||BB MAPFRE SH1
||MAPFRE BB SH2
||IRB - BrasilRE
||Principal Financial Group
Aliança da Bahia
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BB Seguros Participações S.A. (BB Seguros)
BB Seguridade's wholly owned subsidiary BB Seguros was created to hold direct equity investments in the companies that comprises the underwriting and accumulation arm of the company. Currently, BB Seguros participates directly in the capital of the following companies: BB MAPFRE SH1 and MAPFRE BB SH2, jointly named Grupo Segurador BB E MAPFRE; Brasilprev; Brasilcap; IRB-Brasil; and Brasildental.
Grupo Segurador BB E MAPFRE
As a result of the 20-years term strategic partnership between BB Seguros and MAPFRE firmed in 2010, Grupo Segurador BB E MAPFRE operates in the Brazilian insurance market, notably in the segments of Life, P&C and Auto sectors, selling its products through the Banco do Brasil distribution network (banking channel), independent brokers (broker channel) and non-banking partnerships (affinity).
Grupo Segurador BB E MAPFRE is structured in two holding companies, BB MAPFRE SH1 and MAPFRE BB SH2, described as below:
BB MAPFRE SH1
MAPFRE BB SH2
BB Seguridade holds, through BB Seguros, a 74.99% stake in the total capital of BB MAPFRE SH1, holding 100.00% of the preferred shares and 49.99% of the voting shares.
BB MAPFRE SH1 is a holding company focused on the Life, Mortgage Life and Rural insurance segments, which are essentially distributed for Banco do Brasil clients.
In turn, BB MAPFRE SH1 holds the total shares of the following companies:
- Companhia de Seguros Aliança do Brasil S.A. - a privately-held corporation which operates throughout the national territory in the life, mortgage life and rural insurance segments distributed through the banking channel.
- MAPFRE Vida S.A. - a privately-held corporation, operates throughout Brazil in life insurance segments through the independent broker channel;
The following topics show a brief description of the main products offered by BB MAPFRE SH1:
- Life insurance is a product focused on individuals which assures financial protection to the beneficiaries, chosen by the policyholder, in case of death (natural or accidental), or permanent disability of the insured. If a claim occurs, the insurance company pays the amount agreed in the insurance policy to the beneficiary. Differently from the more complex products sold in other countries, the life insurance sold by BB MAPFRE SH1 is a term life insurance without accumulation feature. If the customer fails to make the monthly payments, the coverage is suspended without any amount being reverted to the policyholder.
- Credit life insurance is a life insurance policy intended to pay off a borrower’s loan in case of death of the insured. This type of product is designed to protect both the lender and the insured dependents, preventing them to inherit this liability. This product is already quite widespread in Brazil and it is expected to grow with the expansion of the loan portfolio. The main beneficiary of this type of product is the lender.
- Mortgage life insurance is an insurance policy intended to pay off a mortgage in case of death or disability of the insured. The insurance policy gives the guarantee that the family will keep the property and the bank will receive the full payment of the mortgage debt. A mortgage life insurance also protects against physical damage to the insured property. The premium is calculated on a monthly basis and varies according to the outstanding loan balance and the borrower’s age.
- Rural insurance encompasses a group of three main products: (i) the crop insurance, which protects the farmers from weather hazards and falling prices of the crop; (ii) the rural lien insurance, which protects the asset given as collateral for a rural loan; and (iii) the rural producer credit life insurance, which is an insurance designed for farmers intended to pay off the rural loan in case of death of the insured.
In this company, BB Seguridade holds, through BB Seguros, a 50.00% staket in the total capital, holding 51.00% of the preferred shares and 49.00% of the voting shares.
This holding company concentrates the business related to Auto and P&C insurances, besides those carried out through affinity channels even if the segment is also operated by BB MAPFRE SH1. In turn, MAPFRE BB SH2 holds the total shares of the following companies:
- Aliança do Brasil Seguros S.A. - a privately held corporation that operates nationally in the property and casualty insurances segment through the banking channel.
- Brasilveículos Companhia de Seguros S.A. - a privately-held corporation that operates nationwide in Auto insurance through the banking channel.
- MAPFRE Seguros Gerais S.A. - a privately-held corporation that operates throughout Brazil in P&C insurances sold by independent brokers, as well as other insurance policies of the Grupo Segurador BB E MAPFRE sold in the affinity channel.
MAPFRE Seguros Gerais S.A. also controls the following company:
- BB MAPFRE Assistência S.A. - a privately-held corporation whose purpose is to provide assistance services, complementary to the activities of insurance companies.
The segments operated by MAPFRE BB SH2, specially large-risk and Auto insurance, require a more specialized sales force, which results in a greater concentration of business with the independent brokers when compared to the banking channel.
The following paragraphs show a brief description of the main products offered by MAPFRE BB SH2:
- Property insurance is a type of insurance sold to individuals or companies that provides protection against risks to properties, linked or not to loans. The main products of this segment are: home insurance (covers the risks related to a private residence), business insurance (covers the risks related to a property that belongs to a company) and insurance for machinery and equipments (protection to a property that belongs either to individuals or companies).
- Auto insurance is an insurance policy designed to provide protection for vehicles, of commercial or particular use, against theft, physical damage and/or bodily injury resulting from traffic collisions, besides other assistances provided to the policy holder. The auto insurance market is dynamic and competitive, what benefit the client to shop around for the best price before closing the deal. Besides that, the renewal of this kind of policies occur on an yearly basis, what makes easier for the competitors to go after the clients and makes it difficult to establish and strengthen a long term relationship with costumers, unlike other segments.
- DPVAT is a mandatory insurance in Brazil that covers personal injury caused by vehicles to passengers, drivers or pedestrians. DPVAT offers coverage for three natures of damage: death, permanent disability, and reimbursement for medical and hospital expenses. DPVAT is funded by vehicles owners through annual payments. Out of the amount collected, 45% is transferred to the Ministry of Health (SUS), to fund the hospital care of victims of traffic accidents across the country, and 5% are transferred to the Ministry of Cities, for exclusive use in programs directed to the prevention of traffic accidents. The remaining 50% are directed to the payment of claims.
BB Seguridade operates in the private pension plans segment through its affiliate Brasilprev, in partnership with the US company Principal Financial Group (PFG). In 2010, this partnership was renewed for 23 years. As a result of this new agreement, BB Seguros increased its total stake in Brasilprev from 49.99% to 74.99%.
Pension plans are growing in popularity in Brazil, due to increasing life expectancy, level of financial education and tax benefits for individuals.
Nowadays, there are three types of private pension plans in Brazil: Free Benefit Generator Plan (PGBL), Free Benefit Generator Life Plan (VGBL), and traditional plans, which are no longer sold. The private pension plans in Brazil are described as follows:
- PGBL is recommended for people who declare income taxes in the complete form, as the contributions are tax deductible up to the limit of 12% of the annual gross taxable income. In this modality, in case of redemption or benefit received, the income taxes are calculated on the amount redeemed or income received.
In addition, the participant may choose to be taxed either in the progressive tax system or in the regressive tax system when buying a pension plan.
- In the progressive tax system, the annuity is taxed when money is received according to the “Tabela Progressiva Mensal” (Montlhy Progressive Table) made available by the Brazilian Internal Revenue Service. The tax brackets can vary from zero to 27.5% according to the annual wages with adjustment in the annual tax statement. Redemptions are taxed at 15% regardless the amount redeemed, with adjustment in the income tax declaration according to the Monthly Progressive Table.
- In the regressive tax system, in the event of redemption or annuity received, tax is withheld and is definitive, with no possibility of adjustment in the annual tax statement. The tax rates are determined by the length of stay of each inflow in the plan, starting at 35%, with gradual reduction every two years, reaching a level of 10% after 10 years.
- VGBL is recommended for those who declare income taxes in the simplified form or is exempt, since the contributions are not tax deductible. As in PGBL, the customer can choose either the progressive or the regressive tax system. In this modality, the tax benefit is that in case of redemption or annuity received, income tax will be charged on interest earned only. Another advantage of the VGBL is the simplicity of the procedure for the inheritance transmission, being suitable for customers who wish to make a succession planning. In this product, the customer can determine who will be the beneficiaries after his death and, unlike other assets, funds invested in VGBL are not part of the inventory, which is a procedure with legal costs and attorney's fees that can consume part of the wealth received by the heirs.
- Traditional Plan guarantees a fixed interest of 6% plus inflation (IGP-M) or TR rate per year. These plans are no longer sold and year-by-year become less important in Brasilprev AuM.
BB Seguridade offers premium bonds through its affiliate company Brasilcap, in a partnership with Icatu and Aliança da Bahia. In this company, BB Seguros holds a 66.67% total stake, comprising 49.99% of its voting shares.
Premium bonds are mainly sold through the bancassurance channel and it is an alternative way to accumulate reserves, with term and interest rate pre-fixed, entitling the bondholder to participate in lotteries. Lottery premiums are distributed through periodic draws, being most frequent the usage of a combination of numbers in pre-determined series, based on the Brazilian Official Lottery.
Depending on the type of premium bond and the payment method chosen, the load fee and lottery quotas can exceed 10% of the amount collected. The amount intended to cover lottery, administrative expenses, and operational and acquisition costs are paid by these quotas.
In case of early redemption, there is a vesting period (12 months in most products). Beyond the vesting period, penalties will be applied if the bondholder decides for early redemption, which will decrease as the bond approaches to maturity.
In 2013, BB Seguridade, through its subsidiary BB Seguros, acquired a stake in the capital of IRB-Brasil, marking its entry into the Brazilian reinsurance market. In the opportunity, IRB-Brasil had underwent a process of privatization and capital increase. By the end of this process, BB Seguros became to hold 20.43% of the total capital and is part of the IRB-Brasil control block, together with the National Treasury and other large private Brazilian insurers.
On July 31st, 2017 IRB-Brasil went public with its common shares listed in "Novo Mercado" of B3 - Brasil, Bolsa, Balcão, after a Secondary Public Offering of Shares. During this process, BB Seguridade, through its subsidiary BB Seguros, sold 16.206.387 common shares of IRB Brasil, holding nowadays 15.23% of its total capital.
As a result of the partnership between BB Seguros and Odontoprev, Brasildental was created in 2014 to develop private dental care plans under the BB Dental brand. In this company, the BB Seguros holds 74.99% of the total capital, which is composed of 49.99% of the voting shares and 74.99% of the preferred shares.
BB Corretora is a wholly-owned subsidiary of BB Seguridade whose corporate purpose is the brokerage of P&C, Life and Health insurances, Premium Bonds, Pension Plans and the administration of assets, owning the rights to intermediate the distribution of these products in Banco do Brasil channels, through a 20-years term agreement signed in 2013.
Using the physical, technological and personnel facilities of Banco do Brasil to execute its activities, BB Corretora has a low complexity business model with little capital needs. On the other hand, BB Corretora reimburses to Banco do Brasil the costs incurred by him in this distribution process.
Updated on March 10, 2017.