(Image: Pixabay/@stevepb)
O Goldman Sachs began coverage by insurers of the if. Known for their resilience and good dividendsthe bank sees an improvement in the scenario, amid a new cycle of rising interest rates, which could benefit both the financial and operational sides of the results.
- Are I afraid of Ibovespa? BTG highlights high levels of protection among investors and stocks that can benefit; see here
Additionally, Goldman is constructive on the long-term potential for greater insurance penetration in the GDP (Gross Domestic Product)mainly limited competitive pressures and the large and growing profit pool.
Despite the optimism, not all shares received the purchase stamp. See the following recommendations:
| Enterprise | Ticker | Recommendation | Target price | Potential |
|---|---|---|---|---|
| BB Security | BBSE3 | Buy | R$ 44 | 24% |
| Safe deposit box | CXSE3 | Neutral | R$ 16 | 8% |
| Porto | PSSA3 | Buy | R$ 43 | 19% |
| IRB | IRBR3 | Neutral | R$ 50 | 10% |
BB Seguridade: profit from protection
According to the bank, BB Seguridade is a defensive option considering capital returns (10% DY), revenue composition and structurally high profitability.
“Renewing the brokerage contract is a known risk, but we see a positive asymmetry for perpetuity assumptions”, he highlights.
Also according to Goldman, insurance performance should reflect decent underwriting conditions in the rural segment in 2025, while the pension business typically performs well in high rate scenarios.
No agribusinessthe likely moderate La Niña in 2025 is a risk, but a manageable one for the company's claims.
Is Porto Seguro really safe?
For Goldman, the stock offers a good risk-reward hedge, with shares trading at 7.8 times, 2025 P/E (price to earnings) — a 13% discount to insurance peers.
“The company is a leader in car insurance and P&C insurance in Brazil, and we are constructive regarding growth prospects in new sectors, such as health insurance and banking”, he says.
Goldman notes that Porto Saúde (health) represents 17% of revenues with better margins than incumbents in the sector. Porto Banco accounts for 15% with better unit economy and ROE (return on equity) than some banking peers.
“Porto Seguro is an attractive option to operate in a mature segment and in new sectors that have not yet been fully priced. We forecast a CAGR (compound annual growth rate) of 13% of EPS 2024-27E with a 13% increase in relation to the Bloomberg consensus in 2025”, he highlights.
Caixa Seguridade, mixed trends
For Caixa's insurance arm, Goldman sees mixed trends for revenue growth, with a positive outlook for mortgage insurance, premium bonds and letters of credit, but somewhat weaker for pensions, life and credit life insurance.
“Profits could benefit from lower year-over-year claims in 2025, converging to historic levels. There are also question marks over the depth of Caixa Econômica Federal’s funding to continue originating mortgages in the short term, which is a primary growth lever for CXSE.”
Goldman calculates CAGR of 9% between 2024 and 2027, but sees limited upside with shares trading at 10.2 x 2025 P/E (price to earnings), a 23% premium for America's insurance space Latina and a 27% premium for BB Seguridade.
Did IRB reach the top?
IRB gained market attention after 'game-changing' work. The new management team repositioned the
company focusing mainly on its main reinsurance operations in Brazil, where it is still the leader with 17% market share, and selected opportunities mainly in other Latin American countries.
“IRB's current solvency position likely allows it to increase premiums in low double digits in the near term, while we expect ROE to exceed cost of equity by 2027,” he elaborates.
Goldma forecasts a CAGR of 37% for 2024. However, it believes that with the recent rise in shares, the valuation appears balanced (7.1 times 2025 P/E and 0.8x 2024 P/BV (price to book value).