Press Release 3Q16 11/10/2016. Earnings Release 3Q16 1

Transcription

1 Press Release 3Q16 11/10/2016 Earnings Release 3Q16 1

2 Index 1. Financial Highlights Summary of results Gross Revenues Revenue stock breakdown Bancassurance products Life insurance Mortgage insurance Credit insurance Property and Casualty (P&C) Traditional insurance products Auto Insurance Special Risks Health Insurance Other Products Costs and expenses Costs Operating expenses Headcount Information EBITDA and Net Income EBITDA EBITDA reconciliation Net income Cash flow Attachments Income Statement Balance sheet Glossary Earnings Release 3Q16 2

3 ENG Message from the Management We are proud to close another quarter delivering positive results. Once again, the Company released continuous growth, reassuring the success and resilience of our business model, which was validated by an increase in revenues despite the longest bank strike in recent years, resulting in 28% fewer business days in CAIXA s branches, nationwide. Results Conference Call Friday, Nov 11, 2016 Pursuing our strategy supported by people and technology, we accomplished another major milestone in the quarter by launching our new insourced remote sales channel, operated via Salesforce, which is fully integrated to the commercial force management, allowing a single view of our clients. Throughout the branch network, we continue to work together with CAIXA and Caixa Seguradora implementing the strategy to increase the transactions addressable market for insurance sale, besides the focus in increasing productivity by the consolidation of the Tem Mais Caixa program nationwide. Ultimately, we continue to seek constant progress of the Company s results, fully committed to high standards of corporate governance, as noticed in the recent implementations of our Transaction with Related Parties Committee and Audit Committee. POR ENG Time: 10:00 a.m. (Brasília) 07:00 a.m. (US ET) Phone: +55 (11) Code: Par Corretora Time: 11:30 a.m. (Brasília) 8:30 a.m. (US ET) Phone: +1 (412) Code: Par Corretora Earnings Release 3Q16 3

4 1. Financial Highlights The main highlights for the period were: Bancassurance products kept its performance, despite the bank strike period: 12.1% growth in 3Q16, compared to 3Q15, despite a 28% fewer business days in the quarter due to an extended bank strike in September/16. This result played a major role in the continuous growth of the Company s revenues. The main drivers of the results in the period were the increment in origination of Mortgage credit in MCMV line, and the constant growth of our revenue stock, which presented an increase of 19.3% this quarter. Grand Opening of Par Corretora Remote Channel in our new office in São Paulo: in August, 2016, we launched our new remote sales channel comprised of our own employees 100% integrated to the Salesforce.com; the tool was particularly tailored for this channel. This sales team is located in São Paulo and its main activities are in the sale and renewal settings. We believe this move strengthen even more our commercial strategy, supported by people and technology; as well as cost cutting gains and leverage efficiency, together with a more focused operational management. More Corporate Governance improvements: continuing the processes for improvement in the Company s Corporate Governance structures, the Board of Directors has approved the creation of an Audit Committee composed of 3 members, being that 2 of them are independent. The Committee has a consulting nature and is subject to Company s Board of Directors, having as its main duties advising the Board of Directors on topics related to (i) internal and external audits; and (ii) procedures and mechanisms related to risk management, internal controls, compliance and anticorruption policy. On that same date, the Company instituted a new Compliance Office, which is responsible for implementing and monitoring an Integrity Program, which will have the purpose to: (i) improve management and effectiveness of internal procedures; (ii) receive, process and investigate complaints received; (iii) consolidate rules for hiring third parties and suppliers, as well as rules for donations and sponsorships; and (iv) evaluate and monitor risks related to the Company. The Compliance Office s activities will be supervised by the Audit Committee. Earnings Release 3Q16 4

5 2. Summary of results (In R$mm) 3Q16 3Q15 % 9M16 9M15 % Gross Revenues % % Net Revenues % % Cost and Expenses 1 (47.3) (45.0) 5.2% (135.5) (130.4) 4.0% EBITDA¹ % % EBITDA Margin 54.0% 52.5% 1.5pp 53.9% 52.6% 1.3pp Net Income¹ % % Net Margin 37.5% 35.6% 1.9pp 38.3% 35.9% 2.4pp 1 Costs and expenses, EBITDA and Net Income exclude non-recurring expenses from the IPO. For more details, see section In 3Q16, our Gross Revenues grew 13.5%, compared to the same period in 2015 reaching the highest level of revenue in our historical series despite of having fewer days to generate new sales, due to the closure of CAIXA s branches throughout the bank strike on September, We were able to grow as a result of (i) the continuous process of commercial efficiency gains, by increasing penetration in bank transactions throughout our branch network, supported by the Salesforce.com tool; (ii) Mortgage insurance performance, which presented a growth in new credit contract origination; and (iii) our revenue stock, which grew 19.3%. EBITDA presented an 11.8% growth for 3Q16, when compared to 3Q15, despite the increase in PIS/COFINS effective tax rate. Our EBITDA margin reached 54.0%, which is a 1.5 p.p. increase compared to the same period last year. We posted a 14.4% growth in Net Income in 3Q16 when compared to the same period last year. Net income growth is directly linked to our EBITDA performance, as well as the increase in Financial Results, reflected by the increase of the average Cash balance compared to 3Q15. Gross Revenues +13.5% 3Q16: R$ 115.8mm 3Q15: R$ 102.0mm EBITDA +11.8% 3Q16: R$ 55.4mm 3Q15: R$ 49.6mm Net Income +51,6% +14.4% 3Q16: R$ 38.5mm 3Q15: R$ 33.7mm Earnings Release 3Q16 5

6 3. Gross Revenues (In R$mm) 3Q16 3Q15 % 9M16 9M15 % Life % % Mortgage % % Credit Insurance % % Property & Casualty % % Bancassurance % % Auto % % Special Risks % % Health % % Traditional Products % % Pension plans % % Other % % Other Products % % Gross revenue % % Gross revenue growth is present throughout most of our product portfolio in 3Q16. Despite the bank strike in September, 2016 which kept the branches closed in the entire country for 18 business days - Bancassurance products, which accounted for 78.9% of total revenues in 3Q16, presented a growth of 12.1%, compared to 3Q15. We highlight that the bank strike in 2015, took place in the fourth quarter, resulting in 28% fewer business days in 2016, comparing 3Q16 to 3Q15 this difference aside, we are able to see an increase in daily sales productivity, as shown below: (Comission in R$mm) 3Q16 3Q15 New Sales Life New Sales Auto and P&C New Sales Credit Insurance Business days with open branches New Sales by business day Life 240k/day 216k/day New Sales by business day Auto and P&C 168k/day 104k/day New Sales by business day Credit Insurance 358k/day 222k/day Earnings Release 3Q16 6

7 3.1 Revenue stock breakdown As expected, our revenue stock continues to grow and has reached R$59.2 million in the quarter. One of the most relevant competitive advantages of our business is the recurring and resilient nature of our revenues. This quarter, 51.2% of our revenues came from sales that took place in previous periods. Revenue Stock 1 102, Q15 4Q15 1Q16 2Q16 3Q16 Stock New Sales Other Life and Mortgage are the products with the longest life length and account for 74.2% of our revenue stock. As new sales are added to our stock, we continue to generate growth even in times when sales are weaker. In the case of P&C (Auto, Residential and Corporate Property) products, which have shorter duration, we operate with a high rate of renewals, and that translates into a recurring client portfolio over time. The following table shows the breakdown of our revenue stock: % Total 3Q16 x (In R$mm) 3Q15 4Q15 1Q16 2Q16 3Q16 Revenue 3Q15 Life % 13.6% Mortgage % 17.3% Property & Casualty % 7.0% Residential % 15.7% Corporate MR % -1.4% Auto % -0.7% Special Risks % 52.0% Health % 144.7% Total % 19.3% Note: the breakdown of revenue stock is not an audited financial information and it was structured based on Par Corretora s internal reports and databases, considering the commission flow. It does not considers the Other Products segment due to its smaller relevance. The rational and the formulas used to calculate our revenue stock are described in the glossary section of our earnings release. As shown on the table above, our revenue stock continues to grow consistently, increasing 19.3% this quarter, compared to 3Q15. The highlights of the period were: (i) Life, growing 13.6% in 3Q16, compared to 3Q15, due to the increase on sales of monthly paid insurance on account opening transactions, as well as the prices being readjusted by the inflation; and (ii) Mortgage, growing 17.3% compared to 3Q15, driven by the origination of new contracts in FGTS and SBPE, which generates the pile up effect, as well as the addition of new MCMV contracts. Earnings Release 3Q16 7

8 It is important to highlight that Life and Mortgage insurance work with price adjustments depending on the age bracket of the insured. These adjustments increase stock average ticket throughout the years. 3.2 Bancassurance products Bancassurance products totaled gross revenues of R$91.3 million in the 3Q16, up 12.1% from 3Q15, despite of the bank strike, which impacted the result of news sales at the branches during September. This growth represents an increase of R$9.9 million in our gross revenues. The main products for the period were Mortgage, Residential and Credit Insurance, increasing its revenues by 27.2%, 21.7%, and 16.6%, respectively. Below we detailed each product and its performance in the quarter Life insurance Gross revenues reached R$34.8 million in 3Q16, in line with the result presented in 3Q15. This is a result of fewer business days in the quarter, which compressed the Life insurance new sales performance. In 3Q16 our Life insurance portfolio maintained 2.6 million insured lives. Life insurance performance details are divided in two parts, revenues stock and new sales for the period: Revenues stock presented a 13.6% growth in Gross Revenues - In R$mm 3Q16 when compared to 3Q15 and it was the Number of Items - Millions main driver of growth for Life insurance in the quarter, certifying the resilience of our business model. This growth is mainly due to: (i) continuous increment in the penetration levels of Life insurance sold in account opening transactions; and (ii) Inflation adjustment of insurance contracts, as well as age bracket reframing. The production of new sales depends highly in the performance of one-time payment products, which are sold along with the main banking transactions inside CAIXA s branches. New sales performance was strongly impaired by the bank strike, resulting in 28% fewer business days in the quarter, compared to the same period last year new sales decreased 19.8% compared to 3Q15. 3Q16 3Q15 % 9M16 9M15 % Number of items 1 (mm) % % Revenues (R$mm) % % 1 Not including the Amparo product (funeral assistance) sold in lottery agencies Life Insurance Portfolio¹ Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Earnings Release 3Q16 8

9 3.2.2 Mortgage insurance Mortgage revenues grew 27.2% in 3Q16, compared to 3Q15. The strong result was mainly driven by the increase in new contracts origination, which grew 126.3%, compared to 3T15. This growth is directly related to Minha Casa Minha Vida ( MCMV ) contracts eligible to be insured since Dec/15. In order to detail the performance of Mortgage it is fundamental to separate revenues from recurring commissions (applies to the portfolio of mortgage contracts) and revenues from Upfront Commissions (applies to the current quarter contract origination), as shown below: Origination of New Contracts Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross Revenues - In R$mm Avg. Monthly origination - In thousands 1: Considers MCMV contracts starting on 1Q Recurring Commission: Grew 17.7% in the quarter, strongly driven by two factors: (i) the pile up effect of new contracts funded by SBPE and FGTS segments; and (ii) MCMV contracts insured by Caixa Seguradora. Upfront Commission: the addition of MCMV contracts with an average volume of 24.3 thousand monthly was enough to offset the 20.3% decrease in SBPE and FGTS average contract origination, which went from a monthly average volume of 16.6 thousand new contracts in 3Q15 to 13.2 thousand in 3Q16. The positive balance of 21 thousand contracts, combining all segments, increased upfront commissions revenues by 63.2% in the period, reaching R$7.5 million in 3Q16. The table below shows the revenue breakdown for Mortgage Insurance: 3Q16 3Q15 % 9M16 9M15 % SBPE and FGTS % % MCMV n.a n.a. Origination per month (thousands) % % Recurring Commissions(R$mm) % % Upfront commissions (R$mm) % % Gross revenues (R$mm) % % 1 Considers the current rate of commission since 2009 and the new prevailing commercial conditions Earnings Release 3Q16 9

10 3.2.3 Credit insurance Credit Insurance revenues grew 16.6% in 3Q16 when compared to 3Q15, despite the impact of the bank strike in the quarter. This growth is due to: Credit insurance financial penetration: in the payroll line of credit, offered at CAIXA s branch, Corporate Credit insurance average penetration increased by 3.4 p.p. in 3Q16, compared to 3Q15. Penetration 37% 35% 31% 29% 27% 31% 32% Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Credit Insurance manually sold with Working Gross Revenues - In R$mm Capital transactions: The bundle of credit Penetration insurance with working capital transactions started to be offered under Tem Mais Caixa at the end of CAIXA s working capital origination systems are being prepared to automatically offer this insurance, meanwhile it has been manually offered, growing from R$0.3 million in commissions in 1Q16 to R$2.6 million this quarter. 3Q16 3Q15 % 9M16 9M15 % Penetration % 29.1% 3.4pp 32.7% 31.9% 0.8pp Gross revenues (R$mm) % % 1 Penetration of Credit insurance in CAIXA's branch network (considers only the addressable market) Property and Casualty (P&C) In 3Q16, P&C gross revenues grew 13.9%, compared to the same period in 2015, also reaching the highest level of revenue of its historical series. The insured items portfolio grew 34.4%, compared to 3Q15, driven by Lar+, a product cross-sold with Mortgage insurance to protect house content. The average ticket of this product is lower than the traditional Residential insurance. However, the duration of the product is the same as the duration of Mortgage contracts, accumulating revenue stock for many years to come. P&C Portfolio Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross Revenues - In R$ Millions Itens in the portfolio - In thousands Earnings Release 3Q16 10

11 P&C products performance is directly linked to the increase of Residential insurance penetration levels in Mortagage Credit mainly in MCMV line which is eligible to Residential insurance sale since December, 2015, when Mortgage insurance became mandatory for MCMV line of credit. 3Q16 3Q15 % 9M16 9M15 % Residential (thousands) % % Corporate MR (thousands) % % Number of Items (thousands) % % Residential (R$mm) % % Corporate MR (R$mm) % % Gross revenues (R$mm) % % 3.3 Traditional insurance products Traditional insurance products reached gross revenues of R$19.3 million in 3Q16, up 20.0% from 3Q15. The growth was mostly driven by the R$1.3 million increase in Special Risks, which now accounts for 53.0% of the segment Auto Insurance Auto reached revenues of R$4.4 million in 3Q16, in line with the results for the same period of last year. The product s poor performance is directly linked to the bank strike at CAIXA s branches in September, which led to a decrease in new sales for the period. The renewal maintenance rate (operated in the remote channel) was close to 80% in the period, partially offsetting the drop in revenues, securing the insured fleet growth, which reached thousand items in 3Q16. Auto Portfolio Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross Revenues - in R$ millions Insured Fleet - In thousands 3Q16 3Q15 % 9M16 9M15 % Number of Items (thousands) % % Gross revenue (R$mm) % % Earnings Release 3Q16 11

12 3.3.2 Special Risks Special Risks grew 14.9% in 3Q16 compared to 3Q15. This result was mainly driven by revenues from Warranty, as well as by the Civil Liability Insurance. Revenue growth is mostly a result of continuous investments in our commercial structure expansion focused in the B2B channel. 3Q16 3Q15 % 9M16 9M15 % Warranty % % Agro Insurance % % Civil Liability 1.4 n.a. 3.3 n.a. Other % % Gross Revenues % % Health Insurance Health insurance revenues grew 67.4% in 3Q16, when compared to 3Q15. This growth was driven by an increase in the portfolio over the past quarters. In 3Q15, Par Saúde began to function with a commercial platform strategy, operating through co-brokers. 3.4 Other Products Gross Revenues Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross Revenues - In R$mm Gross revenues from Other Products grew 15.7% in the period, compared to 3Q15. The highlight goes to Pension plans, growing 18% in 3Q16, compared to the same period last year. 3Q16 3Q15 % 9M16 9M15 % Pension plans % % Other % % Gross revenues % % Earnings Release 3Q16 12

13 4. Costs and expenses 3Q16 3Q15 % 9M16 9M15 % Branches (25.9) (23.9) 8.3% (75.8) (69.2) 9.5% Remote channels (3.9) (4.1) -6.5% (12.0) (12.5) -3.6% Backoffice (2.3) (1.8) 26.2% (6.9) (5.1) 36.6% Costs (32.0) (29.8) 7.4% (94.7) (86.8) 9.2% General and administrative (15.8) (14.1) 12.2% (42.6) (40.1) 6.2% Other expenses, recurring (1.0) % 1.8 (3.5) % Operating expenses 1 (15.3) (15.1) 1.0% (40.8) (43.6) -6.5% Costs and expenses 1 (47.3) (44.9) 5.2% (135.5) (130.4) 3.9% Other expenses, non-recurring (1.1) n.a. (32.3) n.a. Costs and expenses (47.3) (46.0) 2.8% (135.5) (162.7) -16.7% 1 Net of expenses related to the IPO process. See section for more details. In 3Q16, our costs and expenses increased 5.2% compared to the same period in This growth, below inflation rate for the period, is a result of initiatives structured in the beginning of the year in order to increase efficiency. These initiatives continue to have a positive effect in the reduction of our cost and expenses. 4.1 Costs 3Q16 3Q15 % 9M16 9M15 % Personnel (23.3) (21.8) 6.7% (70.7) (63.7) 11.1% Travel (0.6) (0.9) -33.0% (1.7) (2.3) -25.2% Other (2.0) (1.1) 75.9% (3.4) (3.3) 1.5% Branches (25.9) (23.9) 8.3% (75.8) (69.2) -12.6% Call center (1.5) (3.5) -56.7% (8.5) (10.6) -19.4% Personnel (1.3) (0.5) 140.2% (1.9) (1.7) 14.9% Other (1.1) (0.1) 712.6% (1.5) (0.2) 681.8% Remote channels (3.9) (4.1) -6.5% (12.0) (12.5) -3.6% Personnel (1.9) (1.6) 19.7% (6.0) (4.4) 34.7% Other (0.4) (0.2) 70.4% (1.0) (0.7) 49.2% Backoffice (2.3) (1.8) 26.2% (6.9) (5.1) 36.6% Costs (32.0) (29.8) 7.4% (94.7) (86.8) 9.2% Earnings Release 3Q16 13

14 Our costs increased 7.4% in 3Q16, when compared to 3Q15. The 8.3% growth in Branches was partially offset by the decrease of 6.5% in Remote channels. Find below a breakdown of our expenses: Branches: the R$2.0 million (or 8.3%) growth in 3Q16, when compared to 3Q15, was mainly due to the 6.7% increase in personnel expenses, which reflects the continuous investments to improve our sales force. These results were partially offset by a reduction in Travel costs. Remote channels: the R$0.2 million (or 6.5%) decrease in 3Q16, compared to 3Q15, is a result of the insourcing of our remote center processes, which is now operated by our own employees in our new office in São Paulo. Backoffice: the R$0.5 million (or 26.2%) increase in 3Q16, when compared to the same period last year, was due to an increase in personnel expenses. Investments in backoffice continues to reflect the higher volume of policies issued by Caixa Seguradora, which consequently creates a higher demand for our insurance claims operation. 4.2 Operating expenses General and Administrative expenses increased R$1.7 million (or 12.2%) in 3Q16, compared to the same period last year. This increase is, for the most part, a result of a pro-rata adjustment of the Company s Profit Share Program provision. This quarter s growth was partially offset by the decrease in Third-party services, and IT and telecom. 3Q16 3Q15 % 9M16 9M15 % Personnel (10.1) (8.8) 14.6% (27.3) (24.7) 10.4% Third-party services (1.1) (1.5) -28.8% (2.9) (3.5) -17.7% Occupation (1.1) (0.7) 53.4% (3.1) (1.9) 64.2% IT and telecom (1.5) (1.7) -9.6% (4.3) (4.7) -9.0% Others (2.1) (1.4) 49.2% (5.0) (5.3) -4.5% General and administrative (15.8) (14.1) 12.2% (42.6) (40.1) 6.2% Other expenses (1.0) % 1.8 (3.5) % Operating expenses 1 (15.3) (15.1) 1.0% (40.8) (43.6) -6.5% ¹Net of expenses related to the Company's IPO The highlights in the period were: Personnel: the R$1.3 million (or 14.6%) increase in personnel expenses in 3Q16 is, for the most part, a result of the pro-rata adjustment of the Company s Profit Share Program provision. Third-party services: the reduction of R$0.4 million (or 28.8%) is a result of the insourcing of our remote center processes. Occupation: the R$0.4 million (or 53.4%) increase in 3Q16, when compared to 3Q15, is still related to expenses with our Headquarters in Brasília. Earnings Release 3Q16 14

15 4.3 Headcount Information Personnel expenses are the main component of our costs and expenses accounting for 83% of total expenses in 3Q16. In 3Q16, we had a net addition of 130 new employees, growing 8.4% in total headcount, compared to 3Q15. This growth was mainly driven by the insourcing of our remote center processes. (Number of Employees) 3Q16 3Q15 % 9M16 1 9M15 % Branches % % Remote channels % % Backoffice % % Administrative % % Total headcount % % 1 Period s average Earnings Release 3Q16 15

16 5. EBITDA and Net Income 5.1 EBITDA Par Corretora has been posting consistent growth in its operating results, closing another quarter with the highest EBITDA of our historical series, R$55.4 million and an EBITDA margin of 54.0%. This growth shows our ability to consistently deliver our operating leverage % 52.2% 53.0% 52.5% 50.0% 52.2% 55.4% 45.3% 54.0% Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 EBITDA - In R$mm % EBITDA Margin 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% In 3Q16, EBITDA presented a R$5.8 million (or 11.8%) growth, compared to the same period last year. The consistent growth of our margin throughout the last quarters is driven by the profile of our revenues, which are recurring, as detailed at the 3.1 section of this release EBITDA reconciliation The reconciliation between the EBITDA reported in the financial statements and the EBITDA adjusted by non-recurring expenses related to the IPO in 2015 is presented below: (In R$mm) 3Q16 3Q15 % 9M16 9M15 % EBITDA (reported) % % Non-recurring expenses 1.1 n.a n.a. EBITDA % % Earnings Release 3Q16 16

17 5.2 Net income We continue to post consistent net income growth, closing 3Q16 with net income of R$38.5 million and net margin of 37.5%. This growth is directly related to our EBITDA growth % 36.8% 36.4% 35.9% 35.6% 35.2% 36.6% 37.5% 31.1% Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Net Income % Net Margin 60% 50% 40% 30% 20% 10% Below is the breakdown of net income: (In R$mm) 3Q16 3Q15 % 9M16 9M15 % EBITDA (reported) % % Depreciation and amortization (1.2) (0.7) 57.4% (3.1) (1.6) 94.2% Financial results % % Income taxes (19.4) (17.4) 11.4% (57.3) (49.5) 15.7% Net Income (reported) % % Non-recurring expenses 1.1 n.a 32.3 n.a Tax shield (0.4) n.a (2.5) n.a Net Income % % Net Margin 37.5% 35.6% 1.9pp 38.3% 35.9% 2.4pp Below are the highlights of the period: Depreciation and amortization: depreciation and amortization expenses increased 57.4% in 3Q16, compared to 3Q15. This increase results from investments in property, plant and equipment arising from investments in our headquarters in the beginning of 2015, and mainly in the development of systems and databases that support the planning, execution and monitoring of our commercial strategy. Financial results: in 3Q16, financial results reached R$3.6 million, up 38.4% when compared to 3Q15. This increment is directly related to the increase of cash average balance. Earnings Release 3Q16 17

18 6. Cash flow We closed 3Q16 with a negative cash flow of R$4.1 million, due to the dividend distribution of R$39.1 million in the quarter. Our cash flow represents, mostly, our net income of R$38.5 million in 3Q16. (In R$mm) 3Q16 2Q16 1Q16 4Q15 3Q15 9M16 Net Income (Reported) Depreciation and Amortization Working capital 3.5 (0.4) 4.2 (0.5) (2.9) 7.4 Capital Expenditure (5.9) (3.7) (1.8) (2.4) (3.9) (11.3) Cash flow from operations Investments Dividends (39.1) (64.1) (31.7) (5.2) (103.2) Other (2.4) (0.1) (0.7) 0.2 (1.2) (3.1) Cash flow (4.1) (26.9) 36.6 (2.8) Opening Balance Cash Flow (4.1) (26.9) 36.6 (2.8) Closing Balance The highlights in the period were: Capex: our Capex of R$5.9 million, was impacted by investments in systems and databases associated to the opening of our new office in São Paulo, launched this quarter. Dividends: dividends of R$39.1 million were distributed in 3Q16, solidifying our profile of generating Cash. Earnings Release 3Q16 18

19 Attachments 1. Income Statement Parent Consolidated 09/30/ /30/ /30/ /30/2015 Continuing operations Revenue from services rendered. net 259, , , ,857 Cost of services rendered (77,423) (72,117) (94,734) (86,766) Gross Profit 182, , , ,091 Administrative expenses (36,095) (35,558) (42,581) (40,085) Depreciation and amortization (2,529) (1,357) (3,130) (1,611) Other expenses 3,884 (35,156) 1,798 (35,809) Share of profit of subsidiaries 2,188 1, Operating profit before finance result 149, , , ,586 Finance income 15,735 9,030 16,127 10,076 Finance costs (1,196) (1,658) (1,504) (2,187) Finance result, net 14,539 7,372 14,623 7,889 Profit before income tax and social contribution 164, , , ,475 Current income tax and social contribution (55,682) (48,544) (58,276) (51,475) Deferred income tax and social contribution 583 2,168 1,014 2,000 Profit for the year 109,369 66, ,650 69,000 Number of shares at the end of the year (in units) 159,907, ,907,282 Earnings per share (in reais) Attributable to: Owners of the parent 109,369 66,387 Non-controlling interests 3,281 2,613 Profit for the year 112,650 69,000 Earnings Release 3Q16 19

20 2. Balance sheet Parent Consolidated 09/30/ /31/ /30/ /31/2015 ASSETS Current assets Cash and cash equivalents 25, ,725 1,241 Financial investments 76,273 97,175 77,005 99,881 Accounts receivable 23,623 19,999 24,389 20,314 Other assets 7,184 2,928 8,303 3,908 Total current assets 132, , , ,344 Non-current assets Deferred IRPJ and CSLL 15,694 20,127 15,955 19,959 Other assets 8,560 4,683 8,159 4,657 Investments 5,156 4, Property and equipment 8,286 4,518 10,169 5,600 Intangible assets 14,873 11,611 28,553 24,958 Total non-current assets 52,569 45,107 62,836 55,174 TOTAL ASSETS 185, , , ,518 LIABILITIES Current liabilities Trade payables 23,179 1,554 23,392 1,633 Social charges 7,455 11,012 9,544 12,866 Tax liabilities 16,393 7,334 17,661 7,521 Provisions 13,103 10,464 16,566 13,198 Borrowings Taxes payable in installments 1,148 2,970 1,148 2,970 Total current liabilities 61,278 33,334 69,257 39,025 Non-current liabilities Provisions 950 1,449 2,629 4,013 Borrowings Taxes payable in installments 6,097 20,365 6,097 20,365 Payables to related parties Total non-current liabilities 7,056 21,827 8,726 24,871 Total liabilities 68,334 55,161 77,983 63,896 EQUITY Capital 40,000 40,000 40,000 40,000 Capital reserve 33,453 33,453 33,453 33,453 Revenue reserve 6,657 6,657 6,657 6,657 Retained earnings 36,814-36,814 - Proposed additional dividends - 30,643-30,643 Total Equity 116, , , ,753 Non-controlling interests - - 7,351 5,869 Total equity, net 116, , , ,622 TOTAL LIABILITIES AND EQUITY 185, , , ,518 Earnings Release 3Q16 20

21 Glossary Bancassurance products: insurance products that have a strong fit with traditional bank distribution channels. These are simple products than can be easily understood by customers. These products are typically offered when the customer is carrying out a banking transaction at the branch. Products in this segment are Life, Credit Insurance, Mortgage and P&C. Traditional Insurance Products: these are typically distributed outside CAIXA's branches, with sales taking place mainly through remote channels (call centers and co-brokers). These insurance products have a strong value perception among customers. This segment comprises: Auto, Health and Special Risks. Other Products: comprises three financial products: Pension Plans, Consortium and Savings Bonds. These serve as an alternative to products offered by the bank (E.g. Pension plan x Funds and Savings Bonds x Savings account). Life: brokerage of Life insurance products. Sale of products to individuals (paid monthly or single installment) and corporations. Main items of coverage are: (i) death, (ii) permanent disability and (iii) personal accidents. Commission payments are made throughout the customer's insurance payment cycle. Mortgage: brokerage of Mortgage insurance. Mortgage Insurance includes coverage for death and permanent disability as well as physical damages to the property. Par Corretora earns commission through two formats: (i) Brokerage percentage of commission on the monthly premium paid by customers (ii) Upfront fee. Credit insurance: brokerage of Credit insurance. Mainly offered through payroll credit offered at CAIXA branches. Coverage for death or permanent disability. Commission is paid at the time of issuance of the insurance policy. Property and Casualty (P&C): brokerage of the Residential and Corporate Property product. Coverage physical damages to property and contents, for residential and corporate properties. Commission payments are made throughout the customer's insurance payment cycle. Auto: brokerage of the Automobile insurance. Basic coverage for collision, fire, robbery, theft and material damages caused to third parties. Commission payments are made throughout the customer's insurance payment cycle. Special Risks: brokerage of diverse structured insurance products sold in the corporate segment. The main Special Risks products are: Warranty, Completion of Construction, Agro Insurance, D&O and Fleet Insurance. These products are offered through our own sales force and co-brokers. Health: brokerage of the health and dental insurance product in the corporate segment. These products are offered through our own sales force and co-brokers. Branches: the channel corresponds to operations in CAIXA's branch network. Costs related to the Company's Sales Force are recorded in this channel and the main cost component includes Par Corretora's sales assistants, who are physically present at the main CAIXA branches. Earnings Release 3Q16 21

22 Remote channels: the channel corresponds to operations in remote channels outside CAIXA's branch network, including: (i) Call Center, (ii) Web Chat and (iii) Co-brokers. The amount paid to call center service providers and personnel costs of the channel's management team and the web chat operation are the main cost components of this channel. Back office: the Par Corretora department responsible for supporting Caixa Seguradora in loss adjustments for specific product lines. Expenses with the loss adjustments team is the main cost component of this channel. General and administrative expenses: Par Corretora's expenses with administrative support, marketing, occupation costs and IT are recorded in this group. The main areas included in general and administrative expenses are: (i) Finance; (ii) People & Management; (iii) IT and Telecom; (iv) Legal; (v) Marketing and (vi) Institutional Relations. ASVEN (Sales Assistant): Par Corretora's sales assistants are allocated to the main CAIXA branches. They play an important role in assisting the branch in reaching its insurance sales targets and operate mainly in two ways: (i) assisting in the sale of bancassurance products at the branches by monitoring performance indicators generated and managed by Par Corretora; and (ii) participating actively in the sale of traditional insurance products, closing the sale process or referring potential clients to our remote sales channel. Service Positions: outsourced call center service positions of Par Corretora. Par Riscos Especiais: Par Corretora s subsidiary focusing on the distribution of Special Risks insurance. Par Saúde: Par Corretora s subsidiary focusing on the distribution of corporate Health Insurance. Revenue Stock: Represents recurring commissions paid monthly for the duration of the insurance contracts: Life: mainly comprised of monthly payment products for individuals and corporate clients. Credit Insurance: it does not generate stock revenue. We earn our commission up-front upon contract origination. Mortgage: comprises commissions from Mortgage insurance for the full duration of the Mortgage contract. Property & Casualty and Auto: considers policy renewals and the commission earned monthly as premiums are paid by the customers of CAIXA. Health: commission paid monthly in health and dental insurance. Special Risks: commission paid monthly and commissions from installment payments. Other: Although there are products that generate stock, as Pension Plan, it is not considered due to its small relevance. Earnings Release 3Q16 22