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Edited Transcript of PSSA3.SA earnings conference call or presentation 6-Nov-19 1:00pm GMT

Q3 2019 Porto Seguro SA Earnings Call

Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Porto Seguro SA earnings conference call or presentation Wednesday, November 6, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Marcelo Barroso Picanço

Porto Seguro S.A. - Director General of Insurance, Investments & IR and Member of Executive Board

* Roberto de Souza Santos

Porto Seguro S.A. - CEO & Member of Executive Board

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Conference Call Participants

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* Eduardo Nishio

Brasil Plural Corretora de Cambio, Titulose Valores Mobiliários S.A., Research Division - Financial Sector Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. And at that this time we would like to welcome everyone to Porto Seguro's Results Conference Call for the Third Quarter '19. Today we have with us Mr. Roberto Santos, the company's CEO; Marcelo Picanço , Vice President of Insurance Investments and Investor Relations; Celso Damadi, Controller and Vice President of Finance and Support; Lucas Arruda, Head of Strategy and Investor Relations; and (inaudible), the IR Manager.

We would like to inform you that this event is being recorded and simultaneously translated. (Operator Instructions)

We have a simultaneous webcast that may be accessed through Porto Seguro's website at www.portoseguro.com.br/ir. At this address you can find the banner called Conference Call. This will lead you to the platform. Questions can be made via webcast using the Ask the Speaker icon. Our -- these questions can be sent at any moment. And they will be responded to in the conference call.

Before proceeding, we would like to mention that forward-looking statements made during this conference call referring to the business outlook, operational and financial goals are based on the beliefs and assumptions of Porto Seguro's management as well as on information currently available to the company. These statements are no guarantee of performance. They involve risks, uncertainties and assumptions as they relate to future events and, therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results, causing them to differ materially from those expressed in the forward-looking statements.

I would now like to give the floor to the company. You may proceed.

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Roberto de Souza Santos, Porto Seguro S.A. - CEO & Member of Executive Board [2]

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Good morning to all of you. And thank you all for participating in the Porto Seguro conference call referring to the third quarter 2019.

We go to Slide #4 where we highlight the main highlights. We began the second half of the year with an advance in the expansion of business. The Property & Casualty insurance increased 9%, while Health, Life, Financial Risks and Credit Operations had a double-digit expansion. Auto insurance had a slight drop in premium due to the stagnation of the economy. But we have had an improvement vis-à-vis the first 2 quarters of the year. We're optimistic with the resumption of growth in the auto insurance because of an expressive evolution in other fields, allowing us a diversification in our business and an increase in revenues and profitability. In the insurance operation we maintain the loss ratio control. And we continue to reduce administrative and operating expenses to obtain efficiency gains. Thus our combined rate remained at 1.5 percentage points better than the average in the last 5 years.

The other businesses have benefited through consistent results and credit operations. And due to the reduction of costs associated to Conecta, new businesses such as the Carro Fácil, the lease operation, have undergone a good evolution and have become [relevant] in our operation.

We have had an increase in our financial investments, enabling us to have the highest net earnings in the last 10 years. In the last few months we have intensified our commercial actions such as discount campaigns and by dividing the auto insurance in 10 installments through the Porto Seguro credit card. We're also launching new services such as Conquista, an investment platform to market the products in our portfolio. And we have several activities to foster the growth of our business, but always maintaining a focus on growth and profitability aligned to the needs and preferences of our customers. I would now like to ask Marcelo to speak in greater detail about the financial and operating results of this quarter.

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Marcelo Barroso Picanço, Porto Seguro S.A. - Director General of Insurance, Investments & IR and Member of Executive Board [3]

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Thank you, Roberto. And once again, thank you for participating in our conference call.

On Slide #5 we speak about our operating results for this quarter and for the 9 months of the year. In the quarter we accelerated the expansion into revenue. We are still at levels that are below our historical levels. But the third quarter begins to show, because of our mixing, a more robust growth for the entire year. And in the auto business we did have a minor reduction vis-à-vis the other quarters of the year.

We have an expansion that evidently is different in terms of insurance, which is our most encompassing portfolio. And this is where our revenues tend to come from. But the expansion in the financial and service area is also very important.

On slide -- on Page #6. I would like to highlight that this quarter we did have an increase in the combined rate vis-à-vis the third quarter '18. And but there is an important remark that we make here. The results of the third quarter, especially in the loss ratio and premiums in auto represent a historic level. We got to an amplified combined rate in this third quarter of 87.1%, below our historical average that generally stands at 89% or 91%, generally about 90%.

Now this increase in this amplified combined ratio is still within what we believe to be a healthy long-term and strategic level. We have no problems in term of margin when it comes to the levels that we are operating with. And this of course when compared to the third quarter of '18, that was spectacular. And we do have that vision that seems to show that we have a deterioration. But the historical average is better than it has been for many years.

I would also like to highlight that in Property & Casualty and dental insurance and others we have achieved very high rates, especially in the entrepreneurial and homeowners market. And we have a strong share. Of course much more to achieve. And the company will tend to grow more in terms of insurance. It is a very relevant brand and will have a further expansion in services.

Now all of these brands have a greater potential for penetration, 10% or 16%, in terms of interest to shareholders in auto, 30%. Now in some of them the market penetration has been lower. But our market share has a great deal of room to grow regardless of the growth of the market. Now regardless of the growth of the market or not, we still have a great deal of room to grow.

When it comes to the consolidated results on Page #7, we have attained a level of return on average equity despite some drops in the loss ratio which was the same level we had some years ago. And despite all of these minor troughs, we are operating at 90% of results, which in our vision is a very robust level compared not only with the Brazilian market but with the best performers in other markets when it comes to insurance. I would like to highlight that the insurance market does not operate with leveraging.

In Slide #8 I would like to refer in greater detail to our performance in several lines. In auto insurance, a slight drop. A minor negative issue. And we're focusing to reverse this trend. There is a very important aspect here. The reduction in loss ratios that was relevant in the last quarters, especially because we have a greater confrontation in the southeast, this is a good news for the country as a whole to have this reduction in the loss ratio. And of course the market is ever more competitive.

Our margin therefore is somewhat lower vis-à-vis the year 2018. And once again, we continue to maintain that 27% market share in the market, which is very relevant. And the losses of less than 1 percentage point vis-à-vis the year 2018. And we see a trend for improvement on this front based on the recent trends. This reduction will no longer repeat itself. We will be dealing with greater stability because of the situation in the country, specifically when it comes to auto insurance.

We have had a change of behavior in terms of the drivers. And what we're going to do in the auto insurance is to seek expansion through an organic growth. And of course we do have the possibility of carrying out acquisitions.

In terms of Health, an increase of 4%. And I would like to refer to this expansion which is higher than the official inflation and the general price index. And we have a very sound growth and are operating ever more strongly in the small- and medium-size enterprises. Now the margin here is more interesting and more sustainable. Where the price struggle is less strong we have invested more in SME because this is our vocation of being a retail company. And thanks for this, we have obtained a greater expansion in this line item avoiding that price war.

In the part of P&C, the growth is 7% for Porto Homeowner. All of this leveraged by some sales campaigns. And we have maintained our growth leadership as always. And good news is that reversion in the growth of Itaú that has had very negative or slower growth. And you can see that we have had a positive growth, perhaps not as high as we would expect, a growth of 3%. And we are market leaders once again with 27% of market share. And this is a line where we have also had an expansion. We work not only to increase our market share but we also focus on this.

So as you can see, we have had relevant growth. But we continue to focus to accelerate this process. In light, a highly robust growth of 27.5%. And we believe that once again this is our vocation of working in the retail market. The Brazilian market has become more mature. And we do not believe that with a single product we can resolve the problems of all of our clients. And that is why we are presently working with a segmented model of solutions, which of course poses a great deal of difficulty. And we're offering greater facilities to our brokers to also offer auto insurance. We have 22,000 brokers working in terms of insurance.

And this is a product, Life Insurance, that is sold by very few specialists. And we do believe there is a great deal of room for growth in terms of consultancies. And we believe that this will be very effective for us going forward. Let's speak a bit about the loss ratio and perhaps give you more specific information associated to some variables. Despite the increase of loss ratio of approximately 3% between the third quarter '18 and the third quarter this year we continue to be below the historical average in the last 5 years in the auto segment. And once again, we're quite comfortable with the loss ratio here.

I would also like to focus on the efforts that we have made to reduce our administrative and operational expenses. If we look at the long-term, this is a work that will require a great deal of coherence and focused efforts. For some time already the company has been reducing 3.5 percentage points at least over the last 4 years, 1 point per year. And we -- when we compare this with inflation and when we look at the nominal rate, and -- so that you can understand that this is not based only on growth. You have to look at the rate and the nominal figures.

Now, when we compare this with the 9 months 4 years ago, we have a nominal growth in insurance that is significant of more than BRL 100 million, minus 6%, within an accrued inflation of practically 20%. So this is a gap of 26 percentage points that we would have in our expenses. And we have had a growth of revenues. But of course a decrease in expenses. This does not mean that this process has been concluded. It is an ongoing process. But it is very important to highlight that we shouldn't set aside this work. That is something that requires permanent focus. And of course it's very relevant work.

In Slide #11 we would like to speak about other businesses, not necessarily insurance. The Conecta solution took place more than a year ago. That costs related to this have decreased significantly. But we have a significant expansion when it comes to net earnings. Total net earnings were BRL 29 million for the 9 months. And the recurring net earnings are BRL 191 million, 9 months accrued. And the return on capital of these lines stands at 22%.

You can see that this is a interesting return. And we have some businesses that are under a [frank] expansion, enabling us to obtain these figures, considering the relevance of the credit cards and the consortia. So we have a very attractive profitability. And of course this is a very relevant business.

Now, the real estate is also very important. It is relevant in Brazil. We are close to achieving BRL 2 billion per month. And we have had more than BRL 20 billion of invoicing or net profit per year. So this is not a minor business. And the expansion was approximately 10% during this period. We're permanently making adjustments in terms of this. And of course taking very prudent measures for this expansion. But we do have a strong focus on this product.

When it comes to the diversification of our business, we have had a reduction of -- well, an evolution, excuse me, of revenues in all of our businesses, not only the auto insurance but other businesses as well. This is not something that we can change suddenly. We need to have a very consistent process. And of course we have to make sure that we do not lose our market share.

On Page #13. And besides other businesses, I would like to highlight some of the initiatives that we have undertaken, new areas of consumption and a new product portfolio. We're seeking combinations of financial products and insurance services and financial products. And of course with a strong focus on insurance. We're working on auto insurance and credit cards with a discount in insurance once again to make this more acceptable to some of our customers.

We're working with Porto Seguro Auto Essencial to optimize the service. Also enabling the client to buy this we have Conquista, which is a digital sales and relationship platform based on client's needs and objectives. And bases itself on the performance of brokers and certified financial planners. And of course this represents an increase in cross-selling and an increase in relationship with our clients so that none of our products are left out.

Our clients can also have the homeowners insurance, life insurance. And we are able to carry out these sales by leveraging the performance of the brokers and of course eliminating the red tape in the company. We also work on traditional products that necessarily require innovation. It's not only about opening new businesses. We have to streamline the existing businesses. We're working between the spare car and transport app, enabling the customer to pass by a car rental if they have to leave their car in the garage. There is a certain cost efficiency in this. And sometimes customers don't want to have to drive their cars for only 3 kilometers and it is more effective to use a transport app.

We also have a D&O Insurance and Professional Civil Responsibility which has been marketed quite successfully. This is an old product. We carried out a partnership with [AT], which is an insurance company that renders worldwide expertise to this operation. We also had Reppara, which is the first subscription service for emergencies at home. Whenever one of our customers needs this, they don't necessarily have to have insurance with us. For BRL 19.90 a month they can contract these services from Porto Seguro.

And of course we're not stopping here. We have constant innovation. And we are a service and a pension company, and we make sure that all of this operates very efficiently. We have financial services, insurance and we also have the bike insurance for all types of bicycles. Now this is a new trend in terms of mobility. It has become very clear. And we have come up with this solution.

To speak about our investment results and allocation. In this quarter we had positive result of 2.7% of profitability equivalent to 175% of the CDI. Now this is a classical measurement in the market. Now if we look at the nominal value for the last 5 quarters, although we work with the lowest CDI in history, we had a very important profit in 2 important lines. We had an increase in our securities a year ago. We decreased our position from 44% to 29%. This was an important movement. But there was also a certain movement in terms of our shares, something that we did strategically for the long term. Our holding period is not 3 months or a year, it is of many, many years. And we have increased our exposure and we have added a new portfolio in BOVESPA with very positive results.

Now given the positioning of the shares that the company has, all of this has been done in a very conscious way. Our return is above the reference rate per quarter. And it is important to mention this because oftentimes the market expects the results of 175% in CDI. And that has not been our historical yield in the last 2, 2.5 years.

A technical but very important issue that I would like to explain to you is the effective tax rate that decreased by 11 percentage points vis-à-vis the third quarter 2018. And there is an explanation here for this drop. Reduction in social contribution rate, lower deferred tax credits from Conecta and the results of the holding. Because of a reason of flexibility, most of our results are in the holding where we have important results. And this has been a quarter where the strategies allocations had a very good yield. So our net financial gain was higher here. And the CDI result is a growth result as it is not net. And as you can see, we have had a very good financial result for the holdings. With this, our final rates went from 44% to 27% this quarter. And (inaudible) is 44%.

On Page 16. Our consolidated results, net earnings and return on average equity. For the company as a whole we have the same ROAE as in the previous quarter last year. We had minor oscillations in terms of insurance. So we do continue on with a stable [cost].

And I would not like to take the profitability to our long-term profitability. Oftentimes we see discussions on the company's ability to have a profitability. That is different from the profitability from CDI. So what we have here is a very important factor. The level of profitability that has maintained its stability through times despite the CDI. The average CDI reaching 40% at 6.2% for 2019. And when we speak about profitability, we had the higher profitability in the 9 month of 2019 vis-à-vis the lowest CDI rate historically. So even when the CDI dropped, the profitability of the company continued, which is not very coherent with the data. And the assumption here is that other variables will not change.

What we have informed the market through the years is that the company has to maintain a good financial situation. If our income statement dropped we have to show that we have worked on enhancements on reducing the loss ratio and other taxes that we have shown you. And the combined rate is one of the highest. And it has remained more stable, between 89% and 91%. If you base yourself on all of the points of the 10-year series. In the last 10 years we have an amplified combined ratio with a CDI of 6.5%. So it wasn't the financial statement that has led us to this. And if we compare it to the results of 2010, we had a result of 87.6%, a very strong result as well.

Having 18.6% of ROAE. And the return on average equity was also [down] in 2006 with a CDI of 9.4% and this year with a CDI of 6.2%. Now this is a very simple comparison. But I believe it shows you the soundness and the capacity of the company to do this. We do have a relevant concentration in auto with 69% of the premium in life, in property. This is where we have the most limited margins. And as the company expands its other businesses at a rate 2 or 3x greater than the Auto segment, we will be able to offset that minor loss in our Auto with other product lines.

Having said all of this, and after giving you this bird's-eye view of the short-term results and the strategic outlook that we have for the years going forward, I think we can have a more in-depth discussion at present. And therefore I would like to open the floor for questions and answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from [Jovanna Hoza] from Bank of America.

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Unidentified Analyst, [2]

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I have 2 questions. During this quarter we see that you still have a drop in auto but with a better account. If you could explain to us which is your vision of competition. And well taking into account the great competition that exist in the auto segment and which is your outlook for the year 2020. And then I will pose my second question.

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Roberto de Souza Santos, Porto Seguro S.A. - CEO & Member of Executive Board [3]

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This is Roberto speaking. Our reading is positive when it comes to the scenario of complexity in the auto segment for the coming month. In fact, what we perceive is the recent movement of market concentration with the exit of one of the great players that has transferred the portfolio to a smaller player. And we detect this as being an opportunity. The player that acquired the portfolio did not have a business volume that would be strong enough for full dedication. And even though this player has a greater portfolio, the profitability of having pricing errors increases a great deal. And of course this will hamper the market.

Now with this player with a smaller portfolio this poses a positive scenario for us. Now it is good for the market as a whole and specifically when speaking about Proto Seguro, we see this very positively. Some brokers are seeking us out, attempting to set up partnership. They did like the former company. And they haven't gotten used to the new company. So this generates several opportunities. This is the scenario.

And another important issue is that the movement towards the reduction in the average ticket that we have observed in the last month. Already last year we perceived a retraction. The prices capture the reduction in loss ratio or loss frequency. And what we see is a reduction in the average ticket that we have, dropping to a healthier level. And our reading in general is optimistic when it comes to the competitive scenario in the auto segment.

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Unidentified Analyst, [4]

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That's very, very clear. My second question refers to the share of financial businesses, 20% for the second quarter. And it was also 16% in the third quarter '18. Which will be the evolution of the share of these business lines? And which is the outlook for financial business going forward? We see that there is a growth in private credit in the market. So which is your outlook in this segment?

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Unidentified Company Representative, [5]

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We do have some fluctuations in results. And we have oscillation of results in other lines. But strategically, we are quite optimistic with this growth. The growth of our other businesses we have provisions and an oscillation in provisions. And I will explain this. Where we speak about a product like a credit card for example, we have CDC with excellent profitability. It has undergone several adjustments during this last year and half. This of course decreased our growth and perhaps hampered our earnings as well.

This lower function of risk of course has an impact on profitability as well. And we're discussing ways to grow more sustainably and in a more robust way, especially in products like credit cards that are an important leverage when it comes to relationship with our clients. And we want to use this mechanism to facilitate sales, to facilitate the payments of our clients. It is a strategic mechanism for us. And that is why we are investing in this additional product. And I think we're quite comfortable with it. But we did have a moment of adjustment and fluctuation that was significant. The trend is to have an increase in our profit share going forward to have something more recurrent and consistent as we have made some adjustments along the road. And our expectation at present is to have more relevant profits.

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Unidentified Analyst, [6]

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Therefore you are comfortable with your model of provisioning. And you shouldn't have further adjustments. And evidently adjustments are done permanently. But the last adjustments that were made have already allowed you to have a more adequate level of provisions.

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Unidentified Company Representative, [7]

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Yes, yes, Jovanna, we are comfortable. And of course, if we have a greater expansion we will have learning. And we have to expand this to other target audiences. And we want to have potential clients for other businesses in the company as well. We're not thinking only of selling credit cards and stopping there. We believe that there can be greater synergy. And of course there will be fluctuations through time. And we will have to make different adjustments. We tried to work through the digital path. It was not possible because of fraud.

Now if we speak about the coming 2 or 3 years, quarter-on-quarter the trend is for the share not only for the credit card but also the financing company and consortiums to grow because we think that we have a great deal of room to grow in terms of market share. We do have a good product to compete with large institution as acknowledged by the media and by clients and specialists.

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Operator [8]

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The next question comes from [Cardiana Martin] from Citibank.

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Unidentified Analyst, [9]

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I would like to better understand what happened with the premium for insurance that have increased. And which was the dynamic that happened? Is it the change of mix?

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Unidentified Company Representative, [10]

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When we compare ourselves to 2 months ago in terms of the fleet, we had a growth of 10,000 vehicles. I think you're speaking about the second and third quarters of 2019. There was a reduction of 140,000 vehicles. And perhaps the greatest difficulty was in competitiveness. This quarter we made readjustments. We worked with the price, with platforms. And at the end of the quarter we observed a more positive growth trend.

We did have a reduction, that drop in the average ticket, wasn't simply a reaction to price, it's due to the adjustments that we have, referred to adjustments in the technical part. When we end the cycle for the 12 months we had a technical reduction.

And in terms of the fleet reduction, it was a more typical quarter. And we carried out significant adjustments in the operations. And at the end of the quarter, we have observed a recovery, a good reaction.

Our expectation is to have an expansion in our fleet going forward in terms of premiums and in terms of fleet. So we don't control what will happen with the risk in 6 months. But if we maintain the present day levels, we don't expect to have further cuts in the tariff. And we're going to work with an expansion in premiums and in the fleet.

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Operator [11]

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The next question comes from [Mr. Eduardo].

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Unidentified Analyst, [12]

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I think the call was very clear in terms of your long-term vision. I do have some questions. You had an excellent evolution in terms of your administrative expenses in the last few years. Do you think that there's still more room? You have had 1 percentage point drop per year. And in other businesses, in terms of diversification, you also had a very good evolution. If you could give us more color in terms of what you are doing. If you can speed the part of Life. If you could speak about the new players.

And if you are doing something different from the market. The market is working with more vertical strategies. And I would like to know which is your strategy in Health and in Life where you have had a growth. And if you believe there are other opportunities to speed up growth in these businesses.

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Roberto de Souza Santos, Porto Seguro S.A. - CEO & Member of Executive Board [13]

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This is Roberto. I will respond to the first question. And then Marcelo will refer to Health and Life.

When it comes to our performance and operating efficiencies, we did achieve a relevant efficiency in the last 2 years. And as we mentioned in the call for the second quarter, we still had further opportunities for reduction. And I will maintain what I said. This type of work is not very speedy work. We have several open fronts in the company. And what we have underway at present is a new front for digital transformation. And the goal -- so part of it refers to sales. But 80% of our efforts are geared to an operating efficiency.

Simply to give an idea, about 30 days ago we launched the possibility of working in terms of assistance, not only for automobiles but for homeowners and servicing credit cards through WhatsApp, through WhatsApp lines. And this type of assistance can be a 100% automatically. And once again, the acceptance of the clients in terms of this too has been surprising. So it is our understanding that we're working with figures for 2020 that will have a significant improvement. We're not satisfied with the industry or the rates that we have presently at Porto Seguro. We want to improve on this.

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Marcelo Barroso Picanço, Porto Seguro S.A. - Director General of Insurance, Investments & IR and Member of Executive Board [14]

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And I will respond to the second part. When it comes to other businesses -- and thank you for your interest in the company, Life and Health are segments in which of course we're interested in growing in a healthy way. Let's speak about the Life segment. We have more digital platforms. We have Conquista itself. This volume so far is not representative. But the app show us that it isn't the digital world against the broker, it is the digital world favoring brokers. And of course we have to have the human presence. And we have worked a great deal with our brokers, our specialized brokers. We also work with nonspecialized brokers with a significant focus.

The second quarter last year was very difficult in terms of Life. Now once again this is a product where we would like to grow strongly in terms of the [extraction] of our channels. And we're working with specialized brokers that only focus on the sale of Life segment for higher tickets, with a solution that is very similar to the United States. We are selling based on the needs of the clients and with more solutions for the long term.

In terms of Health, we have several opportunities. And what is being said in the Health market is the problem of individuals and the problem with prices. And there are problems in the large companies as well where there is an irrational struggle for prices with very limited margins. And of course we do want to work with smaller companies with good margins and working on individual insurance.

We're beginning to work on the small- and medium-size enterprises. This is still a new world for us. And well there are several M&A opportunities here in Health. In Life, of course everything will depend on what happens in the market. If somebody is interested in selling Life portfolios, we would be buyers. But we're also speaking about the more entrepreneurial segment, the homeowner segment and organic opportunities for M&A.

In terms of the CapEx, I think you gave us a response. We had a significant reduction for 2 reasons. First of all, we are demobilizing. The company still acknowledges that we need to optimize and reduce further. The world has changed. And the need for having brick and mortar also decreases. That is why we're demobilizing much of our real estate. And this is being led by our CEO.

And in systems. We're not investing less in technology. We depend a great deal on technology. We have simply concluded a very significant cycle of significant changes. The change of SAP. And many of our large businesses have been concluded when it comes to platforms. It is lower when compared to periods of higher investment as a company where half of our net earnings would go to CapEx.

Now if you compare this with the banking industry, of course the figures are lower. It has dropped to 18% of our net earnings. This does not mean that we're no longer investing in technology. And expenses in technology has a completely new paradigm. We're working with more intelligence, with lighter and more agile platforms. This is changing in any company. And we need more brainpower than force or - and this is our vision on CapEx.

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Operator [15]

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(Operator Instructions) The next question comes from Mr. Eduardo Nishio.

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Eduardo Nishio, Brasil Plural Corretora de Cambio, Titulose Valores Mobiliários S.A., Research Division - Financial Sector Analyst [16]

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And if you could explain your strategy in part of the auto business. You showed us some graphs

(technical difficulty)

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Unidentified Company Representative, [17]

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Presently we have a very large number of requests. And based on the characteristic of risk, we don't offer a quote. We want to present an added quote based on the type of risk that is being posed. And this generates a higher possibility for conversion as well as price. We also have several plans that are underway, several projects that are in course. And that will enable us to better understand risk. And with this -- not necessarily through price, we will better be able to adapt our conversion capacity.

We have carried out several implementations in the company, allowing us to be in a very comfortable position vis-à-vis the market. We have a comfortable market share. But we're not comfortable with the way in which we operate day after day. Therefore there is a great deal that is being done that will lead us to a great growth and greater business conversion without necessarily burning our margins. We are of course going to go back to having growth, even though it's negative. We have already observed this.

Our revenues in terms of autos were lower than in previous quarters. We will turn this into a positive figure in the coming years without this meaning a higher loss ratio to attain that goal. So we are working on these two dimensions, an intelligent way of operating and a greater offer or supply of our products.

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Operator [18]

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Thank you. We would now like to return the floor to the company for the closing remarks.

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Unidentified Company Representative, [19]

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I would like to once again thank you for participating in our conference call, for the questions, for your significant contributions, and of course for your interest in Porto Seguro. Should you have additional doubts, please do not hesitate in communicating with our IR team through the site, or contact the team directly. Thank you very much.

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Operator [20]

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The conference call for Porto Seguro ends here. We would like to thank all of you for your participation. Have a good day.