Texto TEMPO ASSIST Management Presentation April 2011 0
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 1
Introduction and Company Overview Company Overview Marcos Couto CEO Business Units Luiz Figueiredo Health Services Marcello Avena Brokers Channel (health and dental) Fernando Ranoya Affinity Channel (dental and assistance) Gibran Marona Assistance Glauco Michelotti Homecare Corporate José Salazar CFO, IR Officer, Legal Ricardo Manhães COO Ronald Poon Underwriting 2
Introduction and Company Overview Company Overview Leading player in the Healthcare, Dental and Assistance segments with each business segment benefiting from a scalable operating platform Health Services Health Health Insurance Dental Assistance & Self funded, TPA, PPO and Homecare services Leading provider of administrative and back-office services for self-insured employers, governmental entities, insurance companies and health management organizations (HMOs) Health Insurance High-end healthcare plans to SME distributed mainly through brokers Number of lives: 70,000+ Leading provider of dental benefits in Brazil, providing plans to individuals through their employers and associations and benefiting from cross-selling opportunities Number of lives: 770,000+ Leading provider of assistance services for corporate clients, with products in the automobile, home, personal and travel segments Number of items: 17.2mm Number of lives: 1.6mm No risk #1 in Brazil Underwriting risk, with high quality portfolio #9 in Brazil Low risk #4 in Brazil Low risk #2 in Brazil Total 2010 Net Revenue (R$ mm) 632 93 227 952¹ 2010 EBITDA from ops (R$ mm) 2 46 15 35 97 2010 EBITDA Margin from ops Margin (%) 2 7 16 15 10 2010 EBITDA from ops Breakdown (%) 2 48 16 36 Source: Company Notes: 1 Does not exclude R$ 7.5 million intercompany revenues. 2 Refers to EBITDA excluding holding expenses. Excludes non-recurring expenses as explained in company s quarterly releases. 3
Introduction and Company Overview Corporate History Acquisition of USS Assistance Acquisition of Associl s client base Dental Acquisition of Medlar Homecare Initial Public Offering of TEMP3 in Novo Mercado Acquisition of Prevdonto Dental Acquisition of MultiCare Healthcare Joint Venture Caixa Saúde Healthcare and Dental Acquisition of Gama Saúde Health Services Acquisition of Cloe Dental 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 Acquisition of CRC Acquisition of Gama Odonto 1 Acquisition of Oralgold Acquisition of Odonto Empresa Acquisition of OralTech Acquisition of Fleming Planos Odontologicos Acquisition of Staff Builders Acquisition of Unibanco Health Services Dental Dental Dental Dental Dental Homecare Health Insurance Acquisition Rationale Note: 1 Subsidiary of Gama Saúde by the time of its acquisition Consolidation Expansion into new markets 4
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 5
Agenda 1. Introduction and Company Overview 2. Health Business Unit i. Market and Competitive Landscape ii. iii. iv. Business Unit Overview New Initiatives Financial Information 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 6
Health Market and Competitive Landscape Overview of Private and Public Health Systems in Brazil 136MM Public System Only 15MM Medical Cooperatives 1MM Non Profit Organizations 191MM Public Health System 6MM Insurance Companies 17MM HMOs 44MM Private Health Plans 5MM Self Insured 11MM Gov. Funded Entities 11MM Gov. Funded Entities Source: Folder ANS Informação 2010 edition, except gov. funded entities (sector estimates) 7
Health Market and Competitive Landscape Drivers of Demand for Health Services in Brazil GDP Growth Per Capita Population Aging Social Mobility Health Expenditure Per Capita (U$ PPP) Population Distribution Per Age-Group Income Distribution of Urban Residents in Brazil (%) 2009 2003 8,000 6,000 4,000 New Zealand Canada France Swiss EUA 0 10 20 30 40 50 60 70 80 2020 60 50 40 30 20 10 0 47 31 22 A+B C D+E (High) (Middle) (Lower) 2,000 0 0 Australia Italy Japan Portugal Spain South Africa Israel Brazil Uruguay Bolivia Argentina PIB per capita (U$ PPP) Czech Republic 10,000 20,000 30,000 40,000 50,000 0 10 20 30 40 50 60 70 80 2030 2009 60 50 40 30 20 10 0 48 32 19 A+B C D+E (High) (Middle) (Lower) 0 10 20 30 40 50 60 70 80 Source: WB; WHO; IBGE; Wall Street Research; Banco Central do Brasil; Febraban; FGV and BTG Pactual estimates 8
Health Market and Competitive Landscape Private Health Services Market and Competitive Landscape Service Provided Back Office / TMR Network Rental Commercial Plans (Pos-Paid) Commercial Plans (Pre-Paid) Homecare Tempo s Legal Entities Tempo CRC Gama Saúde Tempo Saúde Tempo Saúde Medlar SME Corp/Indiv. A-B B-C-D Corp/SME A-B-C Corp/Indiv. Corp/SME/Indiv. Corp/SME/Indiv. B-C B-C-D A-B 9
Agenda 1. Introduction and Company Overview 2. Health Business Unit i. Market and Competitive Landscape ii. iii. iv. Business Unit Overview New Initiatives Financial Information 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 10
Health Business Unit Overview Overview Back-Office / TMR Network Rental Commercial Plans (Pre-Paid) Commercial Plans (Post-Paid) Homecare Legal Entity Services Processing services and account audits Contact center for service providers and beneficiaries Administration of beneficiaries' registration Administration of service provider network Access to a network of providers with national coverage Network customized to the needs of each client Potential to offer new products Corporate pre-paid health plans Plans target the premium (high income) segment of the population Primarily SME clients with growing corporate client base Commercial postpaid plans focused on corporate clients Development of post-paid reinsurance products through partnerships with international reinsurance companies In-home care Medical procedures Follow-up and monitoring of patients Lives ~1.1 million lives ~ 450 thousand lives ~ 70 thousand lives ~ 40 thousand lives ~ 400 patients currently under treatment Clients 11
Health Business Unit Overview Back-office / TMR and Network Rental Back-office Other (TMR, etc)¹ Network Rental Government funded entities Government funded entities Government funded entities Target Market Private self-administration Health insurance companies Private self-insured Health insurance companies Private self-insured Health Insurance Companies HMOs HMOs HMOs Services Provided Processing services and account audit Contact center for service providers and beneficiaries Administration of beneficiaries' registration Administration of service provider network High cost regulation Processing services / medical accounts' audit of supplies and medication costs Benchmarking analysis to market rates Access to more than 15,000 service providers and 50,000 provider locations Includes Customer Service processes, Regulation, Account processing, Payment to Service Providers Revenue Allocation (9M10) (does not include costs pass through) 60% 8% 32% Relative Position in Market # 1 Player Unique national coverage IT platform and scale as competitive differentiators Unique service offering Proprietary system without peers in national market # 1 Player Unique national coverage Adaptability of network administration system as competitive differentiator Note: 1 Includes approximately 40 thousand lives in self insured plans. 12
R$ mm Health Business Unit Overview Comercial Plans Pre-Paid Evolution of Pre-Paid Portfolio Growth 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000-2010 growth: +19.2% 72,655 60,956 19,920 16,949 January 2010 December 2010 30.000 25.000 20.000 15.000 10.000 5.000 - Lives (000) Tempo grew at a significantly higher rate than the market Market: Average Annual Growth in lives of +5% Tempo Saúde: +19.2% of growth in lives in 2010 100% organic growth 50% via own broker 50% Itaú / Unibanco brokers Lives Premium (R$mm) Geographic Distribution of Pre-Paid Portfolio Portfolio Diversification Pernambuco 3% Bahia 10% Others 6% Growth potential primarily in regions outside of São Paulo Rio de Janeiro axis Minas Gerais 11% São Paulo 49% Rio de Janeiro 21% Based on number of Active Beneficiaries 13
Health Business Unit Overview Homecare (Medlar) Market with Regional Presence, with Local Franchises Historical Revenue (R$MM) and Loss Ratio (%) 61.7% 64.2% 62.0% 61.1% 73.9% Porto Alegre DF Salvador Campos dos Goytacazes Rio de Janeiro São Paulo S.J. dos Campos Santos Campinas Location of Medlar Franchises 80.7 80.1 76.0 2008 2009 2010 Main Customers Revenue Breakdown Procedures 19% Procedures: simpler cases with nonintensive care (bandages, medication dosage,among others) Homecare: most complex cases that require intensive medical and nursing Home Homecare Integration [Clarify] care 81% 14
Health Business Unit Overview Key Factor - Administration of Service Provider Network 35,000 1 service providers distributed in more than 200,000 provider locations all over Brazil Specialized network administration for different businesses: Network rental - Gama Saúde (18,000 service providers) Pre-paid and post-paid commercial plans - Tempo Saúde (14,000) Third party network administration (6,000 providers) Traffic of more than 1.6 million users in network managed by Tempo Active administration of network capacity Continuous update of network coverage Post-Paid Network + Network Rental + TPA Pre-Paid Network Note: 1 Excludes 3,000 providers that are in more than one network 15
Agenda 1. Introduction and Company Overview 2. Health Business Unit i. Market and Competitive Landscape ii. iii. iv. Business Unit Overview New Initiatives Financial Information 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 16
Health New Initiatives Joint Venture with Caixa Seguros Tempo / Caixa Seguros Transaction Rationale Tempo Participações R$30mm in cash R$45mm in credits Provide back office services for all health and dental plan operations of Caixa Saúde Assistance Business Unit Health Business Unit Dental Business Unit 25% JV established with R$17mm (R$7mm from Caixa Seguros and R$10mm from Tempo), with additional R$20mm to be provided by Tempo Tempo will be able to capitalise R$45mm of back office services, which protects Tempo against adverse performance of the JV JV Caixa Saúde If the business plan is successful, the credit will be used in approximately 2 years Tempo gains distribution channel with access to 940,000 businesses (including SMEs), 13,000 public entities and a total of 48 million individuals Tempo retains exclusivity in the sale of health and dental insurance to clients of Caixa Econômica Federal ( CEF ) Tempo participates in administration of the JV through position on the board of directors 17
Agenda 1. Introduction and Company Overview 2. Health Business Unit i. Market and Competitive Landscape ii. iii. iv. Business Unit Overview New Initiatives Financial Information 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 18
Health Financial Information Financial Highlights Business Unit Contribution 2010 Net Revenues (R$ million) Net Revenues EBITDA 1 632.5 Others² 425.3 34% Others² 52% 48% 66% 448.5 2008 2009 2010 Gross Profit (R$ million) and Gross Margin (%) 22% 0,215 21% 21% 20% 92.6 95.3 127.6 EBITDA 1 (R$ million) and EBITDA Margin (%) 6% 6,0% 6% 6,3% 7% 46.5 26.8 24.7 2008 2009 2010 2008 2009 2010 Note: 1 Recurring operating EBITDA (excluding headquarters expenses) 2 Others represent the remaining Tempo business units 19
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 20
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit i. Market and Competitive Landscape ii. iii. Business Unit Overview Financial Information 4. Assistance Business Unit 5. Consolidated Financials 21
(Lives 000) (Annual Growth %) Dental Market and Competitive Landscape Market Evolution Sustainable growth in dental lives of 20%/year Lives Market 18,000 16,000 23% 21% 22% 25 14,000 12,000 10,000 17% 16% 19% 9,133 18% 10,772 13,168 20 15 8,000 6,000 4,447 5,457 6,353 7,530 10 4,000 5 2,000 0 2003 2004 2005 2006 2007 2008 2009 0 Number of Lives Annual Growth Source: ANS Jun/10 22
Odontoprev Interodonto Amil Medial Tempo Dental Odonto System Prodent Uniconto Curitiba Metlife Inpao Dental Unidonto Campinas Unidonto Campinas Sulamérica Belo Dente Dental plan Dental Market and Competitive Landscape Key players in Brazilian Dental Market Total Dental Market 13.2mm participants, representing 6.9% of total population 4,372 Other Operators 3,307 25% 13 Largest Operators 9,907 75% 1,168 1,038 792 565 453 298 260 237 226 221 147 130 Fonte: ANS Dec/09 Odontoprev, Amil, Tempo and Sulamérica 2Q10 Press Releases 23
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit i. Market and Competitive Landscape ii. iii. iv. Business Unit Overview Current Operations Strategic Plan v. Financial Information 4. Assistance Business Unit 5. Consolidated Financials 24
Dental Business Unit Overview Overview Main player in affinity partnerships in Brazil Portfolio of Lives by channel as of Dec. 2010 (000s) Loss Ratio Contribution: 2010 416 780 43.1% 39.2% 364 Total 1 2 Individuals and Corporate Contracts Affinity Individuals and Corporate Contracts Affinity Average Loss Ratio Notes: 1 Individual plans sold directly to clients 2 Plans for corporate and SME 25
Dental Business Unit Overview Distribution Affinity Channel Current Partnerships Contract since 05/2008 Strong Expansion Profile Contract since 11/2009 Strong Expansion Profile Contract since 12/2006 Mature and Stable Customer Base Contract since 10/2007 Solid Expansion Profile Contract since 03/2007 Strong Expansion Profile Contract since 05/2010 Expansion Profile 26
Dental Business Unit Overview Network of providers National coverage PROVIDERS BY STATE 2 3 800,000 beneficiaries all over the country 8,000 accredited dentists 6 15 16 25 100 21 12 181 260 101 8 849 22 33 19 19 147 National coverage More than 1,120 cities covered Fully outsourced and nonexclusive network 80 2647 913 483 162 1710 More than 23,000 specialties/procedures offered 216 285 Active administration of network capacity 27
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit i. Market and Competitive Landscape ii. iii. Business Unit Overview Financial Information 4. Assistance Business Unit 5. Consolidated Financials 28
Dental Financial Information Financial Highlights Business Unit Participation 2010 Net Revenues (R$ million) Net Revenues EBITDA 1 10% 16% 99.7 92.7 Others² 90% 84% Others² 56.1 Gross Profit (R$ million) and Gross Margin (%) 0,53 55% 51% 56% 57% 54.6 53.2 2008 2009 2010 EBITDA 1 (R$ million) and EBITDA Margin (%) 19% 0,19 19% 18.7 18% 16% 15.2 28.6 10.7 2008 2009 2010 Note: 1 Recurring operating EBITDA (excluding headquarters expenses) 2 Dental segment. Others represent the remaining Tempo business units 2008 2009 2010 29
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 30
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit i. Market and Competitive Landscape ii. iii. Business Unit Overview Financial Information 5. Consolidated Financials 31
Assistance Market and Competitive Landscape Market Overview 3 Players Account for 80% of the Market Comments Mkt Share Assistance Industry 15.2% 22.0% 5.0% Base: Sept 2010 Source: Tempo estimate 31.3% 26.6% Tempo Europ Assistance Mondial Assistance Brasil Assistência Interpartner Total market 1.345mm, target market 890mm (Bain & Company estimate) Europ highly concentrated with Bradesco Mondial losing relative contribution (Itaú migrating to Porto) Brasil unsignificant in insurance with a higher participation in Affinity Interpartner (Chubb, Itaú cards and Affinity) Strong concentration in the Insurance Industry 32
(em R$ milhões) (em R$ milhões) Assistance Market and Competitive Landscape Market Trends Growth driven by the insurance market Evolution of Revenues in the Insurance Market 120.000 100.000 80.000 60.000 65.580 73.621 84.327 96.398 107.417 Comments Market grows at a rate of 15.9% per annum Contribution in GDP grew from 3.05% in 2005 to 3.42% in 2009 40.000 20.000 0.000 Source: Fenaseg Site, August 2010 190.000 170.000 150.000 130.000 2005A 2006A 2007A 2008A 2009A Evolution of Revenues in the Insurance Market 121.739 136.779 152.352 167.964 Global average contribution in GDP is 7.5% General Insurance and Personal Insurance represent 72% of the market Forecasts indicate a consistent growth in insurance industry through 2013 The assistance industry grows together with the insurance market 110.000 90.000 70.000 50.000 2010E 2011E 2012E 2013E Source: Siscorp, August 2010 33
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit i. Market and Competitive Landscape ii. iii. Business Unit Overview Financial Information 5. Consolidated Financials 34
Assistance Business Unit Overview Tempo USS Revenues Breakdown Evolution of Gross Revenue and Total Loss (R$000s) 56% 265.242 148.173 53% 211.900 112.845 58% 251.896 FY08 FY09 FY10 Revenue Breakdown per Segment 146.629 Total Gross Revenues Total Loss Loss Ratio (%) 8% 11% 5% 16% 6% 87% 83% 18% 66% FY08 FY09 FY10 Auto Home Personal Comments: Dec 2008 Exit of Bradesco (R$ 80mm in 2008) 2009 Year Implementation of 5 new contracts: HDI 100% vehicle and residential Zurich/Minas Brasil 100% vehicle, residential and life Allianz 60% vehicle Itaú/Unibanco 100% life and residential portfolio Banco do Brasil BB Protection Reduction in vehicle segment concentration Relevant growth in life and home porfolio - improved accident rate when compared to vehicle (vehicle + trucks) Reduction in trucks segment participation highest loss ration 35
Assistance Business Unit Overview Distribution Models Model 1. Assistance incorporated as benefits linked to insurance companies' products Current Model (100% of Revenues) USS Direct Relationship Insurance Companies Relationship through Brokers End Consumer Model 2. requests sold as products directly to end consumers Direct sale via contact center and Company website New Alternative (Already in Implementation process) USS Direct Relationship or through Brokers Affinity Direct Sale Own or partner s selling efforts End Consumer 36
Assistance Business Unit Overview Key Process Administration of Service Provider Network VOLUME OF SERVICES PROVIDED PER REGION Wide network 20,000+ providers High volume of services requests 1,300mm / year Long Term Relationship with clients average age of 7,8 years 1 5 requests 6 10 requests 11 30 requests > 30 requests Intensive use of technology GPS, Remote AC.
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit i. Market and Competitive Landscape ii. iii. Business Unit Overview Financial Information 5. Consolidated Financials 38
Assistance Financial Information Financial Highlights Business Unit Participation 2010 Net Revenues (R$ million) Net Revenues EBITDA 1 238.2 226.7 Others² 76% 24% Others² 64% 36% 190.8 2008 2009 2010 Gross Profit (R$ million) and Gross Margin (%) EBITDA 1 (R$ million) and EBITDA Margin (%) 90.0 38% 0,39 41% 38% 35% 78.0 80.1 12% 28.4 0,13 14% 26.8 15% 15% 35.1 2008 2009 2010 Note: 1 Recurring operating EBITDA (excluding headquarters expenses) 2 Assistance segment. Others represent the remaining Tempo business units 2008 2009 2010 39
Agenda 1. Introduction and Company Overview 2. Health Business Unit 3. Dental Business Unit 4. Assistance Business Unit 5. Consolidated Financials 40
Consolidated Financials Financial Highlights 2010 Mix (%) Net Revenues¹ Mix(%) Actual Results 1 Net Revenues (R$mm) assistance 24% dental 10% health 66% 719.5 739.0 951.8 2008 2009 2010 2010 EBITDA 1 Mix (%) EBITDA 2 (R$mm) assistance 36% dental 16% health 48% 5% 34.0 4% 3% 21.9 5% 6% 57.3 2008 2009 2010 Notes: 1 2010 figures does not consider 1 st Quarter results for the Pre-paid business unit 2 Refers to EBITDA including holding expenses. 41
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