% in 1H05. SulAmérica's loss ratio improved to 72% in the first half compared to 79% in 1H05, helping to prop up profits despite the slight 1.56% increase in written premiums to 3.25bn reais. Auto premiums grew 14.6% to some 1.05bn reais, while the number of vehicles insured expanded 5.7% to 1.6 million. SulAmérica's health portfolio, which focuses on corporate clients, increased a mere 0.8% with 1.68bn reais in premiums. Despite flat billing, the health loan ratio improved almost 10 percentage points to 78.5% in 1H06 from 87.8% in 1H05. Local press reported in late July that SulAmérica was negotiating the sale of its individual health insurance portfolio to local health insurer Golden Cross. Rumors say the transaction only awaits approval from the appropriate authorities. A SulAmérica spokesperson, however, told BNamericas that the insurer does not respond to market rumors. SulAmérica increased technical provisions 12.4% to 3.9bn reais. Health coverage comprises 51% of SulAmérica's portfolio, followed by auto with 37%, commercial risk with 7% and life with 5%. Contributions to SulAmérica's private pension plans stood at 81mn reais in the first half. SulAmérica reached an agreement in June with French financial services group AXA (NYSE: AXA) whereby AXA directs international insurance clients towards SulAmérica for high-risk P&C, transport, equipment and infrastructure coverage in Brazil. The partnership has already pulled in 240mn reais in premiums from new clients. AXA sold its Brazilian subsidiary to local insurer Porto Seguro in December 2003. Dutch financial services group ING (NYSE: ING) owns 49% of SulAmérica.

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