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2009 SulAmérica Annual Report

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2009 SulAmérica Annual Report
2009 SulAmérica
Annual Report
relatorioanualsulamerica09.com.br
2009 Annual Report
contents
Introduction...............................................3
Business Market.................................... 42
Profile...........................................................4
Intangible Assets................................... 54
Key facts in 2009....................................16
Capital Market....................................... 70
Main indicators......................................19
Investments..............................................73
Message from the president.............. 21
Results 2009 ...........................................75
Strategy......................................................23
Corporate information.......................156
Corporate governance......................... 28
About the report..................................159
Risk Management................................. 39
Credits......................................................167
2009 ANnual Report
Introduction
Welcome to the SulAmérica 2009 Annual Report.
Here you will find all information about the performance of the
Company last year. This website was carefully designed for easy
browsing through the subjects that traditionally are most interesting
to the SulAmérica’s audiences. The report brings together a full
analysis of the Company’s operational and financial performance,
an overview of its business strategy and management model, and
prospects in all segments in which SulAmérica operates. The report
also presents the main aspects of the Company’s business conduct,
always based on ethics and accountability, and the path SulAmérica
is tracking to incorporate sustainability into its corporate policies
and day-to-day operations. SulAmérica also seeks to summarize in
the videos featured in this report the highlights of its performance in
2009, presented by its executive officers.
This website serves as a tool to promote communication
and interaction with all those involved or interested in the
performance of SulAmérica. In line with this, please send your
questions, comments or suggestions to Investor Relations, by
e-mail or by telephone +55 (21) 2506-9111. Additional corporate
information is available at www.sulamerica.com.br/ir.
Thank you for visiting SulAmérica’s report and enjoy reading this.
3
2009 ANnual REPORT
PROFILE
About SulAmérica
114 years combining tradition and modernity to create value
Largest independent insurance company in Brazil, SulAmérica
built over its 114-year history a solid reputation, by blending
tradition and modernity. Along this period, the company has
remained faithful to the principles that led it to earn the
confidence and respect of society, without losing focus on
creating value, and maintaining a leading position in its markets.
SulAmérica has 6.7 million customers, and its portfolio
of diversified products and services includes the areas of
health insurance, auto insurance, industrial and commercial
risk insurance, life insurance, private pension, and asset
management. The company is present throughout the
country with a structure consisting of 14 branch offices and 13
subsidiaries, which offer support to more than 28 thousand
insurance brokers, the main agents in the SulAmérica’s structure
of product distribution. The company relies also on 20 business
partnerships entered with some of the leading institutions in
the country. [GRI 2.2; 2.5; 2.8]
A staff of more than 5 thousand employees, in line with the
values of the company, endeavors to obtain the best results, with
ethics, social responsibility, responsiveness and transparency.
With a view toward sustainability, connecting operational and
financial excellence to ethical relationship with all stakeholders,
SulAmérica has extended this approach to all management
initiatives in recent years, in order to strengthen its commitment
to the perpetuation of its generation of value to society and
environmental preservation.
Since September 2007, Sul América S.A. has been listed as
Corporate Governance Level 2 Listing Rulesin BM&FBovespa
S.A. – Securities, Commodities and Futures Exchange (). The
company carried out the largest IPO by a Brazilian insurance
group, by offering 25 million units and raising R$775 million.
SulAmérica has been a partner of the ING Group since 2002
and has a free float of 37%. [GRI 2.1; 2.6]
4
2009 ANnual REPORT
PROFILE
Sulasa
ING
55%
45%
Sulasapar
33%
21%
Managers and
controlling group
Free float
9%
37%
[GRI 2.3]
5
2009 ANnual REPORT
PROFILE
Mission, Vision and Values
[GRI 4.8]
Principles guiding business to ensure customers peace of mind
Mission
Assure financial protection and tranquility to our customers, in a
unique experience of agility, confidence and transparency.
Vision
Up to 2012, be the preferred company to customers and brokers,
in the main markets in which it acts, being among the most
profitable.
Values
• We always focus on the best results
• We carry out what we promise
• We are accessible and dynamic
• Vocation for serving
• We value the employees and teamwork
• We are committed to sustainability
6
2009 ANnual REPORT
PROFILE
SulAmérica
114 years
of transparency and agility
19th Century
SulAmérica Foundation
On December 5, 1895, Sul América Companhia
Nacional de Seguros de Vida was founded by Don
Joaquim Sanchez de Larragoiti.
Joaquim Sanchez de Larragoiti, founder of SulAmérica.
Early 20th Century
Brazil expands its
urban changes
First life insurance policy, issued by SulAmérica on behalf of its founder,
on December 18, 1895.
Rodrigues Alves government is characterized by an
effort to break off with the country’s colonial past and
integrate Brazil to the modern world. Companhia Sul
América de Seguros de Vida, the only company of its
kind in Brazil, headquartered in the then capital
city of the country, is an active player in the
urban transformation.
Foundation of Sul América
Terrestre Marítima
In December 1913, SulAmérica founds Companhia de
Seguros Terrestres e Marítimos e de Acidentes, firstly by the
name Anglo Sul Americana and, later, in 1928, named Sul
América Terrestre Marítima (Satma). Elementary business
areas are established in a timely manner, after the republic
consolidates and immediately before the country’s urbanindustrial and port infrastructure growth efforts.
Central Avenue, in Rio de Janeiro, under construction.
7
2009 ANnual REPORT
PROFILE
Sul América magazine covers, including its first issue.
1920-1940
Launching of Sul América magazine
In 1920, Sul América magazine is launched to become
a true publishing sensation. Published initially
as a communication tool of the company with its
policyholders, it attracts the attention of other
audiences due to the quality of its contents, with pages
dedicated to literature, science, humor, and other
subjects of general interest.
Front view, SulAmérica
headquarters in Rio de Janeiro.
Inauguration of new headquarters
In 1925, SulAmérica inaugurates its new
headquarters, Rua do Ouvidor with Rua da
Quitanda, downtown Rio de Janeiro. The initiative
demonstrates the company’s boldness, willing to
overcome the extremely unfavorable moment,
culminating with the world crisis in 1929.
First car insurance claim.
First car insurance claim
In 1929, insurance scope is further expanded with the
car insurance segment, and SulAmérica pays its first
car insurance claim.
1940-1960
Steady as the
Sugar-Loaf Mountain
In 1941, SulAmérica’s new visual identity is
created, providing a single identification for all
communication activities and actions of the company.
First SulAmérica’s
brand.
8
2009 ANnual REPORT
PROFILE
Supporting modern art
In 1949, at the inauguration of a branch office in Rio de
Janeiro, SulAmérica holds the country’s largest modern
art exhibition to date.
Larragoiti Hospital, now Hospital da Lagoa.
SulAmérica Hospital
In 1951, through the Larragoiti Institute, SulAmérica
launches the construction of the Larragoiti Hospital
– now Hospital da Lagoa –, a reference in the South
Zone of Rio de Janeiro.
1960-1980
Rio de Janeiro Stock Exchange,
in the 1970’s.
Initial public offering
In 1969, Sul América Companhia Nacional de Seguros (Salic)
makes its initial public offering with stock listed in the Rio
de Janeiro Stock Exchange.
1960-1980
Initial public offering
In 1969, Sul América Companhia Nacional de Seguros
(Salic) makes its initial public offering with stock listed in
the Rio de Janeiro Stock Exchange.
Association with
foreign insurance groups
In 1977, a SulAmérica associates with groups Gerling
Konzern Welt-Versicherungs Pool A.G., from Germany,
and Societá Assicuratrice Industriale (SAI), from Italy, to
found companies Gerling Industrial and SAI.
9
2009 ANnual REPORT
PROFILE
Creation of Sul América S.A.
In 1978, as the group expands, Sul América S.A. is created as
the holding company for the financial group.
1980-1995
Private pension start of operations
In 1987, endeavoring to diversify and expand services,
the Group starts its pension plan operations, with Sul
América Previdência Privada S.A.
Health Insurance and
24-hour Assistance
In 1989, the company launches SulAmérica Saúde,
the most comprehensive and flexible health
insurance plan in the market. In the same year, in
another innovative action, the company launches Sul
América 24-hour Assistance services, as part of car,
life, health and personal accident insurance.
1995 – SulAmérica’s
First Centennial
In 1995, the company celebrates its 100th anniversary.
In that same year, the company takes the lead in the
Brazilian health insurance market, the sector with its
most significant growth rate in the period.
10
2009 ANnual REPORT
PROFILE
1995-2000
Brasilveículos and Brasilsaúde
In 1995, a successful business partnership of SulAmérica
with Banco do Brasil creates Brasilsaúde Companhia
de Seguros. Soon, in 1996, Brasilveículos Companhia de
Seguros is also set up, for the segment of car insurance.
Growth through acquisitions
After successfully acquiring Iochpe Seguradora
S.A., in December 1994, SulAmérica maintains its
consolidation strategy by acquiring insurers Santa
Cruz Seguros S.A. and Itatiaia Seguros S.A., in 1996.
This is also the year in which SulAmérica entered
the asset management segment, by setting up Sul
América Investimentos Distribuidora de Títulos e
Valores Mobiliários S.A.
Joint venture with Aetna
In 1997, SulAmérica enters into a joint venture with
Aetna International Inc., one of the largest U.S. insurance
companies, world leader in the health insurance segment,
in order to expand its health, life and pension operations.
Inauguration of new office
building, in Sao Paulo
In December 1999, SulAmérica inaugurates
its new building in Sao Paulo, with a service
structure that integrates all the company’s
business areas in the region.
11
2009 ANnual REPORT
PROFILE
SulAmérica in the 21st Century
Association with ING
In 2001, ING acquires Aetna’s stake and, in 2002, enters into a
partnership agreement with SulAmérica’s holding company.
Launching of C.A.S.A.
In 2005, the first Auto Super-Service Center
(C.A.S.A.) is opened in Sao Paulo, a milestone in the
provision of services in the car insurance segment.
C.A.S.A. Bandeirantes,
in Sao Paulo.
Partnership with Axa
In 2006, by means of a contract with Axa Corporate
Solutions, SulAmérica becomes the primary supplier of
Axa’s products to its international customers in Brazil.
Open doors and
open capital – 2007-2009
Issuance of US$ 200 million
in Eurobonds
In February 2007, SulAmérica completes its first
issuance of US$ 200 million in Eurobonds. With
this, SulAmérica becomes the first insurance
company in Latin America to issue these bonds
to raise funds in the international market.
12
2009 ANnual REPORT
PROFILE
Innovative communication actions
At the end of February 2007, SulAmérica launches Rádio
SulAmérica Trânsito 92.1 FM, for 24-hour broadcast of
traffic bulletins, news and tips in the city of Sao Paulo. The
initiative helps consolidate our brand name awareness in
the country’s largest insurance marketplace.
Initial public offering
raises R$775 million
On October 5, 2007, SulAmérica makes an initial
public offering and becomes a listed company. The
company’s shares start trading on BM&FBovespa,
listed as Level 2 Corporate Governance, a segment
intended for trading shares in companies
that voluntarily agree to adopt best corporate
governance practices and meet certain information
disclosure requirements.
Consolidation and growth
with new partnerships
On May 27, 2008, SulAmérica enters into an exclusive business
partnership with BV Financeira, to promote SulAmérica
Auto insurance. In the same year, the company successfully
completes the tender offer for outstanding shares of Sul
América Companhia Nacional de Seguros.
A new home in Rio de Janeiro
In August 2009, SulAmérica inaugurates its
new facilities in Rio de Janeiro, located at the
RioCidadeNova Complex. The new building features
modern energy and information technology systems,
and meets the highest standards in sustainability
and operational efficiency. The complex is also the
site for the first Auto Super-Service Center (C.A.S.A.)
in Rio de Janeiro, an exclusive service developed
by the company for more convenient attention to
Seguro Auto SulAmérica policyholders.
13
2009 ANnual REPORT
PROFILE
Awards and recognitions
Below is a full list of awards and recognitions received by the company
SulAmérica’s leading role is demonstrated by the awards
received in 2009. They represent the recognition by society
of the pioneering vision of the company, which, in a
comprehensive way, remains as a reference in customer
services, in the relationship with employees, in the
management of its resources, in the creation of products and
services, in the management of its brand reputation, and in
investor relations. Among the awards accepted by SulAmérica
in 2009, we highlight:
• DMA Echo Awards 2009 – Best Use of Direct Mail Channel with case
Picasso (home owner insurance) – Direct Marketing Association;
• Best Customer Relations Company, category Insurance –
Associación Iberoamericana de Relaciones Empresa Cliente
(Aiarec); and
• Four-time winner of “Consumidor Moderno” Award for
Excellence in Customer Services - category: Insurance, Pension
and Capitalization – Padrão Editorial.
[GRI 2.10]
Read on by visiting the complete list of awards and recognitions.
14
2009 ANnual REPORT
PROFILE
Area
Insurance
Customer
Services
Human
Resources
Communication
Investor
Relations
Awards and recognitions
Entity
“Segurador Brasil” - categories: Individual Life,
Corporate and Property Risks, and Pension
Segurador Brasil Magazine
“Desbravadores” Trophy - Pioneer implementation of digital certification
Segurador Brasil Magazine
Best in insurance segment
Padrão Editorial
Fastest growing insurer by net income - large insurance groups Property insurance group
Conjuntura Econômica
Magazine / FGV
Top Corporate Excellence 2009 - Insurance sector
Organização Nacional de Eventos e
Pesquisas (O.N.E.P.), Minas Gerais
“Segurador Brasil” - Best performance in segments:
auto, condominium and civil liability
Analysis by Economist Luiz Roberto
Castiglione
JRS Trophy - Regional Highlight, National Executive
(Marcus Vinícius Martins) and Regional Executive (Luciano Silveira)
JRS Comunicação
Highlight in Insurance Market (Rádio SulAmérica Paradiso)
and Best Technical Manager (Gildete Bornolini)
CVG-RJ
“Cobertura” Performance Award - Category “Best Economic-Financial
Performance (Maritime and Air Insurance Portfolio)”
Cobertura Magazine
“Consumidor Moderno” Award for Excellence in Customer Services
- category: Insurance, Pension and Capitalization
Padrão Editorial
Champions of the Decade Award - Zeca Vieira / Edison Kinoshita /
Patrick Larragoiti
Padrão Editorial
Quality Standard Award in Contact Center - category: Insurance and Pension
Padrão Editorial
Best Customer Relations Company - category: Insurance
Associación Iberoamericana de
Relaciones Empresa Cliente (AIAREC)
Best in People Management
Hewitt and Valor Econômico
Wave Festival 2009 Award - Gold for play “Animal Perigos”
home owner insurance)
Associação Brasileira de
Marketing Direto – Abemd
“Aberje Award” - Communication and Community Relations Case Praças da Paz SulAmérica (Regional São Paulo)
Aberje
DMA Echo Awards 2009 - “Best Use of Direct Mail Channel
with case Picasso (home owner insurance)
Direct Marketing Association
POP - Category Public Relations in Private Organizations case SulAmérica Health Studies
Conselho Regional
de Relações Públicas
TOP 3 Best Evolution in IR (small & mid cap companies)
IR Magazine, with IBRI
and RI Magazine
TOP 8 Best Meeting with Analyst Community (small & mid cap companies)
IR Magazine, with IBRI
and RI Magazine
TOP 10 Best IR Professional (Arthur Farme d’Amoed Neto)
(small & mid cap companies)
IR Magazine, with IBRI
and RI Magazine
TOP 9 Best Annual Report (with net income R$1 billion or higher)
Associação Brasileira das
Companhias Abertas - Abrasca
15
2009 AnNual REPORT
Key facts in 2009
Highlights of the year
January
• SulAmérica restructures its technical board, Life and Private
Pension areas. Administrator Carolina de Molla takes over
the position, with responsibility for managing a team where
challenges are to promote the growth of these areas and
identify new opportunities in the sectors of life insurance and
private pension. Graduated from Universidade Mackenzie and
specializing in Insurance Management, Carolina has been in the
market for 14 years now, and has experience in pension funds,
instituted plans, and group life.
• Gabriel Portella becomes SulAmérica’s Health Vice-President.
His challenge is to expand even further the company’s
successful health operations, whose income represents about
50% of total premiums. Economist, with post-graduate degree
in Business Administration, Portella has his professional history
closely linked to SulAmérica, which he joined in 1974 and has
held a number of positions. In the period 1999-2003, he was
ahead of the company’s Health area.
• SulAmérica opens a new unit of its chain of Auto SuperService Centers (C.A.S.A.), in Curitiba, the first city to receive the
services in Paraná.
• SulAmérica was awarded with ‘Segurador Brasil 2009’,
by Editora Brasil Notícias. The company was recognized by
its performance in the portfolios Individual Life, Corporate
and Property Risks, and Pension portfolios. In addition, the
company accepted the ‘Desbravadores’ Trophy, for its pioneer
implementation of digital certification.
March
April
February
• SulAmérica inaugurates a subsidiary in Jundiaí, Sao Paulo
upstate. The new unit is part of the project for expansion in
Sao Paulo, the country’s large market in insurance premiums,
representing about 50% of the sector income.
• SulAmérica is the first Brazilian insurance company to use
water-based paint for repairs to vehicles of Seguro Auto insured
members. The new technology is the result of a partnership with
Basf and allows reduction of up to 90% of solvent emissions in
16
2009 AnNual REPORT
KEY FACTS IN 2009
the air compared to traditional automotive paint, in addition
to improving significantly the working conditions of repair
professionals.
with the successful Rádio SulAmérica Trânsito FM 92.1.
The radio went on air in February 2007 to strengthen the
SulAmérica Auto insurance brand name in Sao Paulo.
• For the fourth time running, SulAmérica receives the
‘Consumidor Moderno’ Award for Excellence in Customer Services,
promoted by Grupo Padrão. The company was recognized as the
best in the segments of Health, Pension and Capitalization. It was
also awarded in the main category of the insurance market, being
considered the Best in the Insurance Sector.
• SulAmérica reorganizes its Other P&C, uniting under a single
coordination segments Auto, Mass Insurance, and Industrial
and Commercial Risk Insurance. The measure provides better
conditions to make use of synergies and increase operating
efficiency. The unit is coordinated by Carlos Alberto Trindade
Filho, specialist in Personal Insurance from the American College,
Philadelphia, USA, and MBA from Universidade de Sao Paulo
(USP). With over 15 years experience in the insurance sector, the
executive joined SulAmérica in 2004. He has been working in the
areas of Life, Sales and Marketing and, since 2008, he has been
responsible for the Unit of Auto and Massify Insurance.
May
• Fitch Ratings affirms the long-term ratings in foreign currency
BB- on the issuance of US$ 200 million in senior notes by
SulAmérica, with stable outlook.
• SulAmérica is selected by Conjuntura Econômica magazine
as the fastest growing company by net income among large
insurance groups, in the property insurance category.
• SulAmérica is awarded gold in Wave Festival 2009, with
‘Animal Perigoso’, a direct mail piece created by Sun/MPM to
offer homeowner insurance. Distributed to about 5 thousand
people, the piece encouraged SulAmérica Auto policyholders
to learn the advantages of homeowner insurance products
offered by the company.
• Member of SulAmérica Board of Directors Roberto Teixeira
da Costa was recognized by Ibri (Brazilian Institute of Investor
Relations) as Capital Market Personality in 2009, for 50 years
contributing to the best practices in capital market.
• SulAmérica expands operations by opening another subsidiary
in Sao Paulo, in the district of Aricanduva, East Zone of the
capital city.
• SulAmérica is appointed one of the three listed companies
with the best evolution in Investor Relations (small & mid
cap companies), an award promoted by IR Magazine, jointly
with RI magazine and Ibri. In the award, SulAmérica is also
appointed one of the 10 companies holding the best meeting
with the community of investment analysts (small & mid cap
companies), and Vice-President, Corporate and Investor Relations,
Arthur Farme d’Amoed Neto, is selected one of the 10 best IR
professionals (small & mid cap companies).
June
July
• SulAmérica sets up the Sustainability Committee, consisting
of eight executive officers and managers, whose mission is to
increasingly integrate this concept to the policies and day-to-day
affairs. To demonstrate the materiality of the topic for the company,
the Committee reports directly to the Chief Executive Officer.
• With investment of R$15 million, rádio SulAmérica Paradiso
(95.7 FM) is launched in Rio de Janeiro, an innovative partnership
between SulAmérica and Dial Brasil group. The objective is to
offer the audience in Rio de Janeiro a programming with more
information on traffic and quality of life, public services and
good music, by combining these two companies’ concepts of
well-being and health.
• SulAmérica receives the Champions of the Decade Award,
promoted by Grupo Padrão and Consumidor Moderno
magazine. The company was honored in two segments:
Contact Center Director, Edison Kinoshita, was awarded
Relationship Personality of the Decade, and Marketing
Director, Zeca Vieira, was awarded Marketing and
Communication Personality of the Decade.
SulAmérica receives the Insurance Market Award 2009 –
‘Gaivota de Ouro’ Trophy, for excellence in communication
• SulAmérica Investimentos receives grade AMP-1 – Very strong,
best rating for management of third parties’ resources, thus
reflecting the company’s good business profile. Another points
contributing to reach this level: diversified portfolio, wide
range of products, proper operating and control practices,
expertise of management body, disciplined processes for
investment management, and good fiduciary principles.
SulAmérica Investimentos is the only independent
management company in the Brazilian market to receive
highest rating from Standard & Poor’s.
August
• SulAmérica inaugurates its new facilities in Rio de Janeiro,
located at the RioCidadeNova Complex. The new headquarter
represents another milestone in the company’s record of
accomplishment. In addition to contributing to the revitalization
of Cidade Nova, the new building features modern energy
and information technology systems, and meets the highest
standards in sustainability and operational efficiency. The
complex is also the site for the first Auto Super-Service Center
(C.A.S.A.) in Rio de Janeiro, an exclusive service developed by
the company for more convenient attention to Seguro Auto
SulAmérica insured members.
17
2009 AnNual REPORT
KEY FACTS IN 2009
• SulAmérica creates a new Corporate Sustainability
Management area, to align all concepts of sustainability, social
responsibility and private social investment. The creation of the
new area demonstrates that sustainability really matters in the
company’s strategy.
for the acquisition of up to 1,046,872 units, corresponding to 3%
of outstanding units, and approximately 1.1% of the total shares
issued by the company by September 30, 2009. The lead-time for
acquisition is up to 365 days, from the date of the material fact,
ending on October 7, 2010.
• Marcelo Benevides becomes Commercial Director, Sao Paulo
branch office. His major challenge is to accelerate even further
the SulAmérica’s growth in the state. Benevides has 24 years
of experience in the insurance market, dedicated to sales and
marketing areas, with distinguished projects in the Rio-Sao Paulo
marketplace, in medium and large size insurance companies.
• SulAmérica 2008 Annual Report is appointed top 10 among
companies with net income equal to or above R$1 billion
by the Brazilian Association of Listed Companies (Abrasca).
The evaluation reinforces the importance of information
transparency of listed companies and recognizes the best
reports in terms of quality of information.
September
• Member of SulAmérica Board of Directors Roberto Teixeira
da Costa is honored by CPC (Accounting Pronouncements
Committee) for his support to the committee in the convergence
of companies to international accounting standards.
• SulAmérica innovates in customer relations and launches
SulAmérica Lab, to act as its Council of Customers. The initiative
is in line with the priority the company has been giving to
the engagement of its stakeholders, aimed at identifying the
perceptions of its customers, enabling the development of new
relationship practices.
October
• Standard & Poor’s raises SulAmérica ratings from B+ to BB-,
with stable outlook. The agency found that the company’s
financial performance has been solid and consistent in recent
years, and SulAmérica has a strong capital position to support
future growth.
• SulAmérica wins three golden prizes at Echo Awards 2009,
Direct Marketing Association (DMA), the most important
international awards in the direct mailing sector. The company
is awarded for the case Picasso, created to win customer loyalty
and encourage homeowner insurance renewal. The company
receives the top award in the categories Financial Products and
Services, and Best Use of Direct Mail Channel. It is also selected
by popular voting as the best case in the sector, therefore
winning its third golden prize.
• SulAmérica informs its shareholders and the market in general
that it has received a letter from Banco do Brasil, in which the
bank expresses its interest in acquiring the entire interest held by a
subsidiary of the company in Brasilveículos Companhia de Seguros,
representing 60% of the voting stock and 30% of total capital.
• The Board of Directors approves a tender offer for outstanding
shares of the company, to be held in treasury to be used later in
its General Plan for Stock Acquisition Option. The program calls
November
• SulAmérica is recognized by a survey conducted by Hewitt
Associates, in partnership with newspaper Valor Econômico,
as one of the 5 best companies in people management. This
assessment reflects the quality of the actions implemented by
the company to develop and appreciate its employees.
December
• SulAmérica is listed in the Corporate Sustainability Index (ISE)
with BM&FBovespa 2009-2010, to become the first insurance
company to be a part of this selected group of companies with a
differentiating factor in sustainability. The ISE portfolio consists
of 43 shares in 34 companies, representing 15 industries and
totaling R$730 billion in market value.
• Patrick de Larragoiti Lucas, SulAmérica’s Chief Executive Officer,
submits to the Board of Directors his decision not to stand for
another term on the Board of Executive Officers, effective March
2010. The executive officer stands as Chairman of the Board, but
will no longer serve simultaneously as CEO and Chairman of the
Board, a measure that reinforces SulAmérica’s commitment to
the best practices of corporate governance.
• SulAmérica receives the 29th National Award in Public
Relations, from Conrerp 2nd Region–SP/PR, considered a major
award in the segment of corporate communication. The
company is the winner in the category Public Relations in Private
Organizations, with the work developed with the media in the
preparation and release of the SulAmérica Health Studies.
18
2009 ANNUAL REPORT
Main indicators
Highlights of SulAmérica’s performance in 2009
Results – R$ million
2007
2008
2009
Insurance premiums
7,005.4
7,723.2
8,679.6
Earned premiums
6,574.1
6,985.1
7,777.2
Retained claims and benefits expenses
(4,482.8)
(4,958.1)
(5,700.1)
Sales costs
(692.7)
(776.4)
(880.7)
Gross margin
1,398.6
1,250.5
1,196.4
Income before income tax, social contribution and profit sharing
676.2
805.4
620.4
Net income
321.5
415.9
419.1
Adjust net income
339.5
381.8
419.1
Results per share
2007
2008
2009
Number of shares
281,295,931
280,913,431
279,657,196
Net income – R$
1.1092
1.4796
1.4986
19
2009 ANNUAL REPORT
MAIN INDICATORS
Results per share
2007
2008
2009
Adjusted net income – R$
1.1732
1.3580
1.4986
Shareholder's equity – R$
6.9708
8.1364
8.8769
Unit price – R$
30.24
16.00
51.99
Market captalization – R$ million
2,835.5
1,498.2
4,846.5
Balance sheet – R$ million
2007
2008
2009
Technical reserves – insurance and reinsurance
2,992.3
3,909.5
4,651.8
Technical reserves – private pension
1,369.8
1,653.5
1,906.6
Shareholder's equity
1,960.9
2,285.6
2,482.5
Total assets
9,097.9
10,881.8
12,433.4
Financial and operational ratios (%)
2007
2008
2009
ROAE
22.3%
19.6%
17.6%
Adjusted ROAE
23.6%
18.0%
17.6%
ROA
3.5%
3.8%
3.4%
Adjusted ROA
3.7%
3.5%
3.4%
Payout
25.0%
26.3%
50.0%
Combined ratio
97.0%
98.4%
99.4%
Loss ratio
68.2%
71.0%
73.3%
Gross margin
21.3%
17.9%
15.4%
Administrative expenses + tax expenses
16.1%
15.2%
13.5%
Material data
2007
2008
2009
Assets under management (R$ million)
11,493
11,976
14,440
Number of employees
5,582
5,506
5,112
Number of branches
15
14
14
Number of auto service centers (C.A.S.A.s)
6
13
17
20
2009 ANNUAL REPORT
Message from the president
Record-breaking result shows ability to overcome scenario
of uncertainties
Dear Reader,
2009 will certainly be a year remembered for the great steps
forward taken in SulAmérica. For the fourth year running, we
are presenting record results where performance is all the
more significant upon looking back and realizing that it was
accomplished in the midst of a context marked by uncertainty
in both the internal and external markets. This proves that our
business strategy was on the right course and demonstrates
that our groundwork is solid. Over the twelve months of 2009,
we pressed on with the implementation of our plan for growth
and endeavored to expand our business in all our fields of action,
maintaining a policy of discipline in financial management and
according special treatment to our operational efficiency. [GRI 1.1; 1.2]
We thus concluded 2009 showing net incomeof R$419 million, a
9.8% increase in the year on a recurring basis. Return on equity
reached the 17.6% mark and revenue from premiums totaled
R$8.7 billion, an evolution of more than 12% over the period.
In the health segment, the quality of our products and services
made allowed us to keep up growth rhythm of insured
membersand premiums. Our group health portfolio was thrust
forward by an expansion of over 24% in business with small and
medium-sized companies. Our dental care portfolio increased
50% in 2009, demonstrating the success of our Customer
Relationship Management actions and cross-sellingincentives.
The increase in the loss ratioobserved over the year, a reflection
of the scenario experienced by the Brazilian labor market,
which led to greater frequency of use, is already showing signs
of reversion with indexes for the last two quarters exhibiting
a drop as compared to what we had been experiencing during
the first half of the period. The recovery of the Brazilian economy
in 2010 and improvements in employment figures will favor
growth of the health portfolio, especially in the small and
medium-sized company sector, one of the targets our actions
have focused on, which will contribute to improved results.
21
2009 ANNUAL REPORT
Message from the President
We also had an outstanding year in the auto segment, with growth
of over 25% in premiums, while the expansion of industry reached
the 13% mark, an increase of 170 bps in our market share. Additionally,
the loss ratiodecreased more than 250 bps, which is evidence of the
quality of our work on improving our pricing and risk acceptance
process, and improvements put in place in claim management.
In 2009 we maintained a winning strategy of segmentation
and innovation in creating new products with the launch of
SulAmérica Zero Km, targeting the growing new vehicle market,
and SulAmérica Caminhão Km Rodado (trucks’ mileage), which
innovated in the pricing method in this segment on linking the
premium to actual use of the vehicle and its exposure to risk.
Results attained are also a reflection of our multiline model. We
diversified our pension and investment products with the launch
of a new line targeting high-income public, SulAmérica Prestige.
Another newcomer was SulAmérica Você Mulher, life insurance with
specific services covering needs of the female public. In addition, we
reformulated SulAmérica Condomínio insurance, with new coverage
and guarantees for residential or commercial condominiums.
In addition to excellent financial results, SulAmérica’s investment
area also gained recognition for its good management practices.
We were the only independent management entity in the Brazilian
Market to be awarded maximum ratings for administration of
third-party resources in Standard & Poor’s assessment. For the
fourth time running, we were also awarded the ‘Consumidor
Moderno Magazine’ Award for Excellence in Customer Services in
the Health and Pension and Capitalization segments.
In 2009, we once again reinforced our historical links with
insurance brokers, promoting new action aiming at further
improving our relationship with these professionals and
entrepreneurs who comprise our main distribution channel.
With this thought in mind, we carried forward the most
important sales promotion campaign in the insurance market,
Campeões SulAmérica, and we put our additional commission
programs into sequence, extending the range of participating
products. Another innovating initiative was the creation of
SulAmérica Broker’s Radio, a vehicle designed exclusively for
brokers active with SulAmérica, which provides new up-to-date
information about the company and the insurance market.
All our action was backed up by marketing and relationship
campaigns strengthening customers’ and society’s image of
SulAmérica. The successful communication strategy adopted with
SulAmérica Traffic Radio in Sao Paulo encouraged us to create a
vehicle for Rio de Janeiro residents, Paradiso SulAmérica Radio, which
has an estimated audience of over 860 thousand people tuning in.
2009 also marked the start of a new stage in SulAmérica’s
history. In August, we inaugurated new headquarters in Cidade
Nova, in Rio de Janeiro. The modern building meets requirements
for sustainability and operational efficiency, allowing for
a reduction of up to 30% in the use of energy and natural
resources. In our new location, we will have an opportunity to
contribute to the revitalization of this new urban development
area in Rio de Janeiro, the city which has generously provided a
home for SulAmérica for more than 114 years.
I cannot omit highlighting our evolution in making
sustainability an increasingly important part of our culture,
operations and day-to-day routine in managing the company.
We have set up a Sustainability Committee and an area
working exclusively on this issue, as well as including specific
sustainability targets in our new cycle of strategic planning.
In 2009, two initiatives strengthened and provided examples of
this commitment: the use of water-based paint for repairs to our
insured parties’ vehicles, benefiting the environment, partner
workshops and clients; and digital certification of exchanges
of documents between the insurer and providers of medical
services, which increases security of transactions and even
economizes on paper.
Another occurrence we are extremely proud of was the
recognition of SulAmérica, for the second year running, as one
of Brazil’s best companies in terms of people management,
according to a study published in Valor Econômico newspaper.
Value attached to human capital is one of SulAmérica’s
guidelines, and we are fully aware of the huge value of the tasks
performed by every employee in the company’s results.
May I take advantage of this opportunity to thank all the
employees, customers, brokers, shareholders, suppliers and
partners for the commitment and dedication they have
contributed to help us achieve record results once again.
With this short introduction, I take pleasure in inviting you to
learn further details about the company and its action in 2009 set
out in this annual report. We present these results with immense
pride, utterly convinced that SulAmérica will continue on its
trajectory of growth and leadership for a great many more years.
22
2009 ANNUAL REPORT
Strategy
SulAmérica makes use of all opportunities to ensure competitiveness
SulAmérica is on constant lookout for changes in business
environment and seeks to anticipate market moves, in order to
seize all possible opportunities and ensure its competitiveness.
Having this in mind, strategic planning establishes the direction of
the company over a three-year period, and is revised periodically,
setting the focus for management performance. In order to
maintain its ability to generate value, SulAmérica has identified the
following priority guidelines for the development of its business:
• To strengthen SulAmérica brand name;
• To expand the portfolio of products and services;
• To promote continuous review of its policy for relations with
brokers, and develop a new value proposition for this channel;
• To improve the level of customer services, aimed at achieving
higher satisfaction rates;
• To enhance the cross-selling model through investments in
relationship actions with customers;
• To adopt the best practices in underwriting, by conducting a
thorough review of the acceptance and pricing strategy;
• To implement a strategy to balance administrative costs, by
adopting best practices to streamline procedures and trim
overhead costs;
• To incorporate innovation in the process of developing
products and services;
• To enhance the process for control of operating risks.
Challenges for 2010
• To strengthen partnership with brokers through relationship
programs;
• To increase the focus on market segmentation (large
companies, small amd medium enterprises (SME), partnerships
and families);
23
2009 ANNUAL REPORT
Strategy
• To develop a portfolio of products and services that is tailored
to customer needs;
• To promote – with customers and partners – a unique brand
experience, with greater adroitness, transparency and trust;
• To continue developing pricing intelligence for products
and services;
• To pursue an efficient operating model, by fighting waste and
all barriers to productivity;
• To appreciate human capital as great differentiating factor;
• To invest in technology to increase the potential of business
strategies;
• To keep a firm commitment to sustainability, in order to help
build a better world.
In order to ensure that its strategy is disseminated to all
employees, SulAmérica adopts modern management tools.
Among them, we highlight:
• Balanced Scorecard – converts strategy into action plans, which
are developed under four headings: financial; customer; internal;
and learning and growth;
• Portfolio of strategic initiatives for the company’s growth – the
expansion can occur in three ways: organic, through acquisitions,
and diversification;
• Contract for Executive Management – a tool that formalizes
the commitment of executive officers to the strategic guidelines
set forth in the strategic planning;
• Program for Management of Performance and Development
(PGDD) – a systematic model to unfold the strategy to all
employees with the company.
Integrated Model for Strategic Management
PGDD
Management Contracts
BSC
Strategic Planning
Program
Projects / Initiatives
24
ANNUAL REPORT 2009
Sustainability vision
Use of opportunities to secure competitiveness
Over the past few years, SulAmérica has advanced in the
incorporation of the sustainability vision into day-to-day
management. The biggest challenge for the company is permeating
the entire organization in a comprehensive way, so that the
development of new products and services in insurance, pension
and asset management addresses the mitigation of economic, social
and environmental impacts inherent to the activity, following the
concept of Triple Bottom Line, or tripod of sustainability. [GRI 1.2]
Consistent with this vision and convinced that this is a strategic
issue, in 2009 SulAmérica invested in developing governance and
sustainability, and brought the topic into its strategic planning
for 2010-2012. The first step was the creation of the Sustainability
Committee and the Management of Corporate Sustainability.
The Sustainability Committee’s mission is to define guidelines,
evaluate proposed projects and programs, approve and monitor
the sustainability initiatives implemented by the Management
of Sustainability. It consists of eight members, being three vice
presidents, a director and three superintendents, representing
different areas of SulAmérica, as well as an independent
member and the manager of the area of corporate sustainability.
Evidencing its strategic importance, the Committee is not formally
subject to another instance of governance, has a member of the
Board of Directors, and reports directly to the CEO.
Established in August 2009, the Management of Corporate
Sustainability is responsible for implementing various programs
and projects for environmental responsibility and social private
investment. It encourages the adoption of sustainability concepts
in the relationship of the different areas of SulAmérica with
customers, brokers, service providers and suppliers. It reports to
the Vice President of Relations and Human Capital, has its own
budget and, like other management areas, starting in 2010, will
have performance and variable compensation tied to results.
Alongside the creation of the governance structure, the company
outlined, as part of its planning for 2010-2012, a specific strategic
goal in sustainability - Be Committed to Sustainability. Processes
and management systems will be implemented seeking to
perpetuate the business and sustainable development of
the communities where SulAmérica operates. In 2010, part of
the board of executive officers will be assessed by means of a
sustainability target tied to variable compensation.
25
ANNUAL REPORT 2009
STRATEGY
During the second half of 2009, the Committee established
preliminary pillars of sustainability at SulAmérica: Supporting
the Community; Developing Human Capital; Respecting the
Environment; and Work with Ethics and Transparency. The goal is
to organize the company’s initiatives to consolidate and clarify its
vision on how sustainability permeates the business. [GRI 4.15]
Support the community
In the relation with the community, SulAmérica invest in
campaigns, actions and social projects that rely on voluntary
work by employees and partners. Some of them have become
reference of good citizenship practice and environmental
preservation. Additional information about private social
investment and volunteering at the company can be found in
chapter 10.8, on Intangible Assets - Social Investment. [GRI 4.16]
Develop Human Capital
The development of the Human Capital through a clear Human
Resources policy and consistent investment in initiatives for
relationships and development of people is the only way to make the
business increasingly more profitable and sustainable. For additional
information about the actions for people development, please refer
to chapter 10.2, on Intangible Assets - Human Capital. [GRI 4.16]
Respect the environment
In recent years, consumption of natural resources became a
systematic and conscious concern at SulAmérica, reinforced
also by the potential impact, on its entire line of products, of
environmental disasters caused by climate change. With the
increase in the number of events of major proportions, losses to
be indemnified also increase every year. [GRI 4.16]
Work with ethics and transparency
The responsible corporate behavior requires an approach
guided by ethics and transparency, attitudes integrated into all
SulAmérica’s activities. Among the several initiatives, we should
mention the Code of Ethics and Conduct (which gathers the
standards of professional conduct in the relationship, internally
and with third parties), the manuals for shareholders and
the various committees that evaluate all the activities of the
company. Please, refer to chapter 7, Corporate Governance.
Also in 2009, SulAmérica started a diagnostic work of
existing practices, actions and evidence related to corporate
sustainability. This study contributed to the creation of a basis
for the sustainability strategy. During the process, several leaders
and managers from different business units were involved.
The target is to have a sustainability strategy and action plans
implemented in 2010.
Since 2008, the Company has been adopting the guidelines
of the Global Reporting Initiative (GRI) in the annual report
as a way to integrate socio-environmental information to
economic-financial information. This practice contributes to
the development of an internal culture on the topic, and to the
identification of opportunities for improvement of processes,
from the standpoint of sustainability. [GRI 4.16]
Stakeholder engagement
The relevance of the engagement of different stakeholders
directly and indirectly related to the activities of SulAmérica,
taking into account their needs, expectations and demands, is
part of company culture. [GRI 4.16]
Council of Customers
In September 2009, SulAmérica innovated in the relationship
with customers by launching the SulAmérica Lab, a series of
meetings that the company will promote with insured members
to listening to them directly what they think about the products
and services of the company. The meetings take place every
two months in Sao Paulo and Rio de Janeiro as Council of
Customers, and rely on the participation of about 40 customers.
The pioneering initiative reflects the concern of the company in
structuring its businesses. [GRI 4.16]
Climate Committees
SulAmérica created Climate Committees in all its Vice President
areas to promote greater integration in the areas and improve
matters identified as lower than expected in the Climate Survey
conducted biannually. The committees consist of employees and
managers who define the action plan for the improvement of the
points identified in the survey. The action plans are carried out by
the Climate Committee with the involvement of other employees
in each area. [GRI 4.16; 4.17]
Charters, Principles and Other Initiatives (GRI 4.12)
To clarify its position internally and externally, SulAmérica declares
its commitment to sustainability by participating in charters,
principles and conventions relative to issues that are critical to its
business. In line with this, it was the first insurance company to be
listed in the portfolio of BM&FBovespa’s Corporate Sustainability
Index (ISE). By joining the index, SulAmérica had its dedication to
the topic recognized in recent years, both in its strategic priorities,
and in its operations. ISE consists of 43 shares in 34 companies,
representing 15 industries and totaling R$730 billion in market
value. Listed shares are selected among the 150 most actively
traded on the floor, in terms of liquidity, and weighted in the
portfolio at market value of assets available for trading. Being part
of this group of companies allows SulAmérica, among other gains
in reputation and image, accessing a fund industry dedicated to
sustainability, which has a net worth estimated at R$1.13 billion in
Brazil. [GRI 4.12; 4.13]
Is also worth stressing that, in 2009, SulAmérica Investimentos
– an area dedicated to the segment of asset management – has
become a signatory to the Principles for Responsible Investment
(PRI), a platform developed by the United Nations and by a group
of 20 representatives from 12 countries. The initiative aims at
encouraging investment companies to incorporate actions
related to environmental, social and corporate governance issues
while assessing the performance of its portfolio.
In September 2009, the Ministry of the Environment, the
National Confederation of Insurance Companies (CNSeg) and
26
ANNUAL REPORT 2009
STRATEGY
the Rio de Janeiro and Espirito Santo Insurer Trade Association
signed the Green Insurance Protocol (see box). SulAmérica, along
with other insurance companies, was a pioneer in engaging
into the discussions of the working group formed to draft
the protocol of intent. Now, the challenge is to incorporate
environmental criteria, as suggested in the protocol, in the
assessment of socio-environmental impacts and costs in
managing its assets, in risk analysis of insured enterprises, and
in the development of new products.
Within its sphere of activity and influence, SulAmérica adopts
and supports a set of values relative to human rights, improved
working conditions and environmental preservation, through
clauses that do appear on all contracts. In addition to contractual
clauses, the company reinforces these commitments in its Code
of Ethics and Conduct, which is distributed to all employees and is
available to all stakeholders in the company’s website.
Green Insurance Protocol – Main Proposals
1 – Offer insurance, pension, and capitalization products that
foster life quality to the population, and the sustainable use
of the environment, observing the following guidelines:
I) Continuously improve the supply of products and services
to promote projects that have socio-environmental additions;
II) Offer products designed to cover damage to the
environment and encourage their purchasing;
III) Guide the consumer of its products to the adoption of
sustainable practices of production and conscious consumption.
2 – Consider the socio-environmental impacts and
costs in managing its assets and risk analysis, based
on internal policies of each institution and the
following guidelines:
I) Require in the analysis of proposals relating to insurance
coverage of plant and equipment potentially causing significant
environmental degradation, the presentation by the proponent
of environmental permits required by applicable law;
II) Incorporate socio-environmental criteria to the process of
risk underwriting, considering its potential impacts and the
need to recommend technical protection measures;
III) When compatible with the nature of the capitalization
title, consider the allocation in projects of socioenvironmental interest part of the proceeds received;
IV) Consider, in investing the assets guaranteeing technical
provisions, the exclusion of securities issued by companies
with socio-environmental standards with performance
below the acceptable.
Examples of Commitment
a) Supports and respects the protection of internationally
proclaimed human rights;
b) Makes sure its own corporations are not complicit in
abuses and violations of human rights;
c) Upholds the freedom of association and the effective
recognition of the right to collective bargaining;
d) Supports the elimination of all forms of illegal work,
among them, but not limited to, forced, compulsory,
analogous to slavery, and in irregular or similar situation;
e) Supports the effective eradication of child labor;
f) Supports the elimination of discrimination in respect of
employment and occupation;
g) Supports a precautionary approach to environmental
challenges;
h) Undertakes initiatives to promote greater environmental
responsibility;
i) Encourages the development and dissemination of clean
technologies that do not harm the environment;
j) Works against corruption in all its forms, including
extortion and bribery.
27
2009 AnNual REPORT
Corporate governance
SulAmérica is structured to ensure confident decision-making and quality
Corporate governance practices
SulAmérica has always been committed to quality and
excellence in management and the satisfaction of its
stakeholders. When going public in 2007, it joined the Special
Corporate Governance Level 2 Listing Rules with BM&FBovespa
S.A. – Securities, Commodities and Futures Exchange
(“BM&FBovespa Level 2 Listing Rules”), calling, additionally, for
100% tag-along to all shareholders in case of change in the
company’s ownership structure. [GRI 2.6]
provided to shareholders, in order to facilitate and encourage
their participation in Shareholders’ Meetings;
In search of greater transparency and efficiency in
management, SulAmérica endeavors to improve its system
of corporate governance on an ongoing basis. In addition
to complying with the regulations and the Level 2 Listing
Rules, the company adopts additional corporate governance
practices, among which:
• BM&FBovespa indexes
The company’s units, which had been already listed in indexes
IGC (Special Corporate Governance Stock Index) and ITAG (Special
Tag Along Stock Index) since 2008, are now part of ISE portfolio
(Corporate Sustainability Index) and IBrX (Brazil Index) in 2009.
SulAmérica’s inclusion in these indexes shows the market’s
recognition and confidence regarding the corporate governance
and sustainability practices adopted by the company, in addition
to the liquidity of the assets that are traded.
•Manual for shareholders’ participation at Shareholders’ Meetings
Since 2009, SulAmérica has been offering a manual with
detailed orientation for participation in Shareholders’
Meetings. By preparing the manual, the company aims at
improving the transparency and quality of information
• Outstanding shares in percentage higher than the amount
required by BM&FBovespa’s Level 2 Listing Rules
The company continuously monitors its outstanding shares.
In 2009, it kept average 37% of outstanding shares in the
market, which remains above the 25% baseline required by
BM&FBovespa’s Level 2 Listing Rules.
• Assessment of the Board of Directors [GRI 4.10 e 4.7]
In line with the best corporate governance practices, every
28
2009 AnNual REPORT
Corporate Governance
year SulAmérica’s board members evaluate their individual
performance as well as that of the Board of Directors itself,
identifying and proposing actions that may improve performance.
• Setting up a Sustainability Committee
In March 2009, in another measure to show its commitment
to sustainability, SulAmérica created a Sustainability
Committee, as the body that is responsible for formulating
and implementing the strategic program for corporate social
responsibility and providing guidance to the executive bodies
on matters relating to sustainability.
• Charter and Guide of Information on the Board of Directors
In addition to the charter that governs the Board of Directors’
operations and provides for measures to avoid conflict of
interests, SulAmérica prepared a Guide of Information for the
Board’s members in 2009. The material – provided to all board
members and alternates – gathers and makes immediately
available to them all the database that makes up the legal,
regulatory and corporate knowledge to the activities inherent
to the Board of Directors, thus catalyzing the integration of
the members to the company’s decision-making process and
evidencing the expectations of all stakeholders. [GRI 4.9]
• Transparency and wide disclosure of information
SulAmérica has policies that provide for a wide dissemination of
material information in compliance with applicable standards.
In its website, it publishes all material facts, communiqués to the
market and main corporate actions and information, making them
available both in Portuguese and in English at the same time.
• 100% Tag-Along
All SulAmérica shareholders owning common or preferred
shares are entitled to the same conditions offered to the
controlling shareholders in the event of sale of the company’s
control (100% tag-along), an amount higher than the 80%
required by BM&FBovespa’s Level 2 Listing Rules.
• Blackout period
To maintain good corporate governance practices, SulAmérica
adopts a 15-day blackout period prior to the public
disclosure of its financial statements, thus ensuring that the
communication of this information is equal to all stakeholders.
During this period, the company does not make comments or
disclose information about its results. However, in order not
to hinder the market’s monitoring of SulAmérica’s activities,
the company’s routine information is communicated normally
during the blackout period.
• Stock option program
Since March 2008, the company has been adopting a
purchase option plan for Sul América S.A. shares, as part of
the variable compensation of executive officers. The stockbased compensation consists of options to buy shares or units
issued by Sul América S.A., granted to members of SulAmérica’s
board, aimed at stimulating the expansion and success
of its corporate objectives, by aligning the interests of its
shareholders and directors, both in the medium and long term,
by linking the compensation to the future performance of the
company’s shares.
• Impairment to vote in case of conflict of interest
SulAmérica’s by-laws expressly determine that board members
shall not vote regarding matters in connection with which
there is a conflict of interest. [GRI 4.6]
Corporate governance structure
Within the administration scope, the SulAmérica’s corporate
governance system, based on the transparency, equity and
accountability, has as its main decision-making instance the
Board of Directors and its advisory committees, comprised by
members of the Board and external experts.
The organization chart below shows the main authorities in
SulAmérica’s corporate governance system:
29
2009 AnNual REPORT
Corporate Governance
Shareholders’
Meeting
Fiscal Council
Board of
Directors
Audit
Committee
Investment
Committee
Compensation
Committee
Governance
and Disclosure
Committee
Executive Board
of Directors
Internal
Audit
External
Audit
Asset-Liability
Management
Committee
Executive
Committee
Sustainability
Committee
Action Plans
Evaluation
Committee
Corporate Risks
Comitee
Credit
Comitee
[GRI 4.6]
30
2009 AnNual REPORT
Corporate Governance
General Meetings
Every year, the General Meeting convenes ordinarily to take the
accounts of the management, examine, discuss and vote on the
management report and the financial statements; to approve
the allocation of the fiscal year’s income; to elect the members
of the Board of Directors, and to establish the compensation
of the management (Board of Directors and Board of Executive
Officers). On an extraordinary basis, the General Meeting
convenes whenever necessary to resolve on matters that are
relevant for the company.
The company has adopted some procedures to facilitate and
increase the participation of shareholders in the Meetings,
such as: (i) early disclosure of documents and information
related to matters that will be discussed at these meetings;
(ii) holding the Meetings at times and locations that allow the
attendance of the largest possible number of shareholders;
and (iii) making available a manual providing instructions for
participation in Meetings. [GRI 4.1]
At the Shareholders’ Meeting held by Sul América S.A. on March
31, 2009, the following members were elected to its Board of
Directors, with terms ending on March 31, 2010:
Board of Directors
Sul América S.A.’s Board of Directors is composed of nine1
members. An equal number of alternates may be elected, all of
them shareholders of the company, and with a unified one-year
term of office, reelection permitted. In 2009, two members of the
Board of Directors complied with the independence as requested
by BM&FBovespa’s Level 2 Listing Rules. At the General Meeting
to be held on March 31, 2010, Sul América S.A.’s management
will propose raising to 3 the number of Independent Members,
equivalent to 33% of the members, a percentage that is higher
than the required by the above-mentioned rules.
CHAIRMAN
Patrick Antonio Claude de Larragoiti Lucas was first elected to the
Board of Directors of Sul América S.A. and its affiliates in 1998, and
he presides over the Investments, Compensation, and Governance
and Disclosure committees. He joined Sul América S.A. in 1987, and
since 1998 he has been the CEO for the company and affiliates. He
is Chairman of the Board with Brasilsaúde Companhia de Seguros,
as well as a Member of the Board with Brasilveículos Companhia
de Seguros. In addition, he has been a board member of the Geneva
Association since 1999, Chairman of the Board with the Institute
of Supplemental Health Studies (IESS) and First Vice President of
CNSeg, and also served as member of the board with Unibanco
Holding. In 1987, he worked for Compagnie Suisse de Reassurances
Schweizer Ruck in Switzerland. From 1985 to 1986, he worked in the
Capital Market department of Chase Manhattan Bank in Sao Paulo
and in New York. He holds a degree in Business Administration from
Fundação Getúlio Vargas in Sao Paulo. [GRI 4.1; 4.2]
The Mission of the Board of Directors is to collaborate to
protect and appreciate the company’s assets and act toward
its perenniality. It shall ensure the return on investment for
shareholders, based on long-term prospects, sustainability
and adoption of best corporate governance practices in the
definition of business.
Since 2007, the Board of Directors has been adopting a
continuous improvement program, aimed at improving its
performance and its contribution to defining the business
strategy. In 2009, this resulted in a new process of selfassessment and evaluation of the performance of the
Management Board as a collegial body. This annual initiative
allows board members to identify and propose actions to
improve its performance. [GRI 4.7, 4.10]
The Board also has an internal charter that governs its operation
and a document with Guidelines and Information, delivered to
all members. [GRI 4.1]
Members:
Patrick Antonio Claude de Larragoiti Lucas (Chairman) [GRI 4.2]
Robert William Crispin (Vice Chairman)
Carlos Jaime Muriel Gaxiola
Isabelle Rose Marie de Ségur Lamoignon
Joaquim de Mello Magalhães Júnior
Jorge Hilário Gouvêa Vieira
Rony Castro de Oliveira Lyrio
Pierre Claude Perrenoud (Independent Member)
Roberto Teixeira da Costa (Independent Member)
Arthur John Kalita (alternate to Member Carlos Jaime Muriel
Gaxiola)
Carlos Alexandre Larque Lobo de Castro e Silva (alternate to
Member Robert Willian Crispin)
Carlos Infante Santos de Castro (alternate to member Isabelle
Rose Marie de Ségur Lamoignon) [GRI 4.1; 4.2; 4.3]
VICE CHAIRMAN
Robert William Crispin has served as Vice Chairman of the Board
of Directors since 2006, having previously served as a member
of its Compensation Committee from 2005 too 2008. From 2001
to 2007, he served as Chairman of the Board of Directors and
Executive Board at ING Investment Management LLC and as a
member of ING’s Executive Management Team for the Americas,
where he was responsible for all ING’s insurance management
and investment activities in the Americas. During the past 35
years, Mr. Crispin has held a number of positions in insurance
and financial services firms, directing several business units,
including investments, finances, distribution, reinsurance,
international operations and technology. He holds an MBA from
the University of Connecticut and is also a Chartered Financial
1 The number of members of the Board of Directors of Sul América S.A. does not include the number of members of the board of directors of its subsidiaries. On 31 December 2009,
the Company had, consolidated, including indirect subsidiaries Brasilveículos Companhia de Seguros and Brasilsaúde Companhia de Seguros, 18 members on the board.
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2009 AnNual REPORT
Corporate Governance
Analyst (CFA). [GRI 4.1]
MEMBERS
Carlos Jaime Muriel Gaxiola has been a member of the
SulAmérica’s Board of Directors since March of 2008, serving
also as a member of the Compensation Committee. Since
December 2002, he has been working in ING Group companies,
currently serving as CEO and Executive Vice President of ING
Latin America. He holds degrees in Industrial Engineering from
Universidade IberoAmericana, in Mexico City, and in Economics
and Business Administration from Austin Community College.
Isabelle Rose Marie de Ségur Lamoignon has been a member of
Sul América S.A.’s Board of Directors since 1997, and a member
of the Board of Directors of affiliates since 2005. She has been a
Director at Sulasa Participações S.A. since 1993 and has served
on the Board of Directors with Sul América Capitalização S.A. –
Sulacap since 2002. She served on the Strategy Committee from
1998 to 2002, and attended the Management Development
Program in Rio de Janeiro.
Joaquim de Mello Magalhães Júnior has been a member of the
company’s Board of Directors since 1992. He served as Executive
Officer with Sul América Companhia Nacional de Seguros from
1962 to 1977 and has been the President of the Board of Executive
Officers of Companhia Comercial do Rio de Janeiro since 1962. He
specializes in Political Economics at Lausanne University’s École
des Hautes Études Commerciales in Switzerland and holds a
degree in Law from the Rio de Janeiro Federal University.
Jorge Hilário Gouvêa Vieira has been a member of Sul América
S.A.’s Board of Directors since 1996 and has served on its
Auditing Committee since 2002. He has also served as Finance
Secretary in the Rio de Janeiro State government from 1987
to 1990, as President of Brazil’s National Private Insurance
Council (CNSP) from 1985 to 1987, as a member of the National
Monetary Council from 1985 to 1987 and from 1979 to 1981, as a
Board Member at the Rio de Janeiro Stock Exchange from 1983
to 1985 and President and Executive Director of the Brazilian
Securities Commission from 1979 to 1981 and from 1977 to 1979,
respectively. He was Vice-President of ABRASCA from 1981 to 1985
and Board Member in 1995. In addition, he was a Member of the
Board with IBMEC – Brazilian Institute of Capital Markets and
member of the management boards with Companhia Brasileira
de Petróleo Ipiranga, MBR – Mineração Brasileiras Reunidas
S.A., Generali do Brasil – Companhia Nacional de Seguros,
White Martins S.A., MRS Logística S.A., Caemi Mineração and
Metalurgia S.A., VARIG – Viação Aérea Rio Grandense, Viva-Cred
and IRB-Brasil Resseguros S.A. Mr. Vieira is currently a partner
with Gouvêa Vieira Advogados and a Board Member at Boa
Esperança S.A. He holds a degree in Law from the Rio de Janeiro
Catholic University and a Master’s in Law from the University of
California-Berkeley.
Pierre Claude Perrenoud has been a member of Sul América S.A.’s
Board of Directors since 2000. Between 1960 and 1990, Mr. Claude
held several positions at Swiss Re and was responsible for the
company’s operations in Latin America and other countries. He is
currently a board member with captive insurance and reinsurance
companies in several countries. He holds degrees in Business
Administration from Switzerland’s Neuchatel Business School and
in Hispanic Studies from the University of Madrid. He complies with
the independence requirements as set forth in BM&FBovespa’s
Special Corporate Governance Level 2 Listing Rules.
Roberto Teixeira da Costa has been a member of Sul América
S.A.’s Board of Directors since 1999, has served on the
Compensation Committee since 2002, and since 2008, he has
been a member of the company’s Auditing, and Governance and
Disclosure committees. He was the International President of
the Business Council of Latin America – CEAL from 1998-2000,
and the first President of the Brazilian Securities Commission.
He is currently a member of the Board of Directors of BNDESPAR
- BNDES Participações S.A., and of the Inter-American Dialogue
in Washington, DC, as well as member of the advisory boards of
Bunge Alimentos, Companhia Brasileira de Distribuição (Pão de
Açúcar), Comercializadora de Energia Elétrica Ltda. (COMERC)
and Banco Latinoamericano de Exportaciones S.A. He holds a
degree in Economics from the Rio de Janeiro Federal University.
Mr. Costa is a founding partner and current member of CEBRI
– Brazilian Center for International Relations, and a member of
University of Sao Paulo’s GACINT – International Conjuncture
Analysis Group. He complies with the independence
requirements as set forth in BM&FBovespa’s Special Corporate
Governance Level 2 Listing Rules.
Rony Castro de Oliveira Lyrio has been a member of Sul
América S.A.’s Board of Directors since 1992 and has served on
the Compensation Committee since 2002 and on the Auditing
Committee since 2005. He has also been serving in the boards of
Brasilveículos Companhia de Seguros, since 1997, and Brasilsaúde
Companhia de Seguros, since 1988. He joined SulAmérica in
1974 as Director of one of its subsidiaries, has been serving as a
member of the board for several companies in the group since
1975, and served as President of the Board of Executive Officers
from 1985 to 1999. Between 1955 and 1974, he held several
positions at Companhia Vale do Rio Doce. He holds a degree in
Law from the Rio de Janeiro Federal University.
ALTERNATE MEMBERS
Arthur John Kalita is an alternate member of Sul América S.A.’s
Board of Directors, in which he has been serving since 2006,
and was a member of the Investment Committee from 2002
to February 2008. Before joining ING Group, where he serves as
Investment Advisor for Latin America, he worked for J.P. Morgan
and Company from 1982 to 1998, Public Securities Association, as
Director 1978-1982, and Power Authority of the State of New York,
1976-1978. He holds degrees from Hamilton College and Albany
Law School – Union University.
Carlos Alexandre Larque Lobo de Castro e Silva has been an
alternate member of Sul América S.A.’s Board of Directors since
March 2008. He is partner, Pinheiro Neto Advogados. From 2000
to 2002, he served as foreign partner with Shearman & Sterling
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2009 AnNual REPORT
Corporate Governance
in New York. He is a member with OAB/RJ, ABRASCA and NY Bar
Association. He holds a degree in Law from the Rio de Janeiro
State University and holds an LLM in Corporate Law from the
University of Columbia, USA.
Carlos Infante Santos de Castro has served as an alternate
member of Sul América S.A.’s Board of Directors since 2006
and as a member of its Investments Committee since 2002.
He is currently CEO of Sul América Capitalização S.A. – Sulacap,
and serves as member of the Board of Directors with Brasilcap
Board of Directors’ Advisory Committees
Committee
Audit Committee
Capitalização and Caixa Capitalização. Mr. Castro has served
as Corporate Vice President and as CFO, as well as serving as
a member and Vice Chairman on the boards of several of the
company’s operational subsidiaries focused on insurance
such as P&C, health, pension, life and capitalization. He was a
member of the Board of Directors with Brasilveículos, Brasilprev,
Brasilsaúde and Brasilcap, served as CEO for GTE-Multitel, and
served as Director of New Businesses at Grupo CataguazesLeopoldina in Rio de Janeiro. He holds a degree in Electrical
Engineering from the Pontifical Catholic University of Rio de
Janeiro, and MBA and MS in Production Engineering, from
Function
It is responsible for monitoring and assessing the internal and external audit activities, risks and internal
controls, technical compliance, transparency and quality of information included in the company’s financial
reports. It oversees the fulfillment of the company’s Code of Ethics and Compliance and guides the Board of
Directors in the selection of the independent auditors and the officer in charge of the internal audit.
Investment
Committee
The committee reviews the investment policy guidelines of the company and its subsidiaries. In addition,
it is responsible for monitoring obtained results and for assessing the financial market scenario and
trends, as well as the adoption of best risk control practices for investment management.
Compensation
Committee
It assists the Board of Directors in establishing the compensation policy of the management of the company
and its subsidiaries. It endeavors to be always in step with the compensation practices adopted by the market,
besides reviewing and monitoring the evaluation of the management’s performance.
Governance
and Disclosure
Committee
It monitors and oversees the resolutions set forth in the Policy on Disclosure of Material Acts or Facts and
on Securities Trading as well as in the obligations established in the Level 2 Rules adopted by the company.
Stanford University, USA.
Fiscal Council
At the General Meeting held on March 31, 2009, the Fiscal
Council was installed in SulAmérica on a non-permanent
basis, for a term ending on March 31, 2010, comprised of five
members, two of them representing minority shareholders.
The Fiscal Council meets every three months and its primary
duties are to verify the company’s results and the independent
auditors’ report, besides expressing an opinion on the
management’s accounts.
Executive Vice-Presidents responsible for five business areas
(Health, Auto and Massified, Investments, Other P&C, and
Life and Pension) and for the areas of shared management,
institutional, operation and distribution, in addition to twenty
one directors.
The members of the Board of Executive Officers act as the
company’s legal representatives, and are responsible for the
business executive management and for implementing the
general policies and guidelines set forth by the Board of Directors.
Members:
Domingos Carelli Netto
Jorge Augusto Hirs Saab
Nelson Braune
Sergio Alfredo Diuana
Walter Iorio
In December 2009, CEO Patrick de Larragoiti Lucas announced to
the market his decision not to stand for another term on the board
of executive officers. Effective March 2010, he stands as Chairman
of the Board, but will no longer serve simultaneously as CEO and
Chairman of the Board, a measure that reinforces SulAmérica’s
commitment to the best practices of corporate governance.
Board of Executive Officers
The Board of Executive Officers of Sul América S.A. and its
affiliates is composed of the Chief Executive Officer, ten
Internal deliberative bodies
For better performance of its attributions, the company’s
executive board of directors counts on the following internal
2 The number of board members does not include indirect subsidiaries Brasilveículos Companhia de Seguros and Brasilsaúde Companhia de Seguros. On 31 December 2009, the
total number of members of the board was 41, including indirect subsidiaries Brasilveículos Companhia de Seguros and Brasilsaúde Companhia de Seguros.
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2009 AnNual REPORT
Corporate Governance
Committees
Function
Executive Committee (COMEX)
It appreciates and decides on corporate and strategic matters for the company.
Asset-Liability Management
Committee - ALCO
It aims at monitoring the SulAmérica’s risk exposure and evaluates strategies related
to the management of assets by incorporating the characteristics of liabilities to
reach its financial goals.
Action Plans Evaluation
Committee (COPA)
It evaluates and approves projects proposed by the company’s vice-presidencies,
which imply in investments (CAPEX) or additional expenses (OPEX) which exceed predetermined materiality limits.
Corporate Risks Committee
It evaluates and approves risk management policies and examines the limits to be
observed in the company’s operations, supporting the company’s strategic risks
management.
Credit Committee
It evaluates and proposes maximum credit and exposure limits to be observed in the
routine of investments made by the company.
Sustainability Committee
It formulates and carries forward the strategic program for corporate social responsibility,
in addition to advising COMEX and other stakeholders on sustainability-related matters.
deliberative bodies:
Administrators’ compensation policy
SulAmérica adopts a unique compensation policy3, which
establishes the guidelines to be observed relative to the
compensation of key management staff members.
For the purpose of the policy, SulAmérica’s key management staff
are the members of the Board of Directors, Executive Officers,
Fiscal Council, and advisory committees to the Board of Directors,
statutory and non-statutory (“Key Management Staff”).
The Compensation Policy’s main objective is to align the
interests of the Key Management Staff to those of SulAmérica’s,
providing a total compensation consistent with the best
practices observed in its markets, contributing not only to
encourage, attract and retain qualified professionals to perform
its functions, but also to generate value for shareholders.
In 2009, the compensation to Key Management Staff consisted
of the following components: fixed remuneration, variable
remuneration, post-employment benefits, and compensation
based on shares.
The fixed remuneration for the Key Management Staff consists
of part of the regular pay and is determined on the basis of
responsibilities and duties of the position, in accordance with
best market practices adopted by companies in the same
business segments as SulAmérica, i.e., publicly traded companies
of the size and characteristics similar or total compensation
strategies similar to those adopted by SulAmérica, as
recommended by expert consultants, with the fixed income
being an important component of the calculation basis for other
elements of the compensation.
Part of the Key Management Staff is eligible for variable ordinary
pay, represented by additional fees paid in the form of annual
bonuses, aimed at promoting greater interest and alignment
of their goals with those of SulAmérica. The amounts allocated
are the result of an evaluation process based on goals set in
management contracts.
The portion of the compensation represented by postemployment benefits is made up of pension plan established for
the benefit of members of the SulAmérica’s board, aimed at the
formation of long-term savings and a source of supplementary
income in retirement.
The stock-based compensation consists of options to buy shares
or units issued by Sul América S.A., granted to members of
SulAmérica’s board, aimed at stimulating the expansion and
success of its corporate objectives, by aligning the interests of its
shareholders and directors, both in the medium and long term,
by linking the compensation to the future performance of the
company’s shares.
The total compensation paid to Key Management Staff
observes the global amounts approved at general meetings
of shareholders of the respective companies. In 2009, the
total compensation paid to Key Management Staff, posted in
SulAmérica’s results, including benefits and remuneration based
on shares, was R$82 million. [GRI 4.5]
(3) The Compensation Policy does not include indirect subsidiaries Brasilveículos Companhia de Seguros and Brasilsaúde Companhia de Seguros.
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2009 AnNual REPORT
Corporate Governance
Remuneration posted in SulAmérica’s consolidated results1
Year ended on December 31, 2009 (R$ thousand)
Board of Directors
Directors
Fiscal Council
Amount of highest individual compensation
881
5,722
0
Amount of lowest individual compensation
180
964
0
Average amount of individual compensation
216
1,843
0
3,894
78,328
1
Total amount per body
¹ Information extracted from items 13.2 and 13.11 from Reference Form (Instruction CVM no. 480/09).
Investor Relations
The Investors Relations area has as main audience shareholders,
investment professionals, media specialized in finance, and
academics who study the financial and capitals markets.
SulAmérica has been strengthening its contact with analysts and
investors, seeking to expand the capital market knowledge on
the insurance business, and to add greater transparency to the
relations with stakeholders. In 2009, executives of the company
participated in more than 200 events, including conferences
and meetings with investors in Brazil and abroad, more than 130
individual meetings in Brazil, and about 65 abroad. The company
also held eight conference calls on its results, four in Portuguese
and four in English, and held public meetings with analysts and
investors of the capital market (Apimecs). [GRI 4.4]
In 2009, SulAmérica also released a new version of its Investor
Relations website (www.sulamerica.com.br/ir). In this update,
new features and latest and more dynamic tools have been
incorporated. The contents offered by the website were
expanded and its access became easier, for more convenient
browsing and interactivity with users. A new feature was the
access to the training module developed by SulAmérica’s
Corporate University - UNIVERSAS, allowing investors, analysts
and interested persons in general to benefit from the knowledge
base offered by this e-learning tool.
In recognition for its greater contact point and transparency
with market agents, SulAmérica was appointed one of the
three listed companies with the best evolution in Investor
Relations (small & mid cap companies), an award promoted by
IR Magazine, jointly with RI magazine and IBRI. In the award, the
company was also appointed one of the 10 companies holding
the best meeting with the community of investment analysts
(small & mid cap companies), and Corporate Vice-President and
Investor Relations, Arthur Farme d’Amoed Neto, was selected one
of the 10 best IR professionals (small & mid cap companies).
Another recognition that reinforces the quality of information
provided by SulAmérica was its Annual Report 2008
appointment as top 10 among companies with net income
equal to or above R$1 billion by the Brazilian Association of Listed
Companies (Abrasca). In this edition of the Annual Report, for
the first time, the contents are available exclusively through the
internet, promoting greater interactivity, easy navigation and
information about the company and its latest results.
The greater contact with the capital market also positively
influenced the liquidity of the units in 2009. In May, SulAmérica
was listed in the portfolio of Small Cap Index - SMLL, consisting of
90 shares in companies listed in BM&FBovespa, and from January
2010, it was also listed in the BM&FBovespa’s Financial Index (IFNC)
and Brazil Index (IBrX). IFNC consists of 14 shares in 13 companies
representative of financial intermediation segments, general
financial services, and pension and insurance, selected by their
liquidity. The IBrX portfolio consists of the 100 most traded shares at
BM&FBovespa, in number of transactions and financial volume.
Audit and internal controls
Internal controls and compliance
SulAmérica disseminates the culture of controls, focusing on
ethical principles and strict compliance with the law. Every
employee is a control agent responsible for maintaining internal
controls and contributing to their enhancement.
Since 2004, SulAmérica has been implementing a broad program
seeking to ensure compliance with the laws and regulations
applicable to the company’s activities, through an ongoing
process of adhering to and updating regulations, monitoring
compliance with the calendar of regulatory requirements, and
fulfilling requirements from regulators.
In addition, the company develops campaigns, training sessions,
events and workshops aimed at its customers, brokers, partners
and employees, to strengthen the fraud prevention culture. In 2009,
distance-learning courses were held on legal compliance, ethics and
prevention of money laundering. These initiatives were attended by,
respectively, 87%, 88% and 97% of the company’s active personnel.
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2009 AnNual REPORT
Corporate Governance
Aware of the risks inherent to the use of the insurance market to
conceal resources stemming from illegal activities, SulAmérica is
committed to efforts for money laundering prevention, as well
as to compliance with the laws providing for the matter.
[GRI 4.4]
Internal audit
The SulAmérica internal audit reports directly to the Board of
Directors and Audit Committee, and one of its main functions is to
develop works or investigations required by the Audit Committee.
The purpose of the internal audit is to assess the adequacy and
efficiency of the processes of risk management and control of its
products and services, ensuring the identification of the highest
points of risk for the company, making recommendations and
monitoring as set forth by its internal charter.
SulAmérica adopts internal codes and standards such as the
Code of Compliance, which brings the guidelines to be observed
by managers and employees in performing their functions, as
per the term of agreement signed by all, and highlights the
ethical principles and standards of conduct to be adopted.
Policy on Disclosure of Material Acts or Fact
and on Securities Trading
SulAmérica has a Policy on Disclosure of Material Acts or Facts
and on Securities Trading. In addition to the requirements set
forth in CVM Instruction 358, the company adopts additional
procedures, such as adherence by independent auditors and
consultants who have access to material information, with
the policy remaining in effect up to 5 years after the end of
the relationship with the Company. To ensure compliance with
the policy, the company is advised by the Governance and
Disclosure Committee.
In addition, the internal audit sets forth mechanisms to minimize
legal and regulatory sanctions, financial losses or reputation
risk. The Company also has a Code of Compliance, which helps
in the dissemination of guidelines adopted by SulAmérica, and
a channel for receipt and investigation of complaints, which
facilitates the timely identification of possible irregularities.
In 2009, SulAmérica had an outstanding performance in
the development of preventive actions to combat fraud, by
promoting: (i) workshops with the areas that work with the
direct or indirect prevention of fraud; (ii) campaigns with
employees and brokers; and (iii) events for the insurance market.
Code of Ethics
SulAmérica conducts its business within the highest ethical and
moral standards. It understands that the administrators and
employees, regardless of hierarchical levels, are responsible for
the fulfillment of this goal.
In the same year, the company acquired a computer system that,
after its full implementation, will optimize the works of internal
audit and promote the integration of information between
the areas. This will increase the adroitness in the exchange of
information and enable a unified management of risk prevention.
Since 2001, the company observes and causes the observation
of its Code of Ethics, which establishes the rules that will govern
the behavior of its employees in internal and external relations,
being all responsible for ensuring that the code is widely
disseminated and appropriately fulfilled. [GRI 4.8]
The internal audit reports the outcome of the work to the Audit
Committee, quarterly. This ongoing monitoring allows timely
identification of any defect that would jeopardize its effectiveness.
In 2009, the Audit Committee concluded that the internal audit
and internal controls of the company meet its current needs,
finding no deficiencies that could jeopardize its effectiveness.
The SulAmérica Code of Ethics is delivered to all employees upon
their admission and is available for consultation at the Employee
Portal and in the company’s Investors Relations site.
Ombudsmanship
Created in January 2005, the Ombudsman position acts
in compliance with the SulAmérica values, intermediating
conflicts between the consumers and the company. The main
goals of the ombudsman are not only acting towards the
customers’ rights, but also in the clarification of their duties
relative to the service purchased. [GRI 4.4]
Dial Fraud
SulAmérica also has a communication channel to report
situations that are contrary to the guidelines of the Legal
Compliance Program. This channel allows sending messages to
the areas of Compliance, Internal Audit and Fight against Fraud.
In addition, the Ombudsman seeks to improve products
and processes through the analysis of cases received, thus
minimizing the risk of financial loss for fines and litigation,
ensuring a continuous improvement.
Report
Your report is the best protection and chief responsible for solving
these cases. Confidentiality is absolute.
In 2009, the Ombudsman conducted a review of the SulAmérica
Manual of the Policyholder and the Auto Insurance policy, to increase
the quality and transparency of information provided to its customers.
Dial Fraud
4002-3433
Mail
Caixa postal 971 – CEP 20001-970
Rio de Janeiro – RJ
Internet
www.sulamerica.com.br
As a result of its actions, in cases where the Ombudsman
participated in 2009, about 50% were fully met, as reported
by the customers themselves, strengthening the relationship
between SulAmérica and consumers.
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2009 AnNual REPORT
Corporate Governance
External audit
Deloitte Touche Tohmatsu Independent Auditors is the independent
audit firm hired by the company to provide external audit services
related to the examination of financial statements for the year
2009, and issued an unqualified opinion on them. In December,
SulAmérica hired KPMG Independent Auditors to perform services
for a period of four years, starting in fiscal year 2010.
The external auditors of the company comply with the standards
of the Federal Accounting Council - CFC on the independence of
their activities.
Interested parties
Internal channels [GRI 4.4]
SulAmérica maintains a transparent dialog as basis for a
consistent, ethical and sustainable relationship with all the
audiences directly and indirectly involved in its operations
(stakeholders), endeavoring to identify their need and expectations. As tools for planning its initiatives in this area, the
company uses a number of channels for communication with
stakeholders.
In 2008, SulAmérica adopted a new corporate communication
manual, to unify the company’s speech and make its
communication with stakeholders more agile and transparent.
Canais de comunicação
A SulAmérica dispõe de vários canais de comunicação para que
seus stakeholders possam esclarecer dúvidas e enviar críticas e
sugestões: [GRI 4.4]
Function
Customer Complaints
Employees register the complaints from SulAmérica external clients (friends, acquaintances, relatives, etc.) to facilitate problems resolution.
Talk to Us
(Universas)
Space for employees to submit doubts, suggestions and criticism regarding the
training provided.
Talk to Compliance
Employees are encouraged to access the Talk to Compliance to report cases they
identify as any situation that might be in disagreement with the Legal Compliance
Program guidelines. They can send messages to the Compliance Department, Internal Audit and Fraud Prevention, with total secrecy.
External channels [GRI 4.4]
Function
Talk to IR
To facilitate the communication with its shareholders and investors, SulAmérica
maintains in its portal a session where it publishes financial reports, communications and relevant facts, in addition to information regarding the company.
Call Center
In addition to conventional telephone attention, SulAmérica developed an exclusive
call center system for people with special needs regarding hearing and speech (all the
products) and segmented the services to its customers (Automobile, Massified Insurance
and Other P&C, Investments, Pension, Health and Life).
Institutional portal
The institutional portal was set up focused on segmented communication. It offers
relevant contents directed to several audiences, thus improving the relations with
customers, brokers and service providers.
SulAmerica.com You
This platform aims at strengthening the digital presence of SulAmérica in interactive
media through a portal that allows the participation of interested parties in discussions and polls, as well as simulations with different plans and products.
Regulated activities
SulAmérica’s activities are regulated and supervised by the
regulatory bodies and agencies listed below:
• Brazilian Securities Commission (CVM)
• Superintendence of Private Insurance (Susep)
•National Agency for Supplementary Health (ANS)
• Council for Supplementary Health (CONSU)
• Brazilian Central Bank (Bacen)
• National Council for Private Insurance (CNSP)
• Brazilian Institute of Reinsurance (IRB)
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2009 AnNual REPORT
Corporate Governance
• Council of Resources of the National Private Insurance System
(CRSNSP)
•National Council for Self-Regulatory Advertising (Conar)
The company maintains a control system for compliance with
applicable standards and regulations, conducting periodic
processes of verification and accountability to the abovementioned regulatory bodies and agencies, as well as continuous
monitoring of new standards that may affect these processes.
• Association of Analysts and Investment Professionals in the
Capital Market (Apimec)
http://www.apimec.com.br/,
• National Confederation of Companies in General Insurance, Private
Pension and Life, Health Insurance and Capitalization (CNSeg)
http://www.fenaseg.org.br,
• National Federation of Security (Fenaprevi)
http://www.fenaseg.org.br/,
SulAmérica also developed a close relationship with
regulatory bodies and agencies in order to participate actively
in discussions and public hearings, contributing to the
development of standards subject to public audit and aligned
with the new market trends.
• National Health Federation (Fenasaúde)
http://www.fenaseg.org.br/,
The company is part of the following representative entities:
• National Federation of Insurance (Fenseg)
http://www.fenaseg.org.br/ and
• Brazilian Institute of Investors Relations (IBRI)
http://www.ibri.com.br/home/,
• Brazilian Association of Listed Companies (Abrasca)
http://www.abrasca.org.br/capa.asp,
• National Federation of Capitalization (Fenacap)
http://www.fenaseg.org.br/,
• Brazilian Association of Advertisers (ABA)
http://www.aba.com.br/Home.aspx.
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2009 ANNUAL REPORT
Risk management
SulAmérica acts consistently in anticipating scenarios that interfere in business
Accepting risks is an essential part of SulAmérica’s business.
In order to ensure that the acceptance of risks, inherent to
the insurance business, is made consistently and in line with
the company’s strategic goals and policy, risk management is
concentrated in five main aspects:
[GRI 4.8; 4.9;4.11]
with an integrated view of the company’s risks. The instance
consists of the Chief Executive Officer (CEO), Vice-President,
Control and Financial Operations (CFO) and Actuarial Director
(CIRO). The duties of the Committee are:
• control of the impact of negative events;
• to align the risk policy with the corporate strategy;
• management of uncertainties inherent to the accomplishment
of goals;
• to support the company’s strategic risk management aimed at
improved allocation of capital;
• search for opportunities, aiming at obtaining competitive
advantage and increasing value to shareholders;
• to report to the Management and Board of Directors the
treatment given to material risks; and
• alignment of the company’s risk policy with the strategies
adopted; and
• to approve retention levels per insurance segment, and
significant changes in underwriting policies.
• optimization of the capital allocation structure.
The Board of Directors plays the important role of supervising
risk management, by determining the general guidelines to be
observed and their limits. The CEO is responsible for periodically
reviewing, with the Risk Management Committee, the global
To define the corporate risk management strategies, SulAmérica
created the Corporate Risk Committee in 2008, a collegial body
• to approve the risk management policy;
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2009 ANNUAL REPORT
Risk Management
strategies of the business to analyze and manage the material
risks by keeping them at acceptable levels.
Responsible for planning and coordinating the work of preventive
audit (operating and systems), the Internal Audit is in charge
of verifying the existence of adequate internal operational and
systemic controls. These controls allow the identification and
management of risks present in daily operations at SulAmérica, as
well as the company’s adherence to existing standards and laws.
In order to become possible to apply the guidelines throughout
all business areas, the company relies on a complete,
comprehensive and integrated Enterprise Risk Management
(ERM) system. Data about processes, identification and
classification of risks and controls are input into the system,
which in turn provides information for the implementation of
action plans. SulAmérica makes also available for all employees
the electronic documentation of its policies and procedures,
manuals of organizational structure and resolutions of the
executive board, allowing for the circulation of updated material
information on risk management. ERM comprehends the
following categories of risk: [GRI EC2]
Credit Risk
It is the risk that a debtor or borrower does not comply with
the terms of an agreement. It is present in all activities where
success depends on compliance with the agreement reached
by the other party, issuer or borrower. For the classification
of this risk, every institution or fund that performs financial
transactions with SulAmérica receives a rating (score) in relation
to their credit risk. For each business segment, maximum
exposure limits are set for investment in institutions or private
funds, in addition to maximum exposure limits for each of the
scores. For reinsurance operations, the company has determined
rules of assignment, consolidated exposure limits for each
business, limits of assignment per rating, and credit limits per
reinsurer. Finally, any contract of reinsurance has to abide to
internal rules set by the Risk Committee.
Market Risk
It is the risk that the value of a financial instrument or a
financial instrument portfolio changes due to the volatility
of market variables (interest rates, exchange rates, stock and
commodities performance indexes, etc.) caused by adverse
factors. Since 2003, SulAmérica has been using asset and
liability management techniques (ALM - Asset Liability
Management) as a major tool to determine the parameters
to be observed in the allocation of its investments. According
to the guidelines set by internal committees, and following
the policies defined by an investment mandate (updated
periodically), fund managers allocate financial assets in
investments that are consistent with the behavior of the
liabilities. The investment mandates reflect important
points for the proper management of resources, such as the
company’s investment policy, the composition of portfolios
per asset, limits for each portfolio, the existing legislation,
description of products and liabilities, among others aspects.
In general, the SulAmérica’s investment policy aims to establish
a degree of alignment between the minimum liquidity needed
for each segment of the company, and the investment guidelines
to optimize the return on assets, considering the characteristics
of liabilities in each business. The methodology for market risk
management is based on the calculation of Parametric VaR
(Value at Risk). In addition to VaR calculation, stress tests are
performed to verify the expected loss in worst scenarios. Market
risk is monitored by daily reports with information on VaR, in
addition to monthly assessments of investment.
Underwriting Risk
It is the risk arising from an adverse situation that goes against
the expectations of the company at the time of preparing the
underwriting policy. It includes both the uncertainties existing in
the actuarial and financial assumptions, and in the constitution
of technical provisions. For the management and control of these
risks, the company conducts a periodic routine review of the
Procedures for Analysis and Review of Products (PARP). It aims at
reviewing the bases of the products marketed, such as product
definition, marketing studies, expected sales, and pricing. Based
on these analyses, if necessary, action plans are determined to
bring the product back to the company’s expectations.
For the management and control of the risk of provision, due to a
deviation in the type/and or average value of claims, SulAmérica
adopts the following procedures:
– tests for consistency of the methodologies for creating provisions;
– recalculation of technical provisions; and
– monthly monitoring on the variation of technical provisions.
With those analyses, whenever needed, the company applies changes
to the methodology for calculation of provisions, and reviews
calculation and decision-making procedures. These measures
contribute to maintaining technical provisions at proper levels.
In addition to these controls, the company relies on internal
actuarial models to determine the economic capital due to
underwriting risks. The models determine the exposure value for
each business line and enable a more effective risk management,
as they make it possible to quantify gains or losses when adopting
new action plans to control or mitigate underwriting risks.
Operational Risk
It is the risk of loss resulting from faulty, deficient or inadequate
internal processes, people and systems, or external events. Frauds
are an example. Since 2001, SulAmérica has been relying on
specific communication channels as well as an area exclusively
dedicated to fraud prevention and the development of preventive
policies. In addition, in order to reduce risks even further, the
company promotes ongoing training on the topic to employees.
All internal processes are mapped out into a data system that
shows the flow of activities and allows the identification of
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2009 ANNUAL REPORT
Risk Management
respective risks and the controls involved in each operating
procedure. Every risk and control provides qualitative
information, allowing for the classification of processes
according to their risk levels, and the identification of possible
action plans to mitigate operating losses.
SulAmérica is currently developing a project for management
of operational risks aimed at attaining excellence in
management. The project is in line with best practices
and recommendations of international agreements and
treaties, such as Basel II, Solvency II and COSO (Committee of
Sponsoring Organizations), among others.
The plan for business continuity is handled corporately, and,
assisted by proper tools and methodologies, it provides for the
operation of SulAmérica’s essential activities in crises, avoiding and
minimizing financial losses to the company and its customers.
Strategic Risk
It is the risk of losses resulting from processes or decisions made,
which affect the company’s sustainability, growth or competitive
advantage. SulAmérica has a Committee for Assessment of Plans
of Action (COPA), consisting of members from the management,
which examines the initiatives that result in investment or
additional expenses.
In order to ensure compliance with the goals outlined in its
strategic planning, SulAmérica adopts internal controls based on
the Balanced ScoreCard (BSC) methodology as a management tool.
This tool allows monitoring the achievement of goals in the short
term and guiding its direction in the long term. Therefore, it allows
identifying and correcting possible distortions in conduction during
the implementation of the plan. In addition, BSC seeks to make the
strategy more clearly communicated throughout the organization,
as all employees will know about the future vision, the strategic
objectives and the targets to be conquered.
The cost of capital used in the company’s projects is calculated
based on the methodology for calculating the Weighted Average
Cost of Capital (WACC). The values of the assumptions are
reviewed annually during the preparation of the annual budget
plan or, more often, whenever the SulAmérica’s Corporate
Committee deems necessary.
Legal and Compliance Risk
It is the risk of loss resulting from the non-compliance with laws or
regulations, loss of reputation and poorly formalized operations. To
reduce these risks, SulAmérica has a legal department present in
each business area, aligned with the corporate vision. It is responsible
for reviewing the insurance contracts to mitigate legal risks, and
provides support to the judicial proceedings. The legal department
contributes actively for the continuous improvement in the
management of legal proceedings, by providing regular subsidies for
corrective actions aimed at reducing legal risks in transactions.
In addition, SulAmérica set up a Compliance structure with
the position of Compliance managers in each department. The
objective is to adapt the activities in the areas of the company
to the determinations of regulatory and surveillance agencies,
through a solid culture of internal controls, high standards of
integrity and excellence in ethics and adherence to legislation.
The Compliance managers are in charge of disseminating both
the methodology and the determinations in the business areas,
thus ensuring the effectiveness in risk management. They are
guided by some basic procedures: the details of the key activities
and their processes, the identification of risks and controls, and
the creation of action plans. The process of self-assessment of the
system of internal controls is performed, at least, twice a year.
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2009 ANnual REPORT
BUSINESS MARKET
Overview
Activities in diversified segments enhance growth opportunities
Throughout its history, SulAmérica, the largest independent
insurance group in Brazil, has been ensuring financial protection
and peace of mind to its customers, today more than 6.7 million
people. They have at their disposal a full line of products that
offer solutions in the sectors of health insurance, auto insurance,
other P&C segment, and life insurance and pension, as well as
asset management. This multiline model provides a number
of growth opportunities for the company’s businesses through
a business structure that is supported by about 28 thousand
independent insurance brokers and distribution partnerships
with more than 20 financial and retail institutions.
To support the work of insurance brokers, SulAmérica has a
sales-support infrastructure made up by 14 branches and seven
business units, in addition to more than 100 points of presence
throughout the country. The company also has exclusive channel
relationships with insurance brokers who rely on an extranet to
facilitate their access to a number of services, including online
proposals, consultation to commission statements, and reports
relating to products and services. Rádio Corretor SulAmérica was
another innovative channel launched to brokers in 2009, which
can be accessed through the website www.portaldocorretor.
com.br and has an exclusive programming 24 hours a day,
including complete coverage of the insurance industry such as
market movements, events, courses, sales tips, and news about
the company, such as releases, promotions, sponsorships and the
results of campaigns to foster SulAmérica sales. [GRI 2.7]
In addition, to recognize the contribution of insurance brokers
for SulAmérica’s success, and to motivate them even further,
over the years the company has increased its campaigns
to promote sales by offering a number of awards and the
possibility of brokers to participate in the largest campaign
for additional commissioning in the market. As a result of this
successful partnership in 2009, the broker satisfaction rate
with the company increased by 6o bps compared to 2008, with
emphasis on the Southern Region, which grew by 120 bps.
Based on its extensive experience gained over more than 114
years of operation, SulAmérica consolidated its vocation to
enter in quick and innovative distribution partnerships with
several institutions such as Santander, HSBC, Banrisul, Banco do
Nordeste, and Banco de Brasília, allowing the expansion of the
scope of its distribution structure.
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2009 ANnual REPORT
Business Market
In another successful initiative toward the expansion of these
partnerships, in 2009, SulAmérica concluded an agreement with
Gol Airlines for exclusive distribution of life and personal accident
insurance. With the agreement, customers who purchase Gol air
tickets through its website have the option of hiring a personal
accident insurance for the trip. This partnership, innovative in the
way it is implemented, has brought excellent results for the life
segment at SulAmérica.
We have been accomplishing a significant portion of our
insurance activities through joint ventures and strategic alliances
with major financial institutions operating in Brazil, such as Banco
do Brasil, Nossa Caixa, HSBC Bank, Safra and Citibank.
The integration between sales force and the marketing area is one
of the advantages that SulAmérica has in order to offer a better
service to customers. SulAmérica uses modern segmentation
techniques to identify new opportunities to expand its business
base and guide its customer relationship actions.
As an evidence of the quality of services provided to customers
and brokers, the SulAmérica’s Call Center was considered, for
the fourth year running, the best service in the insurance and
private pension industry, and twice in a row, as the best service
in all industries through popular vote in an award promoted
by Consumidor Moderno magazine. The assessment is based
on the criteria of GFK Indicator, which analyzes the quality of
attention, coherence and consistency of information provided
and the level of responses.
For a better implementation of its strategic goals and to respond
to market demands, SulAmérica is structured in four business
units that represent the segments in which the company does
business, and also has six support units. In 2009, as part of an
ongoing process of optimization, the organizational structure
has undergone changes that led to the unification of the units
Auto and Other P&C. The measure sought to increase the synergy
and optimize the structure of attention, pricing and claims
management, in addition to encouraging cross-selling.
CEO
VP Corporate
and IR
VP IT and
Contact Centers
VP Sales
and Marketing
VP Auto and
P&C
VP
Health
VP People and
Private Pension
VP Asset
Management
VP Control
and Finance
VP HR and
Administrative
VP Industry
Relations
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2009 ANnual REPORT
BUSINESS MARKET
Health insurance
Prevention and treatment for 1.8 million beneficiaries
SulAmérica has been working in the private healthcare market
since 1970, when it started to offer the administration of medical
services to insured members in its portfolios of life insurance.
Since 1989, with the regulation of health insurance, the
company expanded its operations in this segment, which now
represent a major part of its product portfolio. In 2009, health
insurance represented 52% of the total insurance premiums at
SulAmérica. According to data released by ANS in September
2009, SulAmérica had a market share of 38% among the
insurance companies specializing in health.
Today, the segment portfolio comprises more than 1.8 million
members, distributed in the modes of group health insurance,
including small and medium-sized businesses, and dental,
individual and in ASO (administrative service only). SulAmérica
offers its customers a wide referenced network with more
than 26 thousand providers of medical and dental services,
comprising more than 8 thousand clinics, 1.4 thousand hospitals,
and over 2.7 thousand laboratories, distributed throughout the
country, present in all states with more concentration in the
Southeast, where is also the largest number of members, in line
with the Brazilian population demographics.
Covered individuals
Total / 1.8 million beneficiaries (2009)
Individual: 16.2%
Dental: 15.4%
SME: 9.7%
Group: 58.7%
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2009 ANnual REPORT
BUSINESS AREAS
This broad network is only possible thanks to the model
adopted by SulAmérica, which focuses on risk management,
thus enabling to have the country’s best doctors, laboratories
and hospitals as service providers. In 2009, the network
of medical service providers
184 thousand
16.2% reported
15.4%
hospitalizations, 34.8 million clinical examinations and 13.5
million doctor visits. The SulAmérica 24-hour Healthcaare
Center (CAS) held average 500 thousand calls per month, for
a total of six million calls a year. Its Portal receives over 400
thousand hits per month, offering over 100 services to insured
members, companies and providers.
The combination of a number of attributes differentiates the
company’s performance in the healthcare segment: the experience
of more than 40 years in this market, the strength and credibility of
the brand, diverse product offerings, the quality of the network of
service providers and innovative operational processes.
Distinguished in the product portfolio, the Saúde Ativa
program, launched in 2002, promotes health and quality
of life to SulAmérica policyholders, acting preventively in
the management of risk factors and monitoring of chronic
diseases. Since 2002, over 150 thousand insured members and
approximately 586 corporate customers have benefited from
this program, including 23 thousand cases of chronic disease
monitoring. With the same goals, but geared toward a specific
audience, SulAmérica launched the Idade Ativa program, for
policyholders over 60 years.
The information gathered along the years allowed SulAmérica
to develop two studies, which have been published annually, and
has become a reference, whose purpose is to disclose the main
risk factors existing in the insured population, a good sample
for the entire Brazilian population. Respondents are men and
women ages 20-49 years, and represent the economically active
population. With the survey, it was possible to identify that
among the main risk factors are high cholesterol, overweight and
high stress levels. Smoking, sedentary lifestyle and unbalanced
diet also stand out among the health problems. There were about
100 mentions in TV reports, printed newspapers, websites, news
agencies and female magazines. More than 15 million people were
reached by the contents presented in different ways.
In keeping with its vocation of always looking for innovations
in operational processes, SulAmérica was the first company
in the segment of private healthcare to embrace the digital
certification technology to exchange electronic documents
with their service providers. With the certification, electronic
transactions are protected by security mechanisms that can
ensure authenticity, confidentiality and integrity of information.
The system is used, among other things, for medical and hospital
providers – doctors, dentists, hospitals and diagnostic companies,
among others – to send their invoices to the company, making
it even faster to process the services provided. With the new
process, SulAmérica no longer circulates about 700 thousand
printed invoices.
Group Health Insurance
The portfolio of group health insurance represents about 36%
of total insurance premiums and approximately 70% of health
insurance premiums. It ended 2009 with more than 1.2 million
insured members, an increase of 11.5% when compared to 2008.
The portfolio consists of over 27 thousand client-companies and
has a broad portfolio of products developed to meet a variety of
customer needs. New products, coupled with incentive programs
for sales, ensured the successful outcome of SulAmérica’s
portfolio of health in 2009.
The segment of small and medium-sized enterprises (covering
insured groups from 4 to 49 individuals), which is part of the
portfolio of group health insurance, has been experiencing a
significant expansion. In 2009, the insured base of products
for small and medium-sized enterprises grew 21.0% over 2008,
ending the year with more than 178 thousand members.
Another distinguished segment is dental insurance, which
ended 2009 with about 168 thousand members, with a
significant growth of 51% over 2008. Customers who purchase
the SulAmérica dental insurance have, among other advantages,
the benefit of Saúde Bucal Ativa, a program of prevention and
oral health promotion aimed at addressing the causes of chronic
oral diseases.
Individual Health Insurance
Since 2004, SulAmérica had not been marketing new policies for
individual health insurance. The portfolio ended 2009 with 278
thousand members, representing 16% of the total of insurance
premiums and 31% of health insurance premiums.
Administered Post-Paid Plans
The portfolio of SulAmérica’s Administrative Service Only
represents another option in health care for customers. This
portfolio serves more than 40 companies, which represented
about 272 thousand covered individuals at the end of 2009.
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2009 ANnual REPORT
BUSINESS MARKET
Auto insurance
Pioneering and innovation for 2.3 million insured members
Auto insurance
SulAmérica stands out in the auto insurance segment by
offering distinctive products, suited to the profile of each
customer. The diversification of offers is a differentiating
factor that demonstrates the company’s pioneer activity in
the segment, which has recorded a 25% revenue growth in
2009 when compared to 2008, accounting for about 34% of
SulAmérica’s total income. In 2009, the company increased its
market share by 170 bps, reaching the new level of 17.0%, and
closed the year with a fleet of 2.3 million vehicles insured.
Insered fleet – thousand vehicles
2,288
1,771
1,922
The national comprehensiveness of SulAmérica’s operations
allows the Company not only exploring successfully growth
opportunities in several regions, but also contributes to a lower
concentration of risks posed by climate conditions.
SulAmérica also distinguishes itself in the auto insurance
market for its innovation and announcement of new products
and services. In 2009, two new auto insurance products were
launched, deserving highlight. The company introduced
SulAmérica Auto Zero Km, intended for light vehicles and
pick-up trucks. Among the advantages of SulAmérica Auto Zero
Km is the possibility of contracting the insurance by the value
actually paid, throughout the length of the contract and in
case of total loss claims. Another benefit is the “Take & Bring”
service for the first scheduled maintenance of the car, picking
up the insured vehicle at the customer’s residence or work
address to take it to the dealer selected by the customer to
make the revision. In case the policyholder prefers to drive to
the dealer, the company offers a complimentary taxi service to
take him/her back home or to the dealer to pick up the vehicle.
In addition to SulAmérica Auto Zero Km, the company
2007
2008
2009
46
2009 ANnual REPORT
BUSINESS AREAS
introduced an innovation in pricing by announcing SulAmérica
Km Run, a product aimed at owners of cargo vehicles. Among
the key attributes of the new product, highlighting goes to the
fact that there is only premium payment when the truck is in
use, and the amount of premium depends on the location and
time the vehicle is used. As a result, insurance has become a
variable cost for the truck owner, allowing policyholders to have
better control of their risk and win from the cost reduction. In
addition, it reduces the risk of theft and accidents, as routes and
times that are more adequate are more often selected by the
policyholder. Therefore, the product represents lower price for
the customer and less risk to the insurer.
In 2009, SulAmérica expanded its chain of Auto Super-Service
Centers (C.A.S.A), by opening a new unit in Rio de Janeiro, two
in Sao Paulo, and one in Curitiba. In addition, the company
launched a national plan to modernize its business units,
by transferring the units of Campinas, Porto Alegre and
Manaus to their respective C.A.S.A.’s in these cities, thus
offering increased support to brokers across the country.
The infrastructure of the Blumenau unit was updated, and
remodeling works were started in facilities located in Belém,
Fortaleza, Cuiabá and Ribeirão Preto.
SulAmérica was also a pioneer in adopting water-based paint to
repair vehicles of SulAmérica Auto Insurance customers. The new
technology is the result of a partnership with Basf and allows
reduction of up to 90% of solvent emissions in the air compared
to traditional automotive paint. In addition, it improves
significantly the working conditions of repair professionals. The
first stage of the new painting system was implemented in the
chain of repair shops associated to C.A.S.A in Porto Alegre (RS), in
March 2009, and was later extended to the cities of Sao Paulo,
Ribeirão Preto and Santo André. With this technology, customers
enjoy the same quality as that provided by carmakers, as the
repair service matches the pattern of the original painting. The
water-based painting system provides increased productivity in
repair shops, saves material, and adds accuracy to match hues.
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2009 ANnual REPORT
BUSINESS MARKET
Other elementary fields insurance
Synergies and efficiency to serve better the market demands
SulAmérica began its operations in the segment of other
P&C in 1913 when Companhia de Seguros Terrestres e
Marítimos (land and maritime insurance) was founded,
seizing the opportunities brought by a moment of strong
urban-industrial and port growth in the country. The main
SulAmérica businesses in this segment include fire insurance,
transportation and civil liability, as well as products for masssale to condominiums and small businesses.
The portfolio represents 8.5% of total SulAmérica premiums,
with accumulated revenue of R$733 million in 2009. In order
to meet the market demands, the company is structured to
act in the areas of large property risks and engineering risks,
with the insured amount over R$100 million; small and midsized enterprises, with the insured amount up to R$100 million;
transportation, civil liability and financial risks and special risks,
such as those involving aeronautical and marine hulls.
Segment composition 2009
Total – R$733.4 million
Massified insurance: 7.6%
Fire: 23.3%
Others: 21.9%
Engineering: 8.5%
General Civil Liability: 5.6%
DPVAT: 18.3%
Transportation: 14.8%
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2009 ANnual REPORT
BUSINESS AREAS
In 2009, SulAmérica reorganized its area of Other P&C, uniting
under a single coordination segments Auto, Mass Insurance, and
Industrial and Commercial Risk Insurance. With this measure,
the company believes it can better exploit the potential of this
segment, creating conditions to benefit from synergies and
increase operational efficiency.
In the area of large risks, SulAmérica consolidated its leadership
as one of the largest insurance companies for sugar and alcohol
mills, a sector with high potential for expansion through the
growth of the biofuel industry in Brazil. The company has added
new features to the product, which provides insurance coverage
to industrial parks in the alcohol-sugar sector and has more
than 80 different coverage types, protecting not only facilities, as
well as stocks of raw materials, and semi-finished and finished
products. In 2009, insurance for mills grew by approximately
100% compared to the previous year, already having more than
100 plants insured. SulAmérica also operates in other areas of
the energy sector in the country, providing insurance coverage
for plants generating electricity, including wind mills.
In the segment of small and mid-sized enterprises, the
company has increased its participation in the corporate and
condominium modes, with the launch of new products and
services. In line with this, SulAmérica developed a line designed
to offer coverage and meet the needs of specific sectors, such
as bars, restaurants, hotels, shopping malls and bakeries.
The intention is to offer the best conditions and services for
insurance brokers and customers, through an attractive pricing
structure and exclusive coverage for each of these niches that
have been identified.
Moreover, in 2009, the company recorded a growth of over 12%
in the purchase of its product Seguro SulAmérica Residencial. A
growing concern about damage caused by weather events are
among the factors that have contributed to the acceptance of
the product. With the home insurance, in addition to property
protection, the policyholder enjoys the various services hired,
and with 24-hour Assistance, a service increasingly valued by
customers, as evidenced by the growth of more than 100% in the
use of the services available in 24-hour-assistance plans.
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2009 ANnual REPORT
BUSINESS MARKET
Life and pension
Innovative services provide well-being and peace of mind
SulAmérica was founded in 1895 as a life insurance company
and, with more than a century of experience, it continues
to invest in modernizing and developing its portfolio
of life insurance. This segment, which encompasses the
company’s business segments of life insurance and personal
Covered individuals – thousand
VGBL
accident, reported revenues of R$394.1 million in 2009, which
represents the equivalent to 5.2% of SulAmérica’s overall
revenues, keeping in line with the previous year. The company
ended the year with about 2.5 million insured members in
this portfolio.
Total reserves – R$ million
Life + PA
+20.0%
2,484
2,382
2,291
+4.3%
2,342
40
2008
+4.2%
+10.0%
2,440
1,910
44
2009
2008
2009
50
2009 ANnual REPORT
BUSINESS AREAS
With efforts aimed at meeting the needs of different customer
segments, and following the success of other SulAmérica initiatives
with targeted products, the company has expanded the options
available in the life insurance segment by launching SulAmérica
Você Mulher, a life insurance that incorporates features specifically
geared to female audiences. Its main differentiating factor is the
advantage of supporting services such as nutritional counseling
and psychological support, and provision of innovative services
focused on quality of life. The product offers coverage for death,
total permanent disability by accident and funeral, and a specific
coverage for the diagnosis of various types of cancer, in addition to
those specifically related to women.
Besides expanding the product portfolio in the life insurance
segment, SulAmérica invested in developing new distribution
channels, acting differently in the private pension segment, and
entering into new partnerships for greater distribution of life
insurance. The company has developed a new relationship concept
with the high income public, Prestige. The starting point was
the launch of a package of special services for private investors,
consisting of a line of pension funds in the modalities PGBL and
VGBL, with different allocation strategies, such as fixed income,
referenced, balanced and multimarket. SulAmérica, which already
had a structure in place to serve high-income customers, has
introduced the Prestige brand name in its actions to this segment.
With the Prestige concept, SulAmérica began offering private
pension customers an open platform for asset management,
which allows greater diversification of investments and
managers. As the largest independent insurance company in
the country, SulAmérica is able to offer the open platform as an
important differentiating factor. The Prestige client has several
services and tools to monitor their investments, such as weekly
newsletters on the macroeconomic situation, personalized
service, statements via e-mail or regular mail, internet banking
and conference calls with the chief economist at SulAmérica
Investments and those responsible for funds management.
With these actions, the company sought to increase the
synergy between the areas of private pension and investment.
In 2009, high-income customers represented 10% of
SulAmérica’s portfolio of pension plans, totaling approximately
R$1.9 billion in reserves.
In 2009, by expanding its distribution channels, SulAmérica
concluded a partnership for exclusive distribution of life
insurance and personal accident with Gol Airlines. With this
partnership, Gol customers who buy air tickets through the
website may also acquire, in a simple and easy way, a personal
accident insurance for their trip. This partnership, innovative in
the way it is implemented, has brought good results for the life
segment in 2009.
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2009 ANnual REPORT
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Asset management
Solutions to meet each investment profile
The fast recovery of the Brazilian economy in 2009 contributed
to the good performance of the SulAmérica’s asset management
area, which ended the year with R$14.4 billion in assets under
management, and growth of 20.6% when compared to R$12.0
billion recorded in 2008, according to the Brazilian Association of
Financial and Capital Market Entities ( “ANBIMA”).
In the segment of asset management, SulAmérica operates
with institutional investors, external distributors and
private clients, offering investment options in over 120
funds, open and exclusive, with conservative, aggressive
and moderate profiles, including shares, fixed income,
multimarket and derivatives.
Managed assets – R$ million
Third-party assets – R$8.4 billion (2009)
Proprietary
Institutional: 92.3%
External
distribution: 4.5%
11,976
6,758
Third-party
20.6%
24.8%
Private: 3.1%
5,219
2008
15.1%
14,440
8,432
6,008
2009
Source: Anbima
52
2009 ANnual REPORT
BUSINESS AREAS
In 2009, SulAmérica Investimentos was the only independent
manager in the Brazilian market to get the highest rate – AMP-1
Very Strong – from Standard & Poor’s, for the management of
third-party resources. Several attributes contributed for the
company to reach this level of quality: diversified portfolio,
wide range of products, proper operating and control practices,
expertise of management body, disciplined processes for
investment management, and good fiduciary principles.
Innovation is also a requirement for success in this segment.
Together with the area of People and Pension segment,
SulAmérica Investimentos has developed a new concept in
the relationship with the high income public, called Prestige.
This new product is a multimarket fund, with no equity in the
composition, with starting amount of at least R$1 million. The
fund’s objective is to overcome CDI through a long-term strategy
in the market of interests and allocation in long-term securities.
The Prestige client has several services and tools to monitor their
investments, such as weekly newsletters on the macroeconomic
situation, personalized service, statements via e-mail or regular
mail, internet banking and conference calls with the chief
economist at SulAmérica Investimentos and those responsible
for funds management. Relying on a fully structured private
channel is a differentiating factor, from the synergy between
two segments of financial investments, pension plans and funds,
which enabled to offer greater diversification and a chance to
maximize the return on investment.
SulAmérica Investimentos has also diversified its portfolio of
dividend funds with the creation of SulAmérica Dividendos
FI Ações. The product’s differentiating factor is the possibility
of increased profitability through the payment of dividends.
It is also less exposed to volatility, as it consists of shares in
already consolidated companies with a good history of dividend
payment. SulAmérica Dividendos FI Ações invests chiefly
in the electric energy sector, and also has positions in the
telecommunications and media, steel, financial services and
sanitation. With minimum investment of R$25 thousand and
management fee of 1.5% per year, the fund has an accumulated
net worth of R$13 million.
In response to the demand of the investment market for assets
with higher returns, SulAmérica Investimentos has intensified
its activity in the stock market with an enhanced equity team,
structuring a team of professionals specialized in risky assets.
The new team has six managers, and its goal is to increase
this type of allocation in the total resources managed by the
company. The portfolio under management has accumulated
more than R$600 million in equity.
53
2009 AnNual REPORT
Intangible Assets
Brand
Credibility and respect ensure value toward the market
SulAmérica is one of the best-known and respected brands
in the Brazilian insurance and private pension market. Its
solid reputation has been built over more than 114 years of
existence. One of the latest evidences of the brand’s strength
was a study conducted in 2009 by IDS consultants aimed at
assessing the brand-name awareness of insurance and private
pension companies. SulAmérica was the most frequently cited
independent insurer, with over 94% of the total of prompted
and spontaneous recalls. Likewise, a survey conducted by Brand
Finance pointed the company as the most valuable brand in
the Brazilian insurance market in 2008.
SulAmérica’s brand reputation favors its marketing strategy,
representing a competitive advantage that contributes
significantly to the continued development of relations with
customers, brokers and distributors.
The brand’s visibility has gained a new momentum in 2007,
with the launch of Rádio SulAmérica Trânsito in the Sao Paulo
marketplace. The radio station provides information on the
city, service and music, 24 hours, seven days a week. While
general radio audience grows average 1.5% per year, SulAmérica
Trânsito reached a 149% growth in its first year of operation.
Considered an ally of drivers against traffic jams, the radio
records over 17 thousand listeners per minute at peak hours,
who deem revolutionary the possibility of obtaining realtime guidance on alternative routes through the city traffic.
Currently, it is the top-ranked news radio among listeners in
cars at peak hours.
Since early 2008, people in Rio de Janeiro have been living
more closely with the SulAmérica brand, thanks to the
partnership developed by the company with the city of Rio
de Janeiro to install bicycle lockers at the city’s bicycle lanes,
thus encouraging the use of bicycles as an alternative means
of transportation and reducing pollution. The initiative is
fully consistent with Rio’s climate, topography and way of life,
by combining physical activity with urban mobility, helping
promote a healthier lifestyle.
Continuing investment to increase its participation in the Rio’s
daily life, SulAmérica launched Rádio SulAmérica Paradiso in
2009, and inaugurated its new headquarters, in Rio de Janeiro.
The radio offers programming with more information on traffic
54
2009 AnNual REPORT
Intangible Assets
and quality of life, service and good music, allowing its brand
name to profit by combining the concepts of well-being and
health. The new corporate headquarters was built with the
most advanced technological resources, at Cidade Nova, next
to the SulAmérica Convention Center, encouraging the renewal
of an old section of the city. These initiatives are significant
contributions to the city of Rio de Janeiro.
The experience with the radio service was the inspiration
to create a new vehicle intended specifically to strengthen
the relationship with insurance brokers. Rádio Corretor
SulAmérica is a web channel dedicated to news about
the insurance market and the initiatives of the company,
in addition to quality music, and news on sports, politics,
economy and information on the auto market. To reinforce
its brand-name awareness, SulAmérica promoted advertising
campaigns for products Auto, Health and Dental Insurance,
and Child Private Pension. The company also promoted the
2nd Meeting of Business Brokers in a river cruise through
Negro River, and was present at key events in the insurance
industry, such as the Brazilian Congress of Insurance Brokers,
held in Florianópolis, and 2nd Enconseg – Meeting of Rio de
Janeiro State Insurance Brokers.
Throughout its history, the company has been supporting
culture by means of sponsorship and promotion of a number
of artistic events. In 2009, SulAmérica Circuit for Music
and Movement, which promotes cultural activities, offered
the population a number of shows, such as the tour of the
International Magic Festival, and gave prestige to national
artists such as Skank, Vanessa da Mata, and Maria Rita. For
SulAmérica, the sponsorship of cultural events is another
example of the company’s commitment to contribute to the
socio-cultural development of the country.
55
2009 AnNual REPORT
Intangible Assets
Human capital
Operating efficiency is sustained by qualified, motivated professionals
Human Capital
In line with this, it became necessary to strengthen the foundations
of a culture of high performance in the company, which relies on
a clear and transparent relationship with employees. The way
adopted by the Human Resources area was involving them, so that
they would understand their role in meeting the targets, and this
contributed to the positive results achieved in the year.
To achieve the strategic goal of enhancing operational efficiency,
in 2009 SulAmérica focused on identifying opportunities for
synergy between different areas, investing not only in the
consolidation of systems and processes, but also professional
development and quality of life for employees.
Profile of Employees
a) Nature of position and nature of position per gender in management
Executives
Management
Technical/Operational
Interns
Grand total - TOTAL
37
907
4,205
185
5,334
Gender
Total
%
F
426
45%
M
518
55%
Total
944
100%
[GRI LA1; LA13]
56
2009 AnNual REPORT
Intangible Assets
b) Per gender [GRI LA1; LA13]
Gender
Total
%
F
2,857
54%
M
2,477
46%
Total
5,334
100%
c) Per type of employment, labor contract and region
Office - BRANCH
Belém
Commissioned
+ fixed
2
Brasília
1
Campinas
1
Curitiba
1
Cuiabá
Fortaleza
2
Ribeirão Preto
3
Rio de Janeiro
Salvador
São Paulo
Total
1
15
119
1
8
17
66
39
17
185
37
18.3%
Total
19
1,210
853
592
380
290
5,334
%
Education
Total
Secondary
3,093
Graduated
Post-graduated
Total
133
1,794
314
5,334
Race
0.4%
Yellow
22.7%
Indigenous
16.0%
11.1%
54
54
64
84
25
78
41
42
68
71
62
65
46
49
2,423
2,574
1,929
2,020
76
77
5,073
5,334
7.1%
Qty
%
37
1%
White
4,107
77%
Black
182
3%
Mulatto
Total
6
0%
1,002
19%
5,334
100%
* Self-declared upon admittance.
5.4%
100%
g) Per specific job posts – interns, people with special needs,
and outsourced services [GRI LA1]
[GRI LA1; LA13]
e) Per education level
Elementary
87
f) Per race [GRI LA1; LA13]
977
46-50
44
2
19.0%
Over 51
42
1
1,013
36-40
84
77
19-25
41-45
1
25
Qty
31-35
Grand total
83
Age
26-30
Monthly
63
d) Per age
[GRI LA1; LA13]
Under 18
Executive EXECUTIVE OFFICER
1
Porto Alegre
Recife
Intern
2
Belo Horizonte
Blumenau
[GRI LA1]
%
2%
58%
34%
6%
100%
Type
Qty
Special Needs
106
Outsourced
1,748
Interns
Apprentices
186
77
57
2009 AnNual REPORT
Intangible Assets
Employee Turnover (GRI – LA2)
The turnover of the company’s employees is calculated by the
number of admissions and dismissals, disregarding executives
and interns. In 2009, the turnover rate at SulAmérica was
15.58%. This calculation included layoffs by contract termination,
dismissals, resignations and deaths.
Turnover rate
2009
15.58%
2008
15.95%
2007
15.08%
Diversity and equal opportunity [GRI LA13]
Equal opportunity for all persons regardless of race, belief,
economic class or gender is a premise at SulAmérica. The human
resources policy includes programs to promote the inclusion of
these groups. Read on the initiatives:
• Special Opportunities Program – Created in 2006 in
compliance with Law No. 8213/1991, in units of Rio de Janeiro and
Sao Paulo, the program encourages the employment of people
with special needs to fill the position of trainee. It provides
intensive training in IT, tutoring, and technical content about
the insurance industry.
• Teen Insurance Program – Created in 2007 in compliance with
Law No. 10097/2000, it opens opportunities for young people
ages 16-19 years to work 4 hours a day. It provides apprentices
with technical and professional training compatible with
their physical, moral and psychological development. After the
24-month program, the company intends to hire the largest
possible number of young people as regular employees in its
various areas.
• SulAmérica Messenger Program – This program is part of
the set of social responsibility initiatives by SulAmérica. Since
1996, the company has been developing work in partnership
with Cruzada do Menor NGO, for young people who have
difficulty entering the job market. After a period of training,
they are hired to work as messengers, or in the areas of
courier, administrative assistance and warehouse. More in
Social Investment.
In addition, the SulAmérica’s remuneration policy provides
equal pay for men and women (GRI - LA14). After 2009, women
represented 54% of headcount. At the management level, there
were 426 female employees, or 45% of the managers. [GRI LA14]
Remuneration and Benefits
The remuneration to employees consists of a fixed amount, a
variable portion (based on targets and individual goals) and
a package of benefits defined by the Collective Bargaining of
Employees in the Insurance Industry (CCT), as well as voluntary
benefits. The remuneration policy is reviewed periodically,
to align the practices of the company to the trends and best
practices of the market.
The variable remuneration, or Profit Sharing Program (PPR), is
based on the operational net income after income tax and social
contribution, calculated on the balance sheet of the company
in each year. 10% of the profit made is allocated to pay PPR/PLR.
The amount paid in advance is deducted from this percentage,
in accordance with the rules set under CCT. The program is
institutional and directed to all employees. In 2009, R$31.6
million1 were paid.
In 2009, the lowest remuneration at the company was
equal to 186.5% of the minimum wage. The ratio between
the lowest and highest pay, considering only employees, is
2,784.7%2. (GRI – EC5). [GRI EC5]
Lowest salary vs. minimum wage
Year
Administrative
assistant
Minimum
Wage
Rate
2007
R$770.00
R$380.00
202.6%
2008
R$812.35
R$415.00
195.7%
2009
R$867.00
R$465.00
186.5%
[GRI EC5; LA14]
1. Employees only.
2. Considering only fixed salary for 40-hour-week employees.
58
2009 AnNual REPORT
Intangible Assets
Remuneration and benefits *
Description
Expenses with social taxes
Total
R$69,985,957.20
Expenses with meals
R$31,312,730.83
Expenses with transportation
R$6,785,743.36
Expenses with private pension
R$2,516,016.96
Expenses with health
R$11,448,187.63
Expenses with safety and occupational medicine
R$1,002,755.56
Expenses with qualification and professional development
R$6,517,237.43
Expenses with day care aid and nurse aid
R$2,221,289.53
Profit sharing
R$31,635,637.00
* Employees, administrators, outsourced and freelancers.
SulAmérica adopts a remuneration policy that aims at attracting
and retaining talent. The benefits offered by the company
exceed those established in CCT. They are extended to all fulltime employees and include meal vouchers, food vouchers,
transportation vouchers, day-care aid, and nurse aid. In addition
to the benefits set in CCT, SulAmérica includes:
Recruitment and Selection
SulAmérica adopts a process for recruitment and selection that
prioritizes internal hiring. The Internal Opportunities Program
involves those employees who stand out and demonstrate
potential for career development. In 2009, the company filled
76% of the openings with internal candidates.
• Pension Plan - the company offers the PGBL PrevSAS plan
to all employees on an optional basis, in accordance with the
conditions set by each employee. SulAmérica’s monthly basic
contribution is 1.035% to all employees, applicable to up to
R$4,496.28 of the monthly basic salary. [GRI EC3]V
When there is no internal resource compatible with the position,
the company uses a database of resumes to search for suitable
professionals in the market. SulAmérica prioritizes the hiring
of employees from nearby communities, including members of
senior management. [GRI EC7]
• Health and Dental Plan - the company offers three options for
Health and Dental Plan to all employees, with the possibility
of paying the total cost with employee counterpart or
reimbursement of part of the amount spent for providers who
are not part of the referenced network;
Performance Evaluation
The Performance and Development Management Program
(PGDD) allows relating the most important asset of the
organization – the employees – to the company’s strategic
objectives, thus ensuring the continuous improvement of
performance standards. The annual performance evaluation is
applied to 100% of the employees. According to the degree of
achievement of set goals, a career development plan is drawn up
and circulated on the company’s intranet. [GRI LA12]
• Life Insurance - all employees receive life insurance when they
are hired by the company at no cost;
• Discount network - SulAmérica has a network of partners that
offer discounts to its employees in places like movie theaters,
supermarket, pharmacy, and car rental;
• Funeral grant;
• Disease grant;
• Guidance by social assistance;
• Program for management and treatment to the chronically ill;
and
• Personal accident and collective insurance.
Employees on a temporary basis receive transportation voucher
and meal voucher as benefits. [GRI LA3]
Training, Awareness and Education
SulAmérica invests in the qualification of its employees through
a program of training and development that offers a wide
variety of contents not only for employees and their families,
but also to brokers, customers, service providers, and suppliers.
With a budget of over R$2.6 million in 2009, the company
offered 93 distance-education courses through its corporate
university, Universas, on topics such as ethics, product portfolio,
insurance market and fraud prevention. The program totaled
over 342 thousand hours of training to more than 61 thousand
participants, with 108 thousand hours of hands-on classes and
233 thousand hours of distance learning. [GRI LA10]
In 2009, 5,065 employees attended training on Money
Laundering Prevention, in compliance with Susep Circular Letter
no. 340, March 23, 2007. The course aims at illustrating situations
59
2009 AnNual REPORT
Intangible Assets
of money laundering, so that employees are able to identify
and address the risks related to this illegal practice in their daily
activities. [GRI SO3]
341,980
SulAmérica invests every year in several programs to improve
the quality of life for employees and their families. In 2009,
it created the Health in Harmony to evaluate the activities,
measure results and set priorities for investment. The company
has no special focus on serious diseases in its efforts to quality
of life or other programs, because the activity of the company
does not expose employees to a different level of risk. The main
programs are:
Leadership Training
SulAmérica invests in various programs to enhance skills and
abilities, and to develop the management skills of employees.
Through skill management programs and lifelong learning, the
company trains managers so that in the future they may take
leadership positions.
• Athletes SulAmérica - Created in February 2005, it seeks to
encourage healthy practices through sports, providing even
more flexibility and good physical and mental performance to
its professionals, in addition to relieving stress in a healthy way.
Initially intended for employees in Rio de Janeiro, the project
was very successful and has been extended to Sao Paulo, Belo
Horizonte and Recife.
Total training
2008
Participants
61,364
Hours
392,061
2009
61,661
• Wellness Space – An area where various activities are offered
for free, such as shiatsu, yoga, singing, choir, ballroom dancing,
embroidery and handicrafts, in addition to paid services like
sewers, manicure and hairdressing.
• Language Programs
• Management Development Program
• Project Management Program
• Technical Certification Program – Susep Regulation
• Multiplier Program
• Internship Program
• Managing stress - After completing a test, employees
are selected to attend lectures and receive information to
reduce stress. Those with a high stress rate receive weekly
psychological attention, focusing on guidance for the
difficulties presented.
• Potential Identification Program (PIP)
• Talent Program
• Continuing Education Program
• MBA Program
Organizational climate and personal support programs
Since 2001, every two years the company has been conducting a
climate survey to assess the level of employee satisfaction. The
results are widely disseminated and action plans are defined to
identify the strengths and opportunities for improvement. In 2008,
4,197 employees representing 81% of the personnel completed the
organizational climate survey. The rates achieved were very positive.
Favorability rate
47%
55%
60%
• Smoke Zero, Health Ten - The anti-smoking program to improve
the quality of life of those who smoke and those who share the
environment with them. The company promotes lectures, offers
medical monitoring, and distributes free medicine to those who
would like to quit smoking.
63%
• Management of risk factors – tests performed include glucose and
cholesterol, as well as measurement of blood pressure, weight and
height. With a report on the health of its employees, SulAmérica
organizes actions aimed at quality of life tailored to their needs.
• Orientation to pregnant women - Held twice a year, the
program provides lectures and exercises, ensuring baby’s health
during pregnancy.
• Living Well - A program of personal assistance designed to
provide well-being, peace of mind and safety to employees
and their families. The service is available 24 hours a day, 7
days a week. There is a direct channel for personal support
with specialists in various fields (psychology, social service,
physiotherapy, pedagogy, legal counseling, etc.), guiding those
interested, quickly and free.
• Nutritional Attention.
• SulAmérica Football Club.
• Flu immunization.
2002
2004
2006
2008
60
2009 AnNual REPORT
Intangible Assets
• Ecological walks.
In 2009, there were 26 labor-related accidents, resulting in
18,669 lost hours. The company also had seven cases of RSI sent
to Official Social Security due to the Epidemiological Social
Security Technical Nexus. [GRI LA7]
• Health Emporium.
• Workplace exercises.
Occupational safety and health
The administrative area of the company is responsible for all
programs related to occupational safety and health. Issues related
to these topics are in full compliance with the specifications of
the Brazilian labor laws, and are not detailed in CCT. [GRI LA8; LA9]
Some of the actions in 2009:
• SIPAT - Internal Week for Accident Prevention;
• PPRA - Program for Prevention of Environmental Risks (work
environment);
• Training for fire fighting and prevention;
• First aid Training;
• Counseling on prevention of urban violence; and
• Emergency simulation.
Besides these activities, SulAmérica provides courses and
lectures in all its units on the following subjects:
• Course on CIPA and accident prevention;
• Training for the Fire Brigade;
• Lecture on first aid;
• Lecture on defensive driving; and
• Lecture on urban violence.
The table below presents the percentage of employees
represented in formal committees of safety and health [GRI LA6]
Programs
PCMSO (Program for Medical
Control and Occupational
Health)
Number of employees
involved
Human Rights
Consistent with its values, SulAmérica does not tolerate
discrimination of any kind, whether race, gender or other reason.
In 2009, no incident or case of discrimination was reported.
Additionally, there were no specific cases of violation of rights
of indigenous peoples in any unit of the company, and there
were no incidents of human rights violation, such as forced or
compulsory labor, child labor, or operations with significant risks
of this type of violation within the units of the company. [GRI
HR6; HR7]
The company uses outsourced security services in all its
units and requires that contractors offer basic training on
human rights. The security personnel receive at least 6 hours
of training on Human Rights and Human Relations at Work.
At every two years, the learning of these service providers is
recycled. [GRI HR8]
The core curriculum of training for all staff includes an ethics
course, which covers issues relating to the rights of people and
citizenship. In 2009, 1,268 employees attended the course, with a
workload of two hours. [GRI HR3]
All SulAmérica employees are under collective bargaining
agreement. For this reason, the company has not identified in
its units any operations that generate significant risk to the
exercise of freedom of association and collective bargaining.
The collective bargaining, however, does not include a clause
specifying the minimum lead-time to inform employees about
operational changes, such as change of address. The company
adopts, however, a policy of re-placement of those who do not
opt for the move, and provides enough lead time for those who
are on the move. In 2009, the company consolidated five units
located in the city of Rio de Janeiro, transferring their activities to
the new building. This process, administered by a specially hired
team, took two years from the choice of location to the effective
move. The process involved extensive communication campaign
and engagement of all employees. [GRI 2.9; LA4; LA5; HR5]
4
CIPA (Internal Commission
for Accident Prevention)
33
BVI (Voluntary Fire Brigade)
363
61
2009 ANnual REPORT
Intangible Assets
Technological assets
Implementation of new systems increases process efficiency
Technology performs an essential role in ensuring reliability
to services provided to SulAmérica customers, suppliers
and brokers in the various segments. In 2009, the Company
invested R$50.4 million in technology and information
management, focusing on the tools of business intelligence
(BI), which allowed the company to enhance the management
of its sales force.
The implementation of new information systems brought
more efficiency to key processes for the business, for instance,
the adjustment of claims in the auto segment. In the massify
insurance segment, the technology evolution has allowed a
300% increase in the number of price proposals made monthly.
A new tool for price quotation and purchase of insurance went
into operation, facilitating sales and reducing issuance times.
Technology has supported the improvement of key channel
relationships, such as the Broker Portal, which was redesigned
in 2009 with renewed navigation structure and services.
Another differentiating factor in SulAmérica’s structure of
Information Technology (IT) is the ability to timely integrate with
new distribution channels and service providers, which speeds
up the expansion of business. In 2009, six new large distribution
channels were integrated to SulAmérica. To support this increased
automation, the company now has an infrastructure of IT
consisting of more than 450 servers and a storage capacity of more
than 100 terabytes. In the mainframe environment, over 50 million
transactions are processed with average availability above 99.96%.
Focused on efficiency, SulAmérica was capable to optimize the
capital invested by renegotiating its trade agreements with
technology providers. In line with this, the company invested
in the adoption of free software along 2009. Currently, over 2
thousand users make use of these applications. With actions
like this, the company reduced the need for new investments
and reduced the IT expenditure participation in the company’s
revenue by 24 bps.
62
2009 ANnual REPORT
INTANGIBLE ASSETS
Quality attention
Vocation to serve cordially 6.7 million customers
Today, only a few companies have a robust structure to serve
its customers effectively as SulAmérica does. Over 6.7 million
customers all over the country are served by our own call
centers, located in Sao Paulo and Rio de Janeiro. These units
provide specialized services and have the autonomy to solve
problems and make timely decisions on matters relating to all
segments of the company, such as insurance, private pension
and asset management.
In 2009, the rate of FCR (First Call Resolution), i.e., the
resolution of requests at the first call, reached 93% in platforms
such as prior medical authorization. This performance is
the result of ongoing investments in the qualification of
attention professionals – all certified in accordance with the
standards of the National Federation of Private Insurance and
Capitalization Companies (Fenaseg) and the National Agency
of Supplementary Health (ANS) – and technological tools that
allow a prompt and safe attention.
In order to reach this level, the company had to change its
management structure. For that purpose, in 2004, the company set
up an Executive Area responsible for taking care of all stages in the
customer relationship – acquisition, service selling, cross selling, up
selling, retention and recovery – another aspect that demonstrates
the strategic importance of customers to SulAmérica.
The quality attention provided by SulAmérica has been
recognized by a number of awards received over the recent
years. In 2009, for the fourth year running, the company was
distinguished with the ‘Consumidor Moderno’ Award for
Excellence in Customer Services, segments of Insurance, Health
and Private Pension. Created by Grupo Padrão in partnership
with the consultancy International IZO System, the award aims
to identify and disseminate the best practices in customer
service in Brazil, and recognize companies that focus on service
excellence, not only gaining new customers, but also, above all,
maintaining high level of satisfaction and loyalty.
Among the company’s differentiating factors regarding its
quality attention, one of the values of the company stands out:
“vocation to serve”. With cordiality and clarity, our employees
seek to identify, right from the beginning of the call, the
customer needs, with accessible questions, endeavoring to
resolve their request on the first call.
63
2009 ANnual REPORT
INTANGIBLE ASSETS
To maintain its levels of quality service to customers,
policyholders and brokers, SulAmérica invests in three pillars:
people, processes and technology. Our Contact centers rely on
our own team, formed by professionals who are qualified and
prepared to exceed the customer expectations. The Company
has support areas to supervise the service operation, providing
monitoring and training, and implementing new projects to
ensure quality attention. In addition, the company maintains
partnership agreements with the best companies in information
technology management. In addition to reflecting in the
practice one of the company’s values - “we are accessible and
dynamic” -, the investment in internet solutions is a competitive
differentiating factor, as it offers accessibility and responsiveness
to increasingly demanding customers, accustomed to receiving
services through digital channels.
As in all action areas, the company develops its customer attention
services with ethics and social responsibility, in compliance with
all standards. Proof of this was the timely adaptation to Decree
6523/2008, known as “Law of Call Centers”. [GRI PR5]
64
2009 ANnual REPORT
Intangible Assets
Innovation
Bold stance to search for increasingly better solutions
Along its history, SulAmérica has been building a consistent track
record of innovation. New products, services with differentiating
factors, communication increasingly more directed, and
partnerships in distribution channels reaffirm the company’s
bold stance and constant quest for better solutions. Among the
recent innovations are the radios to provide public services in
Rio de Janeiro and Sao Paulo, offering quality information and
entertainment for audiences in the largest Brazilian cities.
Year after year, pioneering examples multiply. Based on CRM
(Customer Relationship Management) actions and market
research, the company launched a number of differentiated
products in 2009. SulAmérica Truck Km Run is the only
insurance in the market for heavy trucks and tow trucks that
have a new pricing model, allowing the customer to pay
according to the usage of the vehicle. SulAmérica Auto 0Km
came up to serve specifically the growing market of new vehicles
in Brazil. In the asset management area, SulAmérica Prestige
was especially designed for high-income clients. SulAmérica
Você Mulher, in turn, is a life insurance developed exclusively for
female audiences, offering health, beauty and wellness services.
Willing to gain greater operational efficiency, SulAmérica
was the first company in the industry to adopt the
technology of digital certification for electronic document
exchange with its 26 thousand providers of health and
dental care, ensuring authenticity, confidentiality and
integrity of information.
In the segment of auto insurance, the company was a pioneer in
launching a new system that uses water-based paint to repair
vehicles in the chain of shops accredited by the Auto Super-Service
Centers (C.A.S.A.). The new technology is the result of a partnership
with Basf and allows reduction of up to 90% of solvent emissions.
Besides innovating in the development of new products,
processes and services, SulAmérica also seeks new solutions
to improve its relationships. In 2009, the Company held with
insurance brokers, a major stakeholder group, the largest sales
campaign in the insurance market. Under the theme Champions
League, the campaign offered new awards, encouraging brokers
to achieve their goals and promoting integration between
SulAmérica and its partners.
65
2009 ANnual REPORT
Intangible Assets
Innovation
Bold stance to search for increasingly better solutions
Along its history, SulAmérica has been building a consistent track
record of innovation. New products, services with differentiating
factors, communication increasingly more directed, and
partnerships in distribution channels reaffirm the company’s
bold stance and constant quest for better solutions. Among the
recent innovations are the radios to provide public services in
Rio de Janeiro and Sao Paulo, offering quality information and
entertainment for audiences in the largest Brazilian cities.
Year after year, pioneering examples multiply. Based on CRM
(Customer Relationship Management) actions and market
research, the company launched a number of differentiated
products in 2009. SulAmérica Truck Km Run is the only
insurance in the market for heavy trucks and tow trucks that
have a new pricing model, allowing the customer to pay
according to the usage of the vehicle. SulAmérica Auto 0Km
came up to serve specifically the growing market of new vehicles
in Brazil. In the asset management area, SulAmérica Prestige
was especially designed for high-income clients. SulAmérica
Você Mulher, in turn, is a life insurance developed exclusively for
female audiences, offering health, beauty and wellness services.
Willing to gain greater operational efficiency, SulAmérica
was the first company in the industry to adopt the
technology of digital certification for electronic document
exchange with its 26 thousand providers of health and
dental care, ensuring authenticity, confidentiality and
integrity of information.
In the segment of auto insurance, the company was a pioneer in
launching a new system that uses water-based paint to repair
vehicles in the chain of shops accredited by the Auto Super-Service
Centers (C.A.S.A.). The new technology is the result of a partnership
with Basf and allows reduction of up to 90% of solvent emissions.
Besides innovating in the development of new products,
processes and services, SulAmérica also seeks new solutions
to improve its relationships. In 2009, the Company held with
insurance brokers, a major stakeholder group, the largest sales
campaign in the insurance market. Under the theme Champions
League, the campaign offered new awards, encouraging brokers
to achieve their goals and promoting integration between
SulAmérica and its partners.
65
2009 ANnual REPORT
Intangible Assets
Social investment
Tradition in investing in projects that contribute
to sustainable development
In addition to generating value for various stakeholders,
SulAmérica also contributes to the development of the country
by encouraging and supporting projects aimed at education,
health and the environment. In its relationship with the
community, the company targets investments in campaigns,
actions and social projects that rely on voluntary activities by
employees and partners, focused on the practice of citizenship
and environmental preservation.
The social projects have as their target audience teenagers and
adolescents from communities around the SulAmérica units in
regions of high vulnerability. All investments are analyzed by the
area of Corporate Sustainability and subject to the approval of
the Sustainability Committee. In 2009, SulAmérica supported
the following social projects: [GRI SO1]
PROJETO PRAÇAS DA PAZ SULAMÉRICA (SAO PAULO)
Committed to the population’s safety and well-being,
since 2007, in partnership with Instituto Sou da
Paz, SulAmérica has been developing an innovative
project to promote best practices to encourage
citizenship: PROJETO Praças da Paz SulAmérica.
The goal is the participatory revitalization of public
squares, providing living space for young people and
adolescents from the outskirts of Sao Paulo. The mobilization of these
communities and training of youth in these regions are the main
objectives of the project, which turns abandoned and devalued areas
into community centers to promote sports, cultural and educational
activities. The project has already revitalized three squares in the
districts of Lajeado (East Zone), Jardim Ângela (South Zone) and
Brasilândia (North Zone). [GRI EC8]
66
2009 ANnual REPORT
Intangible Assets
Over the four-year long project, SulAmérica will have
invested about R$2.5 million in the revitalization of squares
and support for cultural and sporting activities. Those
new spaces are expected to contribute to the prevention
of violence, since, once revitalized with the participation
and involvement of the community, new areas become
public spaces for safe coexistence, cared for by the residents
themselves. Sports courts, playground, benches and tables,
covered spaces, stages and areas for cultural shows are some
of the features of these squares.
In addition to the financial investment, SulAmérica encourages
voluntary work by inviting employees to participate in several
social projects in SulAmérica Peace Squares.
A PRIMEIRA INFÂNCIA VEM PRIMEIRO CRECHE PARA
TODAS AS CRIANÇAS (RIO DE JANEIRO)
In partnership with the Abrinq Foundation
for the Rights of the Child and Adolescent, in
2009 SulAmérica contributed to expand access
to early childhood education and improve its
quality. The program envisages reforms for
expansion of day care centers, installation of thematic facilities
for children, and promotes continuing education for teachers and
coordinators in four units near the company’s new headquarters
in Cidade Nova, Rio de Janeiro.
The four day care centers benefited by the project - Instituto Central
do Povo, Abrigo Teresa de Jesus, Creche Florescer and Casa de Jacira
- serve about 1 thousand children. In 2009, the 20 educators and
pedagogical coordinators responsible for the centers have undergone
40-hour training to improve the care provided to children. The project
also relies on the participation of voluntary SulAmérica employees
who over 2009 developed several activities, such as distributing gifts
and children’s books on Children’s Day and Christmas. The plan calls
for an expansion to serve additional 120 children in 2010. [GRI EC8]
CRIANÇAS SAUDÁVEIS, FUTURO SAUDÁVEL
This initiative is an alliance of public
and private sectors and civil society,
developed to promote better nutrition
and self-sufficiency for around 1,000
students and their families, as well as
teachers from public schools in Sao Paulo. In 2009, 516 children
underwent anthropometric and biomedical evaluation, 123
PROJETO SAÚDE BUCAL (RIO DE JANEIRO and SAO PAULO)
Oral health promotion
and health education raise
self-esteem and prevent
diseases, in addition to
creating conditions so that each one becomes aware of their
rights as citizens. In Sao Paulo, the project aims at increasing
oral health knowledge in the areas surrounding SulAmérica
units in Real Parque and Jardim Panorama, through training of
multiplying agents, development of educational and preventive
activities, and treatment of children and adolescents. The project
is carried out within the Casulo NGO facilities, installed in the
had hemoglobin examination and 92 had stool tests. The
rate of anemia found in the group was over 54%, and 20% are
overweight. Based on these results, different actions have been
planned to occur in 2010 in the schools, with children and their
parents. Schools that are part of the program and reach the
expected results will be certified with the Inmed/SulAmérica
Sign: “Crianças Saudáveis, Futuro Saudável”. [GRI EC8]
community of Real Parque, and has benefited 434 children and
adolescents. [GRI EC8]
In Rio de Janeiro, the project was developed in partnership with
Ação da Cidadania NGO and the Brazilian Dental Association
(ABO). The goal is to provide
guidance on oral health for
1,500 public school children
from Cidade Nova. In 2009, 264
children from Canadá school,
in Morro de Sao Carlos, and 128 community leaders were trained
in matters related to oral health. [GRI EC8]
67
2009 ANnual REPORT
Intangible Assets
CRIANÇAS SAUDÁVEIS, FUTURO SAUDÁVEL
Aimed at promoting sporting culture in the
communities, Instituto Esporte & Educação
created the Socio-Educational Sports
Nucleuses, providing direct care to children
and adolescents. In addition, it trains and
supports Physical Education professionals
who work in the nucleuses, through
reflective teaching practice, management of the centers and
ongoing education.
SulAmérica supports the project through the Law for Incentive
to Sports (Law 11472/2007) and, in 2009, involved 1,096 children
in 30 public schools in Sao Paulo. The sporting, cultural and social
service is provided to children and adolescents aged 6 to 18 years
from social classes C, D and E. To participate in the program, they
must be enrolled in public schools and have their attendance
controlled by the institution. The project also helps to empower
educators and mentors, as well as young people from the
communities interested in spreading the culture of sports.
Cruzada do Menor
Since 1996, SulAmérica has been supporting Cruzada do Menor
NGO, which trains and teaches basic courses for teenagers,
benefiting young people seeking access to the labor market. .
After their course conclusion, SulAmérica accesses a database
with information from these people, who may be hired to work
in various areas of the company.
Campaigns and Social Actions
Every year, SulAmérica creates opportunities for its employees
to engage in citizenship and solidarity. In 2009, there were
five institutional campaigns, developed in all units, with the
participation of corporate volunteers:
• Christmas Action – SulAmérica annually promotes a
campaign to encourage employees to sponsor a child at
Christmas. In 2009, the action took place in all units of the
company and benefited more than 2 thousand children in 20
institutions.
• SOS Northeast Campaign – In response to the floods occurred
in the states of North and Northeast in May 2009, the company’s
employees were mobilized and collected more than 3 thousand
items, including clothing, cleaning supplies and food for the
homeless in several states affected.
• Solidarity Committee – The Committee was formed
to improve even further the results of social campaigns
undertaken by SulAmérica. Hundreds of employees,
from various units, contribute new ideas, suggestions
and proposals, and encourage the participation of their
colleagues. Supported by the Solidarity Committee, new social
activities are performed annually in all locations. In 2009,
the committee mobilized more than 2,000 employees in the
various actions and institutional campaigns.
• Campaign of warm clothes and food donation – Since its inception
in 2005, the campaign of warm clothes and food donation has raised
over 11 thousand pieces of clothes and blankets and more than
70 thousand kg of food. In 2009, employees collected more than 1
thousand items during the June festivals throughout the country.
• Campaign for donation of toys and children’s books on
Children’s Day – The campaign is held every year during
September and October in all business units. The action has the
support of employees who donate books and toys, new or used,
benefiting institutions near the units. In 2009, about 6 thousand
toys were collected and distributed to 20 institutions.
• Campaign for blood donation – Since 2003, SulAmérica has
been holding a campaign to encourage its employees to donate
blood. Employees from all SulAmérica units engaged in the action,
which, in 2009, collected about 170 liters of blood in a single day.
• Program Guiding to the Labor Market – Aimed at young
people participating in social projects who are receiving
training for the labor market, it offers the opportunity
to experience the corporate environment, by visiting the
SulAmérica facilities. During the tour, young people get
closer acquaintance with the activities of various areas
of the company, such as Human Resources, Property
Administration, Finance, Sales and IT. They also attend
presentations provided by SulAmérica employees and
interact with volunteers from the Solidarity Committee.
In the 2009, the actions took place in Rio de Janeiro, Porto
Alegre, Blumenau, Campinas, Recife and Cuiabá, with the
participation of over 170 young people.
68
2009 ANnual REPORT
Intangible Assets
Results – Campaigns and social actions 2009
Total volunteers
312
Total qualified educators
28
Total employees involved in campaigns and social actions *
7,873
Total employees participating in speeches on citizenship *
640
Total directly benefited from campaigns and social actions *
4,840
Total directly benefited from projects *
3,418
Total institutions served in campaigns and social actions
74
Total items donated in campaigns
12,272
* Participants in more than one action were counted for number of participations.
Respecting to the Environment
For SulAmérica, the consumption of natural resources in recent
years has become a significant issue for management, especially
regarding the impact that environmental disasters caused
by climate change may have on the insurance business. It is
increasingly necessary to invest in technologies and processes
to reduce emissions, improve the analysis of environmental
risks and offer new products that encourage the adoption of
environmental management practices.
workstations, it led to a reduction of about 4.2 million sheets
of A4 paper, or 18% less when compared to the previous year
(figures only for Rio de Janeiro and Sao Paulo).
SulAmérica follows the rules and guidelines of regulatory
agencies in the sector on issues of environmental impact, and
develops various campaigns, initiatives and actions to improve
the management of natural resources.
• Conscious consumption of water and electricity - Since 2008,
SulAmérica has been developing campaigns to educate its
employees about the campaign ‘Turn on and off’, which
encourages the conscious use of energy. The move to the
new building in the district of Cidade Nova, Rio de Janeiro,
provided high reduction in water consumption and electricity.
The design included systems to improve the use of water and
lighting in order to reduce the consumption of water and
electricity and, therefore, reduce emission of pollutants in
the activities of the company, a concern right from the new
building design. The water from restroom sinks is reused for
flushing and washing the external areas. The use of doubleglazing creates a layer for heat retention, thus reducing the
need for air conditioning. The whole building is glazed, which
allows for better use of natural lighting, and all lights near
the windows have photoelectric controls (which regulate the
output according to the ambient brightness). In addition, the
building has automated elevators, or smart elevators, which
consume less energy. [GRI EN5; EN18]
Some of these initiatives include:
• Reduction in paper consumption: In 2009, SulAmérica
implemented a series of initiatives, processes and tools to reduce
paper consumption, working intensively with employees, service
providers and customers. Because of the initiatives, the company
saved about 6 million A4 sheets.
- New User Kits for all SulAmérica products present the general
insurance conditions briefly and safely, while the content in its
entirety can be accessed at the SulAmérica’s website. With the
kit, customers receive at home a leaflet explaining the main
advantages, guarantees and insurance services, the policy sheet,
with the agreed conditions, in addition to policyholder cards as
per the distribution rules. The initiative has eliminated over 1.5
million A4 sheets of paper only in the Auto Insurance Kit. In 2010,
the company will adopt the kit in all products.
- Why Printing? The campaign was created to encourage
employees to print less. Coupled with the installation of printer
pools and the use of two-sided printing as standard on all
- Health Insurance Digital Certification: Through this process,
introduced in 2009, the company adopted the technology of digital
certification for electronic document exchange with its more than
26 thousand service providers. With the new process, SulAmérica no
longer circulates about 700 thousand printed invoices.
• Selective waste collection - Since 2004, the company has been
adopting a selective collection system in its units. With the daily
collection of plastic and paper, it recycled about 200 thousand
tons of waste in 2009. It also implemented new systems and
promoted campaigns to reduce waste generation.
[GRI EN7, EN18, EN22]
69
2009 AnNual REPORT
Capital market
SulAmérica shares’ appreciation is higher than Ibovespa Index
SulAmérica is a listed company, since October 5, 2007, when
it began trading shares grouped into units (sets consisting
of one common share and two preferred shares). In
September of that year, it adhered to Level 2 Special Corporate
Governance Practices.
Below is the shareholding structure of the company:
Shareholders*
Common
stock**
%
Preferred
stock**
%
Total
% of Total
Units
Sulasapar
Participações S.A.
92,362,873
59.6563
-
0.0000
92,362,873
33.0272
-
ING Insurance
International BV
19,862,103
12.8287
39,724,207
31.8221
59,586,310
21.3069
19,862,103
Controlling
Individuals
6,216,043
4.0149
12,432,088
9.9590
18,648,131
6.6682
6,216,043
Board Members
and Executive
Officers
1,671,342
1.0795
3,342,669
2.6777
5,014,011
1.7929
1,671,334
100
0.0001
200
0.0002
300
0.0001
100
Fiscal Council
Members
* Shareholding structure as per Bovespa’s concept.
** 62,415,920 of the total common stock and 124,831,840 of the total preferred stock are arranged in units, with each unit consisting of 1 common share and 2 preferred shares.
70
2009 AnNual REPORT
Capital Market
Shareholders*
Common
stock**
%
Preferred
stock**
%
Total
% of Total
Units
Outstanding
shares***
34,712,590
22.4205
69,333,281
55.5410
104,045,871
37.2047
34,666,440
Subtotal shares
154,824,951
100.00
124,832,245
100,00
279,657,196
100.00
62,415,920
Shares in treasury
Total shares
546,245
1,092,490
1,638,735
0
155,371,196
125,924,735
281,295,931
62,415,920
* Shareholding structure as per Bovespa’s concept.
** 62,415,920 of the total common stock and 124,831,840 of the total preferred stock are arranged in units, with each unit consisting of 1 common share and 2 preferred shares.
*** Including those held by Fiscal Council members.
In 2009, SulAmérica units achieved an appreciation of 224.9%, one of
the largest recorded in BM&FBovespa over the period. The unit ended
the year priced at R$51.99, raising the company’s market value to
R$ 4.9 billion. This appreciation was higher than that recorded by the
Exchange’s composite, 82.7%, which reflected the economic recovery
of the Brazilian market. The daily average financial volume grew
100.5% over 2008, reaching R$5.3 million, with daily average of 221
transactions, 206.9% over the previous year.
Performance of units
55,000
50,000
300
45,000
40,000
250
35,000
200
30,000
150
25,000
100
15,000
20,000
10,000
50
5,000
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
Volume SULA11
Volume Ibovespa
0
SULA11
Dec 07
Dec 08
Dec 09
281,295,931
280,913,431
279,657,196
1.45
0.66
1.88
Profit/unit
R$3.4236
R$4.4420
R$6.7145
Profit/share
R$1.1412
R$1.4807
R$1.4986
Maximum price
R$32.00
R$34.95
R$51.99
Minimum price
R$27.94
R$13.00
R$16.01
Average price
R$30.30
R$24.75
R$30.72
Number of shares
P1/B
Volume (R$ thousand)
Price (Dec 30, 2008 = 100)
350
71
2009 AnNual REPORT
Capital Market
Compensation To Shareholders
The management submitted to the Shareholders’ Meeting a
proposed distribution of income, which includes the payment of
dividends amounting to R$199.1 million. This amount supports
the proposal, approved by the Board of Directors at a meeting
held on February 23, 2010, for a policy of dividend distribution of
50% of adjusted annual net income, calculated in the financial
statements for fiscal years 2009, 2010 and 2011.
Since the company went public, SulAmérica units are part of
portfolios ITAG (Special Tag Along Stock Index) and IGC (Special
Corporate Governance Stock Index). With increased liquidity in
2009, in May, SulAmérica was included in the portfolio Small
Cap Index - SMLL, consisting of 90 shares in companies listed
on BM&FBovespa. Starting in January 2010, the shares are also
part of BM&FBovespa’s Financial Index (IFNC) and Brazil Index
(IBrX). IFNC consists of 14 shares in 13 companies representative
of financial intermediation segments, general financial services,
and pension and insurance. The IBrX portfolio consists of the 100
most traded shares at BM&FBovespa, in number of transactions
and financial volume.
The distribution, in each case, is subject to the respective
proposals for allocation of net income by the company’s
management, and the relevant approval by the Shareholders’
Meeting, and may be revised based on the company’s needs
and plans, such as significant acquisitions and investments, and
compliance with regulatory requirements. In any case, possible
interim distribution of dividends or interests on own capital
during the year in question will be taken into account.
In December 2009, SulAmérica was recognized for the materiality
it attaches to the sustainability topic, becoming the first insurance
company listed on the ISE portfolio (Corporate Sustainability Index).
The ISE portfolio consists of 43 shares in 34 companies, representing
15 industries and totaling R$730 billion in market value. This group
is selected among the 150 most actively traded on the floor, in terms
of liquidity, and weighted in the portfolio at market value of assets
available for trading.
Ratings
Since its issuance of Eurobonds (Senior Notes) in February
2007, SulAmérica has been periodically evaluated by Standard
& Poor’s Ratings Services and Fitch Ratings Brazil. In March
2007, Standard & Poor’s assigned rating B to SulAmérica. In
May 2008, the agency raised the rating to B+. In 2009, it raised
again to BB-, with stable outlook. The agency found that the
insurance company’s financial performance has been solid and
consistent in recent years, and SulAmérica has a strong capital
position to support future growth.
Stock Repurchase Program
As already occurred in 2008, on October 7, 2009, the Board of
Directors approved a tender offer for outstanding shares of the
company, to be held in treasury to be used later in its General
Plan for Stock Acquisition Option. The program calls for the
acquisition of up to 1,046,872 units, representing 1,046,872
common shares and 2,093,744 preferred shares, corresponding
to 3% of the outstanding units, and approximately 1.1% of the
total shares issued by the company by September 30, 2009. The
lead-time for acquisition is up to 365 days, from the date of the
material fact, ending on October 7, 2010.
Agency
Fitch
Date of reference
May 8, 2009
Rating
Standard
and Poor‘s
Type
AA-
Long term national rating
F1+
Short term national rating
BB
Problematic to predict future development (IDR), long term in foreign currency
-
IDR of long term in foreign currency
B
IDR of short term in foreign currency
BB
IDR of long term in local currency
B
IDR of short term in local currency
BBAgency
Fitch Ratings assigned SulAmérica rating B for emission of
Eurobonds (Senior Notes), in February 2007. In July that same year,
it raised the rating to BB-. In July 2008, it raised again to BB, which
was confirmed in 2009.
Long term rating in foreign currency for emission of US$ 200 million in senior notes
Date of reference
October 20, 2009
Rating
Type
BB-
Global scale local currency
BB-
Global scale foreign currency
72
2009 AnNual REPORT
Investments
SulAmérica constantly earmarks resources to keep competitiveness
and efficiency
SulAmérica invests in processes and services that increase
its efficiency, add value to its products, and are seen as a
differentiating factor by its customers. In 2009, the total
budget earmarked for the improvement of processes and
services was approximately R$90 million.
system development lead-times and increase the quality of
delivery. We also started projects aimed at the achievement
of excellence in processes of insurance purchasing in the
segments of auto and life insurance, strategic areas for
the company.
The major investments were directed to the area of
information technology, which received funds to the tune
of R$50.4 million. The company incorporated new product
segmentation and customization tools, which enabled the
development of new customer relationship management
(CRM) activities. In line with this, it became possible to improve
product mapping to meet the needs of specific audiences.
The main processes for customer attention in specialized
channels were centralized to improve operational efficiency
and quality of communication. This has expedited the services
to customers, who seek information about their insurance
policies or need to file a claim, as well as brokers interested in
clarifying technical issues when preparing proposals.
In the same vein, in the allocation of resources, the company
prioritized technology projects aimed at better supporting
operational activities. An example is the new support system
for the regulation of auto claims, which implementation will
be completed in 2010. Another initiative was the development
of a supporting tool to create test environments to reduce
The move to the SulAmérica’s new facilities in Rio de Janeiro,
completed in August 2009, allowed the company to enjoy
greater efficiency through the adoption of sustainable
technologies incorporated into the new building, which
can generate savings of up to 30% in energy and natural
resources. The project started in 2007, requiring investments
of R$30 million.
73
2009 AnNual REPORT
In 2009, SulAmérica also expanded its chain of Auto SuperService Centers (C.A.S.A), by opening a new unit in Rio de
Janeiro, two in Sao Paulo, and one in Curitiba. In addition, the
company launched a national plan to modernize its business
units, by transferring the units of Campinas, Porto Alegre
and Manaus to their respective C.A.S.A.’s in these cities, thus
offering increased support to brokers across the country.
The infrastructure of the Blumenau unit was updated, and
remodeling works were started in facilities located in Belém,
Fortaleza, Cuiabá and Ribeirão Preto.
74
2009 ANNUAL REPORT
2009 Results
Economy
The performance of the Brazilian economy in 2009 was marked
by the set of stimulus measures taken by the Government,
which boosted demand on the main productive sectors. The
reduction on the Excise Tax (IPI) rate and the successive cuts in the
country’s base rate, which dropped 5 percentage points, ended
the year standing at 8.75% p.a., for example, have contributed to
the sales of 3.1 million new vehicles in the domestic market in
2009, an increase of 8% in relation to the prior year’s figures. The
Broad National Consumer Index (IPCA) accumulated a variation
of 4.31% and the GDP shall reveal a stable performance, thus
confirming the rapid response of Brazil to the gloomy outlook
for international markets. Besides, data for the fourth quarter
indicates that the Brazilian economy grew over that period at
rates that truer represent its potential, characterizing in most
part the restoration of the consumer confidence.
The good outlook for the Brazilian economy contributed to
the good performance of BM&FBOVESPA S.A. – Securities,
Commodities and Futures Exchange, the Ibovespa having
ended 2009 at 68,588 points, a rise of 82.7%. The US dollar
closed 2009 recording a devaluation of 24.5%, being quoted
at R$1.7445.
In this context, the insurance industry had a good
performance in 2009, with a total of R$46.7 billion in
premiums issued by insurance companies and a growth
in 5.0% in relation to 2008, taking into consideration
only the data of the market under the regulation of the
Superintendency of Private Insurance (SUSEP), not including
the health insurance or the VGBL. The industry benefited
from the stimulus measures adopted by the Government,
supported by a regulatory framework that gives emphasis on
liquidity and solvency. With this result, the sector will increase
its share in the GDP, confirming the strong potential for
growth in the insurance industry in Brazil.
In 2010, GDP shall reveal growth, led by the expansion of the
industry and increase in demand.
75
2009 ANNUAL REPORT
2009 RESULTS
Main consolidated financial information
Results (R$ million)
2009
2008
Δ%
8,679.6
7,723.2
12.4%
7,777.2
6,985.1
11.3%
(5,700.1)
(4,958.1)
15.0%
Acquisition costs
(880.7)
(776.4)
13.4%
Gross margin
1,196.4
1,250.5
-4.3%
620.4
805.4
-23.0%
Net income (loss)
419.1
415.9
0.8%
Ratios
2009
2008
Δ%
Lossratio (% of earned premiums)
73.3%
71.0%
2.3 p.p.
Acquisition cost ratio (% of earned premiums)
11.3%
11.1%
0.2 p.p.
Administrative expense + tax ratio
13.5%
15.2%
-1.7 p.p.
Gross margin ratio (% of earned premiums)
15.4%
17.9%
-2.5 p.p.
99.4%
98.4%
1.0 p.p.
17.6%
19.6%
-2.0 p.p.
1.4986
1.4796
1.3%
Insurance premiums*
Earned premiums
Retained claims and benefit expenses
Income before income tax and social contribution and profit sharing
Combined ratio
ROAE
2008
Earnings per share – parent company
2009
*Includes premiums of mandatory third-party liability for vehicles owners (dpvat) and premiums ceded in coinsurance
Comments on performance
SulAmérica ended the year 2009 recording a net income of R$419.1
million, which corresponds to a growth rate of 9.8% in relation to
the recurring net income for 2008. The return on average equity
in 2009 stood at 17.6%.
Net income – R$ milion
ROAE – %
+ 0.8%
416
-200bps
419
19,6%
2008
2009
2008
17,6%
2009
(*) Return on average equity – annualized
76
2009 ANNUAL REPORT
2009 RESULTS
soruges ed soimêrP
Insurance premiums – 2009
Total / R$ 8.7 billion 9002 – seõhlib 7,8 $R I latoT
Insurance premiums – R$ million
+12.4%
Other property
& casualty:
8.680
7.723
8.4 %
Automobile:
33.8%
Life
5.8%
2008
2009
Health:
52%
Overall lossrate stood at 73.3%, whereas the combined ratio
stood at 99.4% at the end of the year.
Combinated ratio – %
+99,4%
+98,4%
1,1%
2,4%
11,1%
12,8%
73,3%
71%
2008
1.3%
2.1%
11.3%
11.4%
2009
Loss ratio
Administrative expenses
Acquisition cost
Tax expenses
Other operating income (expenses)
77
2009 ANNUAL REPORT
2009 RESULTS
The positive results of the Company’s program for improving
operational efficiency improved by 1.4 p.p. the rate that
measures administrative expenses in relation to retained
premiums, which stood at 11.4% at the end of the period,
whereas it stood at 12.8% in the prior year.
Administrative expenses – R$ million
937
+0.8%
2009
The balance of marketable securities increased 17.2% in 2009 in
relation to 2008, totaling R$6.8 billion, of which approximately
97.0% is allocated to fixed-income assets. The return on
marketable securities was equivalent to 115.9% of the Interbank
Deposit Rate (CDI) in 2009.
Business areas
Health insurance:
Health insurance premiums totaled R$4.5 billion (52.0% of total
insurance premiums), a growth of 10.2% in relation to 2008.
Insurance premiums – R$ million
4,099
2008
140 bps
945
2008
+10.2%
Administrative expenses ratio – %
retained premiums
4,515
2009
12.8
11.4
2008
2009
Group health insurance premiums increased 15.8% in 2009,
totaling R$3.1 billion, and representing 35.9% of the Company’s
total insurance premiums and 69.0% of health insurance
premiums. The portfolio of the group health insurance segment
counted on a total of 1,245 thousand insured members at the end
of the year, an increase of 11.5% in relation to 2008. The growth
in group health insurance premiums in 2009 is explained by the
increase in the number of insured members and adjustments to
existing policies. Premiums of the health insurance segment of
small and medium-sized companies (SME) showed an expansion
of 21.4% in 2009 in relation to 2008, reaching a total of R$579.2
million, in line with the increase of 21.0% in the number of
insured members, with a portfolio comprising 178,595 members
at the end of the period. Dental care portfolio ended the year with
167,621 members, a growth of 51.0% in relation to 2008, reflecting
the positive result of promotional campaigns andcross-selling
efforts in the insured base .
In individual health insurance, premiums amounted to R$1.4
billion, a fall of 0.6%, and corresponded to 16.2% of total
insurance premiums and 31.0% of health insurance premiums.
The portfolio of individual health insurance showed a reduction
of 8.5% in the year in relation to 2008, ending the period with
278,320 members. In 2009, the National Healthcare Agency
(ANS) approved an increase of 6.76% to individual health
insurance policies issued from the time Law No. 9,655/1998
became effective, and the same proportional rate to policies
78
2009 ANNUAL REPORT
2009 RESULTS
issued before such Law entered into effect, applied according to
the provisions of the rules in effect.
The total loss ratioof health insurance stood at 80.8%, an
increase of 450 bps as compared to 2008, partially attributed
to the increase in costs of medical services and more frequency
of utilization observed industry wide. The acquisition cost ratio
stood at 5.9% in 2009, an increase of 50 bps in relation to 2008.
Automobile insurance:
Insured fleet – Vehicles in thousand
Life and personal accident insurance:
In the life insurance segment, which also includes personal
accident insurance and VGBL and represents 5.7% of the
Company’s total insurance premiums for the year, premiums
totaled R$497.6 million. The loss ratio in life insurance stood at
57.0%, whereas the acquisition cost ratio stood at 22.3%.
Income from private pension operations:
+19.1%
1,922
premiums reached R$733.4 million in 2009, a fall of 6.2% in
relation to 2008. This decrease is partially explained by the
revision of the risk acceptance policy adopted in the portfolio,
which led the company to adopt a more selective approach. In
the period, the loss ratio stood at 80.9% and acquisition costs
represented 18.6% of earned premiums.
2,288
Income from the private pension operations increased by R$12.7
million or 87.0% in 2009 from the previous year, mainly due to
the lower provisions for the financial variation in plans pegged
to inflation indexes. In 2009, income from private pension
operations grew by 28.3% on the previous year to R$202.1
million. Private pension provisions increased by 14.1% on the
previous year to R$1,904 million.
Income from Administrative Services Only:
2008
2009
Income from the administrative services only (ASO) grew by 8.0%
over 2008 to R$30.9 million, impacted by the increase in the average
fee per member. The portfolio ended the period with 268,500
covered individuals, which represents contraction of 1.5%.
Income from asset management operations:
Automobile insurance premiums, which represent 33.8% of
total insurance premiums of the Company, grew 25.0% in 2009,
ending the period with a total of R$2.9 billion. The increase noted
in automobile insurance premiums is explained by the growth
in the insured fleet that reached 2.3 million vehicles in the end of
2009, having increased 19.1% in relation to 2008, in addition to the
increase in the average annual premiums.
The loss ratio stood at 61.5%, a fall of 270 bps, explained by the
continued optimization pricing policy and a better acceptance
policy adopted by the Company, as well as an increase in the
average premium in line with market conditions, being partially
offset by the increase in judicial reserves as a result of changes in
estimates that has been made since the second quarter of 2009.
The acquisition costs ratio showed an improvement of 50 bps in
relation to 2008, ending the period at 18.3%.
The volume of assets managed by the indirect subsidiary Sul
América Investimentos D.T.V.M. S.A. grew 20.6%, ending the year
with a total of R$14.4 billion (according to the criteria of Brazilian
Financial and Capital Markets Association (ANBIMA)). The
result of asset management operations showed a reduction by
R$3.8 million in 2009, in line with the increase in the portion of
investments of clients in funds with a more conservative profile,
therefore, with lower management fees.
Assets under management – R$ million
Proprietary
11,976
In 2009, SulAmérica increased by 170 bps its share in the automobile
insurance market, holding 17.0% of total premiums, according to
SUSEP data. The insured fleet reached 2.3 million vehicles.
6,758
Other property and casualty insurance:
5.219
In the area of other property and casualty insurance, segment
that represents 8.4% of the Company’s total insurance premiums,
2008
Third-party
+20.6%
14,440
+24.8%
8,432
+15.1%
6,008
2009
79
2009 ANNUAL REPORT
2009 RESULTS
Net income for the year and proposals for its use
In July 2009, the indirect subsidiary Sul América Investimentos
DTVM S.A. received the “AMP-1 – Very Strong” rating from Standard
& Poor’s, the highest rating in relation to practices of management
of customer’s assets, reflecting the good profile of the company’s
business. Among the points that took the company to this rating
are the diversification of its portfolio, the scope of its product
portfolio, the several practices adequate to operations and controls,
the expertise of its management body, disciplined processes of
investment management and good fiduciary principles.
The Board of Directors, at a meeting held on February 23,
2010, approved a proposal according to which the Company
will adopt as policy the distribution of dividends of the
earnings recorded in the financial statements for the years
2009, 2010 and 2011 at the amount of 50% of annual adjusted
net income. In each case distributions will be subject
to the respective proposals for use of net income by the
Company’s management and the proper approval at Annual
Shareholders’ Meeting, and they may be reviewed based on
plans and needs of the Company, considered at the time,
such as, among others, acquisitions and relevant investments
and meeting of regulatory requirements. In any case, such
percentages of possible distribution of interim dividends or
interest on shareholders’ equity shall be computed in the
course of the year in question.
Investments
At December 31, 2009, the Company had direct investments in the
following companies: Sul América Companhia Nacional de Seguros
in the amount of R$431.5 thousand, Sul América Companhia de
Seguro Saúde in the amount of R$569.7 thousand, and Saepar
Serviços e Participações S.A. in the amount of R$1.5 million.
Net income for the year and proposal for its use (parent company):
2009
2008
Net income for the year
419,093
415,641
Recognition of legal reserve (5%)
(20,955)
(20,782)
Adjusted net income (Article 202 – Laws Nos. 6,404/76 and 10,303/01)
398,138
394,859
99,535
98,715
199,069
103,910
199,069
290,949
Mandatory dividends
Proposed Dividends
Use:
Setting up a reserve for business expansion
The distribution of earnings shown in the chart above was
reflected in the Financial Statements, on the assumption that
it will be approved at the Annual Shareholders’ Meeting.
Indebtedness
In February 2007, SulAmérica issued a total of US$200,000,000
in Eurobonds (Senior Notes), at an annual interest of 8.625%,
with a maturity period of five years. On 26 November 2007, with
the use of part of the funds from the Initial Public Offering
(IPO) and as provided by the contract, it carried out the early
redemption of US$ 71.7 million, corresponding to 35% of the
adjusted balance. This issue is the object of a swap transaction
aimed at substituting the foreign exchange exposure by the
CDI variation. At the end of 2009, the adjusted debt balance was
R$ 9.9 million in current and R$254.8 million in non-current, and
represented 11.6% of net assets.
totaled R$430.0 million; remuneration of third-party interests
reached R$94.9 million; minority interest on retained earnings to
R$36.6 million; and retained profit totaled R$419.1 million.
Distribution of added value – R$1.4 billion
[GRI EC1]
Personnel
expenses: 31%
Retained profit: 30%
Minority interest on
retained earnings: 2%
Remuneration of
third-party interests: 7%
Distribution of Added Value
SulAmérica’s added value reached R$ 1.4 billion in 2009. Personnel
expenses amounted to R$432.7 million; taxes and contributions
Taxes and
contributions expenses: 30%
80
2009 ANnual REPORT
Demonstrações financeiras
Balance sheets as of december 31, 2009 and 2008
(In thousands of brazilian reais – R$)
ASSETS
Parent Company
Consolidated
Notes
2009
2008
2009
2008
CURRENT ASSETS
–
433.181
456.203
7.791.712
6.395.565
CASH AND CASH EQUIVALENTS
–
22.232
156.088
618.564
511.994
–
173
32
59.942
54.726
3.1
22.059
156.056
558.622
457.268
5
306.012
214.536
4.411.877
3.507.331
Fixed income securities
–
21.703
86.832
4.144.408
3.412.298
Equity securities
–
–
–
172.074
89.504
Equity funds quotas
–
284.309
127.704
96.558
12.421
Other
–
–
–
1.554
2.356
(–) Provision for losses
–
–
–
(2.717)
(9.248)
–
–
–
1.765.839
1.468.083
Premiums receivable
6
–
–
1.263.023
1.091.441
Insurance companies
–
–
–
45.918
48.278
11.2
–
–
453.792
362.354
–
–
–
47.242
32.396
6.1
–
–
(44.136)
(66.386)
–
–
–
1.520
4.383
Receivables
–
–
–
838
3.775
Reinsurance credits
–
–
–
682
608
ACCOUNTS RECEIVABLE
–
104.072
83.506
381.480
373.534
Accounts receivable
–
86.992
68.005
115.750
88.926
Recoverable taxes and contributions
7
18.516
14.994
123.062
126.777
Recoverable taxes and contributions – tax
loss carryfowards
7
–
1.992
32.098
56.551
Other
–
98
49
124.486
116.549
(–) Allowance for doubtful accounts
–
(1.534)
(1.534)
(13.916)
(15.269)
OTHER ASSETS
–
–
–
120.376
74.511
PREPAID EXPENSES
–
865
2.073
12.469
6.577
DEFERRED ACQUISITION COSTS
–
–
–
370.834
298.129
11
–
–
367.874
295.603
11.3
–
–
2.960
2.526
Cash and Banks
Securities purchased under resale agreement
MARKETABLE SECURITIES
RECEIVABLES FROM INSURANCE AND
REINSURANCE OPERATIONS
Reinsurance companies
Other
(–) Allowance for doubtful accounts
RECEIVABLES FROM PRIVATE PENSION
OPERATIONS
Insurance and reinsurance
Private Pension
The accompanying notes are an integral part of these financial statements.
81
2009 ANnual REPORT
2009 results
Parent Company
ASSETS
Consolidated
Notes
2009
2008
2009
2008
11.2
–
–
108.753
151.023
NON–CURRENT ASSETS
–
2.552.927
2.227.263
4.641.699
4.486.274
LONG–TERM ASSETS
–
1.698
7.721
4.451.509
4.269.615
MARKETABLE SECURITIES
5
11
9
1.887.634
1.883.765
Fixed income securities
–
–
–
1.871.900
1.869.302
Equity securities
–
–
–
120
120
Equity funds quotas
–
–
–
10.659
9.880
Other
–
95
95
31.560
31.358
(–) Provision for losses
–
(84)
(86)
(26.605)
(26.895)
–
–
–
98.757
54.491
6
–
–
37.306
131
REINSURANCE AND RETROCESSION EXPENSES
RECEIVABLES FROM INSURANCE AND
REINSURANCE OPERATIONS
Premiums receivable
Insurance companies
Reinsurance companies
–
560
11.2
–
–
60.891
54.360
–
825
2.511
2.261.165
2.145.157
Recoverable taxes and contributions
7
8.779
7.672
575.290
579.153
Recoverable taxes and contributions – tax
loss carryfowards
7
11.278
10.636
150.322
172.230
16
825
648
1.655.182
1.617.724
Other
–
–
–
51.469
57.560
(–) Allowance for doubtful accounts
–
(20.057)
(16.445)
(171.098)
(281.510)
OTHER ASSETS
–
–
–
2.912
7.118
PREPAID EXPENSES
–
862
5.201
12.896
6.674
DEFERRED ACQUISITION COSTS
–
–
–
140.909
142.763
11
–
–
138.632
141.372
11.3
–
–
2.277
1.391
11.2
–
–
47.236
29.647
2.551.229
2.219.542
190.190
216.659
–
2.546.034
2.217.255
6.899
10.144
8.1
2.546.034
2.217.255
–
–
Property for rent
–
–
–
15.515
21.453
Other investments
–
–
–
15.903
16.319
(–) Provision for losses
–
–
–
(15.041)
(15.214)
(–) Depreciation
–
–
–
(9.478)
(12.414)
ACCOUNTS RECEIVABLE
Judicial deposits
Insurance and reinsurance
Private Pension
REINSURANCE AND RETROCESSION EXPENSES
PERMANENT ASSETS
INVESTMENTS
Equity in associated companies
The accompanying notes are an integral part of these financial statements.
82
2009 ANnual REPORT
2009 results
Parent Company
ASSETS
Consolidated
Notes
2009
2008
2009
2008
8.2
–
–
75.216
131.197
Land and building
–
–
–
3.960
116.267
Furniture, fixtures and equipament
–
–
–
85.087
78.007
Other
–
–
–
44.136
25.317
(–) Provision for losses
–
–
–
(189)
(594)
(–) Depreciation
–
–
–
(57.778)
(87.800)
8.3
5.195
2.287
104.586
72.442
Goodwill
–
5.138
5.138
20.573
20.573
Software
–
3.242
317
148.070
102.326
(–) Amortization
–
(3.185)
(3.168)
(64.057)
(50.457)
–
–
–
3.489
2.876
Organization, implementation and
installation costs
–
–
–
7.554
5.115
Goodwill from merger
–
–
–
(–) Amortization
–
–
–
(4.065)
(2.239)
2.986.108
2.683.466
12.433.411
10.881.839
PROPERTY AND EQUIPMENT
INTANGIBLE ASSETS
DEFERRED CHARGES
TOTAL ASSETS
–
The accompanying notes are an integral part of these financial statements.
83
2009 ANnual REPORT
2009 results
Balance Sheets as of december 31, 2009 and 2008
(In thousands of brazilian reais – R$)
Parent Company
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes
CURRENT LIABILITIES
Consolidated
2009
2008
2009
2008
214.279
127.147
5.544.884
4.658.248
ACCOUNTS PAYABLE
–
214.279
127.147
671.385
556.649
Accounts payable
17
201.120
110.272
348.983
254.873
Taxes and other social charges payable
–
1.104
2.414
106.834
96.619
Labor liabilities
–
–
–
31.428
32.245
14
5.763
9.952
5.763
9.952
Taxes and contributions payable
–
3.395
4.509
66.442
68.682
Other
–
2.897
–
111.935
94.278
–
–
–
421.388
363.929
Refundable premiums
–
–
–
9.392
10.947
Insurance companies
–
–
–
24.708
14.133
9.1
–
–
145.730
139.367
Commissions on insurance premiums
–
–
–
157.518
134.611
Other
–
–
–
84.040
64.871
–
–
–
2.687
1.801
Reinsurance payable
–
–
–
291
355
Other operating payable
–
–
–
2.396
1.446
THIRD–PARTY DEPOSITS
10
–
–
59.255
41.951
TECHNICAL RESERVES – INSURANCE
11
–
–
3.898.013
3.254.455
PROPERTY AND CASUALTY AND GROUP LIFE
–
–
–
2.987.768
2.482.677
Unearned premium reserve
–
–
–
1.799.282
1.474.527
Premium deficiency reserve
–
–
–
12.939
1.852
Reserve for claims and claims adjustment
expenses
–
–
–
958.127
831.067
IBNR reserve
–
–
–
201.954
152.829
Other
–
–
–
15.466
22.402
–
–
–
795.621
689.739
Unearned premium reserve
–
–
–
84.466
76.734
Reserve for benefits granted
–
–
–
5.297
5.067
Reserve for claims and claims
adjustment expenses
–
–
–
218.717
188.918
IBNR reserve
–
–
–
487.141
419.020
Loans and financing (Note 13)
INSURANCE AND REINSURANCE
Reinsurance companies
PRIVATE PENSION
TECHNICAL RESERVES – HEALTH INSURANCE
The accompanying notes are an integral part of these financial statements.
84
2009 ANnual REPORT
2009 results
Parent Company
LIABILITIES AND SHAREHOLDERS' EQUITY
Consolidated
Notes
2009
2008
2009
2008
TECHNICAL RESERVES – LIFE INSURANCE
WITH SURVIVORSHIP COVERAGE
–
–
–
114.624
82.039
Reserve for benefits to be granted
–
–
–
91.683
63.256
Reserve for benefit granted
–
–
–
121
152
Unexpired risk reserve
–
–
–
136
234
Financial surplus reserve
–
–
–
11
5
IBNR reserve
–
–
–
6.671
4.970
Premium deficiency reserve
–
–
–
1.782
1.784
Reserve for future policy benefits
–
–
–
14.175
9.951
Other
–
–
–
45
1.687
–
–
–
431.215
378.937
11.3
–
–
431.215
378.937
Reserve for benefits to be granted
–
–
–
370.641
318.331
Unexpired risk reserve
–
–
–
191
540
Risk fluctuation reserve
–
–
–
5
1
Reserve for benefit granted
–
–
–
55.280
54.506
Reserve for future policy benefits
–
–
–
696
2.660
Financial surplus reserve
–
–
–
1.313
582
IBNR reserve
–
–
–
2.009
973
Other
–
–
–
1.080
1.344
16
–
–
60.000
59.240
Labor contingencies
–
–
–
3.981
4.161
Civil contingencies
–
–
–
56.019
55.079
–
–
–
941
1.286
–
–
–
941
1.286
NON–CURRENT LIABILITIES
289.333
270.681
4.156.840
3.716.624
LONG–TERM LIABILITIES
289.333
270.681
4.156.840
3.716.624
ACCOUNTS PAYABLE
289.333
270.681
1.458.389
1.329.975
TECHNICAL RESERVES – PRIVATE PENSION
UNRESTRICTED PLANS
ACCRUED LIABILITIES FOR CONTINGENCIES
OTHER
Other
Taxes and contributions payable
17
1.436
6.255
1.008.912
913.491
Deferred taxes
7.2
9.642
9.642
114.201
103.895
Loans and financing
14
278.250
254.784
278.250
254.784
–
5
–
57.026
57.805
Other
The accompanying notes are an integral part of these financial statements.
85
2009 ANnual REPORT
2009 results
Parent Company
LIABILITIES AND SHAREHOLDERS' EQUITY
Consolidated
Notes
2009
2008
2009
2008
–
–
–
21.706
2.581
Insurance
–
–
–
19.026
–
Other
–
–
–
2.680
2.581
TECHNICAL RESERVES – INSURANCE
11
–
–
753.801
655.036
PROPERTY AND CASUALTY AND GROUP LIFE
–
–
–
403.584
421.116
INSURANCE AND REINSURANCE
Unearned premium reserve
–
–
–
83.731
38.416
Premium deficiency reserve
–
–
–
24.386
23.407
Reserve for claims and claims adjustment
expenses
–
–
–
295.467
359.293
–
–
–
28.373
29.281
Reserve for benefits granted
–
–
–
8.453
7.535
Reserve for claims and claims adjustment
expenses
–
–
–
19.920
21.746
–
–
–
321.844
204.639
Reserve for benefits to be granted
–
–
–
307.473
191.232
Premium deficiency reserve
–
–
–
13.797
12.379
Other
–
–
–
574
1.028
–
–
–
1.475.434
1.274.540
11.3
–
–
1.475.434
1.274.540
Reserve for benefits to be granted
–
–
–
1.163.972
950.155
Risk fluctuation reserve
–
–
–
3.804
1.219
Reserve for benefits granted
–
–
–
238.411
255.517
Contribution deficiency reserve
–
–
–
65.715
50.436
Other
–
–
–
3.532
17.213
16
–
–
445.025
451.409
Tax Contingencies
–
–
–
157.673
143.100
Labor contingencies
–
–
–
36.816
36.687
Civil contingencies
–
–
–
250.536
271.622
–
–
–
2.485
3.083
–
–
–
2.485
3.083
TECHNICAL RESERVES – HEALTH INSURANCE
TECHNICAL RESERVES – LIFE INSURANCE WITH
SURVIVORSHIP COVERAGE
TECHNICAL RESERVES – PRIVATE PENSION
UNRESTRICTED PLANS
ACCRUED LIABILITIES FOR CONTINGENCIES
OTHER
Other
MINORITY INTEREST
–
–
–
249.191
221.329
18
2.482.496
2.285.638
2.482.496
2.285.638
18.1
1.185.831
1.185.831
1.185.831
1.185.831
Capital reserves
–
386.045
382.570
386.045
382.570
Treasury stock
–
(21.622)
(2.210)
(21.622)
(2.210)
Earnings reserves
18.4
916.590
696.705
916.590
696.705
Valuation adjustments to shareholder's equity
18.5
15.652
22.742
15.652
22.742
2.986.108
2.683.466
12.433.411
10.881.839
SHAREHOLDERS' EQUITY
Domestic capital
TOTAL LIABILITES AND
SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of these financial statements.
86
2009 ANnual REPORT
2009 results
Statements of income for the years ended december 31, 2008 and 2007
(In thousand of brazilians reais – R$)
Parent Company
Consolidated
Notes
2009
2008
2009
2008
–
–
–
8.289.159
7.316.461
Insurance Premiums
–
–
–
8.648.242
7.680.366
DPVAT (mandatory third–party liability for
vehicles owners)
–
–
–
133.962
105.007
Coinsurance Premiums ceded
–
–
–
(102.627)
(62.200)
Reinsurance Premiums Ceded
–
–
–
(324.567)
(352.288)
Retrocessions Premiums
–
–
–
1.134
458
Premiums Ceded to Consortiums and Funds
–
–
–
(66.985)
(54.882)
CHANGES IN TECHNICAL RESERVES
–
–
–
(511.969)
(331.385)
EARNED PREMIUMS
–
–
–
7.777.190
6.985.076
ASSET MANAGEMENT FEE
–
–
–
4.773
3.067
RETAINED CLAIMS
–
–
–
(5.675.420)
(4.939.622)
Direct claims
–
–
–
(6.067.206)
(5.208.881)
Claims – consortiums and funds
–
–
–
(50.819)
(37.616)
Assistance service
–
–
–
(45.262)
(38.900)
Recovery for claims
–
–
–
418.609
163.736
Salvage and recoveries
–
–
–
166.738
218.759
Change in IBNR reserves
–
–
–
(97.480)
(36.720)
–
–
–
(24.635)
(18.509)
Benefits expenses
–
–
–
(23.296)
(18.118)
Change in IBNR reserves
–
–
–
(1.339)
(391)
19.2
–
–
(880.726)
(776.399)
Commissions
–
–
–
(972.973)
(840.782)
Recovery of commissions
–
–
–
31.022
23.238
Other acquisition costs
–
–
–
(1.821)
(1.995)
Change in deferred acquisition costs
–
–
–
63.046
43.140
(110.678)
(86.986)
INSURANCE OPERATIONS
RETAINED PREMIUMS
BENEFITS EXPENSES
ACQUISITION COSTS
OTHER INSURANCE OPERATING
INCOME/ EXPENSES
–
Other insurance operating income
19.4
–
–
166.616
131.118
Other insurance operating expenses
19.5
–
–
(277.294)
(218.104)
INCOME FROM RETAINED CONTRIBUTIONS
–
–
–
202.107
157.486
Income from retained contributions
–
–
–
202.107
157.486
PRIVATE PENSION OPERATIONS
The accompanying notes are an integral part of these financial statements.
87
2009 ANnual REPORT
2009 results
Parent Company
Consolidated
Notes
2009
2008
2009
2008
CHANGES IN TECHNICAL RESERVES
–
–
–
(169.230)
(126.923)
ASSET MANAGEMENT FEE
–
–
–
15.095
12.290
BENEFIT AND REDEMPTION EXPENSES
–
–
–
(14.676)
(22.041)
Benefits expenses
–
–
–
(13.662)
(21.989)
Changes in IBNR reserve
–
–
–
(1.014)
(52)
ACQUISITION COSTS
–
–
–
(5.417)
(4.698)
OTHER INSURANCE OPERATING INCOME/
EXPENSES
–
(470)
(1.453)
OTHER PRIVATE PENSION OPERATING
EXPENSES
–
–
–
(470)
(1.453)
NET OPERATING INCOME FROM ASO BUSINESS
–
–
–
30.936
28.644
NET OPERATING INCOME FROM ASSET
MANAGEMENT BUSINESS
–
–
–
19.465
23.371
19.3
(12.036)
(5.757)
(944.521)
(936.911)
TAX EXPENSES
–
(1.283)
(5.803)
(177.858)
(175.438)
NET FINANCIAL INCOME
–
16.557
27.635
564.492
496.966
Financial income
19.6
153.589
221.758
1.043.065
1.042.855
Financial expenses
19.7
(137.032)
(194.123)
(478.573)
(545.889)
–
434.929
453.480
9.975
187.509
–
–
–
1.307
2.405
8.1
424.058
458.862
(5.770)
12.433
–
10.871
(5.647)
7.507
(7.661)
19.8
–
265
6.931
180.332
438.167
469.555
620.402
805.429
ADMINISTRATIVE EXPENSES
EQUITY INCOME
Income from property for rent
Adjustments to investments in subsidiaries
Other equity income/ expenses
Profit from sale of permanent assets
INCOME BEFORE INCOME TAX, SOCIAL
CONTRIBUTION AND PROFIT SHARING
Income tax
20
(5.872)
2.173
(97.150)
(161.323)
Social contribution
20
(2.044)
747
(32.614)
(50.603)
–
–
–
(34.926)
(47.370)
430.251
472.475
455.712
546.133
(36.619)
(130.192)
Profit sharing
INCOME AFTER INCOME TAX, SOCIAL
CONTRIBUTION AND PROFIT SHARING
Minority interest
–
–
INCOME BEFORE REVERSAL OF INTEREST ON
SHAREHOLDERS' EQUITY
Interest on shareholders' equity
430.251
472.475
419.093
415.941
(11.158)
(56.834)
–
–
419.093
415.641
419.093
415.941
279.657.196
280.913.431
1.498,60
1.479,61
–
NET INCOME
NUMBER OF SHARES OUTSTANDING
EARNING PER THOUSAND SHARES (R$)
The accompanying notes are an integral part of these financial statements.
88
2009 ANnual REPORT
2009 results
Statement of added value for the years ended december 31, 2009 and 2008
(In thousand of brazilians reais – R$)
Parent Company
Consolidated
2009
2008
2009
2008
1.325
265
9.528.531
8.655.900
Revenues from insurance operation
–
9.014.382
8.054.095
Revenues from private pension operation
–
202.107
157.486
Asset management fee
–
19.867
15.357
1.325
265
4.522
180.332
–
–
30.936
28.644
Net operating from asset management activities
–
19.465
23.371
Other
–
219.518
166.269
Priovision for doubtful accounting – Reversion
–
17.734
30.346
–
(681.461)
(458.308)
Insurance operating
–
(511.957)
(331.385)
Private pension operation
–
(169.504)
(126.923)
1.325
265
8.847.070
8.197.592
–
(4.546)
(6.481.213)
(5.523.167)
Retained claims
–
(6.190.966)
(5.288.153)
Change in IBNR reserves
–
(99.908)
(36.743)
Benefits and redemption expenses
–
(192.484)
(207.434)
Change in IBNR reserves – private pension
–
–
(420)
–
(4.546)
2.145
9.583
(5.405)
(4.860)
(1.585.389)
(1.430.732)
Material, power and other
(1.080)
(1.484)
(151.606)
(152.401)
Third–parties service, net comission
(4.325)
(3.376)
(1.496.496)
(1.320.949)
Change in deferred acquisition costs
–
–
63.046
43.140
Lost/ Assets value recuperation
–
–
(333)
(522)
(4.080)
(9.141)
780.468
1.243.693
–
–
(34.039)
(35.159)
8 – NET ADDED VALUE PRODUCED (6–7)
(4.080)
(9.141)
746.429
1.208.534
9 – ADDED VALUE RECEIVED/ CEDED IN TRANSFER
491.947
478.127
666.823
392.460
Financial income
(30.245)
91.043
609.144
685.390
Net of equity accounting (Note 9.1)
424.058
458.862
–
8.529
Net of reinsurance ceded operation
–
–
(3.933)
(164.865)
1 – REVENUES
Net from disposal of assets – permanent asset
Net operating from ASO business
2 – CHANGES IN TECHNICAL RESERVES
3 –NET INCOME OPERATION (1+2)
4 – RETAINED CLAIMS AND BENEFITS
Other
5 – INPUT PURCHASE FROM THIRD–PARTIES
6 – GROSS ADDED VALUE (3–4–5)
7 – DEPRECIATION, AMORTIZATION AND DEPLETION
–
The accompanying notes are an integral part of these financial statements.
89
2009 ANnual REPORT
2009 results
Parent Company
Consolidated
2009
2008
2009
2008
–
–
(134.216)
(140.870)
79.010
(74.209)
78.948
(75.277)
–
–
33.603
(12.314)
52
53
68.159
74.549
19.072
2.378
15.118
17.318
10 – ADDED VALUE TO BE DISTRIBUTED (8+9)
487.867
468.986
1.413.252
1.600.994
11 – DISTRIBUTION OF ADDED VALUE
487.867
468.986
1.413.252
1.600.994
5.918
5.214
432.655
422.794
2.116
3.578
311.164
330.014
3.802
1.636
91.645
67.800
–
–
29.846
24.980
8.825
3.294
429.996
542.203
8.684
3.284
418.204
530.771
–
–
99
238
141
10
11.693
11.194
42.873
44.837
94.889
89.948
Interest
42.722
44.759
62.353
68.619
Rentals
151
78
32.536
21.329
430.251
415.641
455.712
546.049
11.158
–
–
–
–
–
–
(84)
419.093
415.641
419.093
415.941
–
–
36.619
130.192
Net of coinsurance ceded operation
Exchange variation – loans and commitments receivable
Monetary and exchange variation – insurance and private
pension
Monetary variation – Judicial Deposits
Other
11.1) Personnel
Direct remuneration
Benefits
F.G.T.S
11.2) Taxes, fees and contributions
Federal
State
Municipal
11.3) Income from managed assets
11.4) Interest on shareholders' equity
Interest on shareholders' equity
Dividends
Retained earnings (accumulated deficit)
Minority interest on retained earning
The accompanying notes are an integral part of these financial statements.
90
2009 ANnual REPORT
2009 results
Statements of income for the years ended december 31, 2009 and 2008
(In thousand of brazilians reais – R$)
Parent Company
Consolidated
2009
2008
2009
2008
–
–
9.099.587
8.197.453
Insurance Premiums
–
–
8.261.115
7.417.773
Income from Retained Contributions / Income Portability
–
–
273.029
261.074
Aso Healthcare Plans
–
–
532.958
488.707
Other
–
–
32.485
29.899
–
–
(6.088.679)
(5.313.906)
Insurance
–
–
(5.432.261)
(4.748.144)
Private Pension Benefits / Redemption /
Outgoing Portability
–
–
(175.385)
(128.254)
Aso Healthcare Plans
–
–
(481.033)
(437.508)
–
–
(986.710)
(861.787)
(399)
24
(135.699)
(152.410)
(6.654)
(6.248)
(934.033)
(770.730)
Personnel Expenses
(1.530)
(1.682)
(424.074)
(352.773)
Other
(5.124)
(4.566)
(509.959)
(417.957)
(9.274)
(5.758)
(320.685)
(520.659)
(8.799)
(2.216)
(176.321)
(203.805)
(1)
(434)
(82.340)
(118.398)
(474)
(3.108)
(62.024)
(198.456)
75.957
90.095
–
8.299
(23.260)
(18.877)
(57.594)
(74.562)
(107.040)
275.764
222.528
1.128.040
(435.474)
(578.612)
(5.612.848)
(9.681.935)
Selling
294.796
843.837
5.304.026
10.413.636
Income
33.638
10.539
531.350
396.339
(227)
4.242
(14.291)
2.104
(70.897)
339.242
784.424
1.641.842
60.898
(81.453)
(418.513)
(912.606)
Payments to Acquire Marketable Securities
(33.555)
(91.091)
(2.330.973)
(2.512.493)
Proceeds and Maturities from Sale Marketable Securities
94.453
9.638
1.912.460
1.599.887
OPERATING ACTIVITIES
COLLECTION
CLAIMS AND BENEFITS
COMMISSIONS
OPERATING INCOME/ EXPENSES
ADMINISTRATIVE EXPENSES
TAXES AND CONTRIBUTIONS PAYABLE
Income tax and social contribution
PIS and COFINS
Other
DIVIDENDS AND INTEREST ON SHAREHOLDERS' EQUITY
FINANCIAL CHARGES
MARKETABLE AT FAIR VALUE THROUGH PROFIT OR LOSS
Purchase
OTHER
NET CASH FROM (USED IN) OPERATING ACTIVITIES
Investing Activities
OTHERS MARKETABLE SECURITIES
The accompanying notes are an integral part of these financial statements.
91
2009 ANnual REPORT
2009 results
Parent Company
Consolidated
2009
2008
2009
2008
784
(182)
(39.154)
(223.585)
(216)
(198)
(189.092)
(247.930)
1.000
16
149.938
24.345
–
(36.178)
6.103
261.005
(1.576)
(240)
(65.147)
(25.556)
It Equipment/Software
(944)
(232)
(37.928)
(14.960)
Leasehold Improvements
(632)
(8)
(27.219)
(10.596)
60.106
(118.053)
(516.711)
(900.742)
(104.089)
(63.244)
(115.824)
(214.319)
(60)
(60)
(24.346)
(24.507)
(18.916)
(1.849)
(20.973)
(7.194)
NET CASH (USED IN) FINANCING ACTIVITIES
(123.065)
(65.153)
(161.143)
(246.020)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
(133.856)
156.036
106.570
495.080
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
156.088
52
511.994
16.914
22.232
156.088
618.564
511.994
(133.856)
156.036
106.570
495.080
JUDICIAL DEPOSITS AND REDEMPTIONS
Investing Activities
Judicial Deposits
Redemption of Judicial Deposits
PURCHASE AND SALE OF PROPERTY AND EQUIPMENT
EQUIPMENTS
NET CASH (USED IN) FROM INVESTING ACTIVITIES
Financing Activities
DIVIDENDS AND INTEREST ON SHAREHOLDERS' EQUITY
PAES - SPECIAL PLAN FOR TAX PAYMENT IN INSTALLMENTS
OTHER PAYMENTS
CASH AND CASH EQUIVALENTS AT END OF PERIOD
INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS
The accompanying notes are an integral part of these financial statements.
92
2009 ANnual REPORT
2009 results
Conciliation between net income and net cash from (uded in) operating activities
for the years ended december 31, 2009 and 2008
(In thousand of brazilians reais – R$)
Parent Company
2009
NET INCOME
2008
Consolidated
2009
2008
419.093
415.641
419.093
415.941
Minority interest
–
–
27.862
–
Depreciation and Amortization
–
–
38.767
35.897
39.781
87.658
39.781
87.658
Interest and Monetary Variations on PAES – SPECIAL PLAN
FOR TAX PAYMENT IN INSTALLMENTS
34
36
6.559
7.437
Interest and Monetary Variations on Provisions for
Contingencies and Taxes and contributions liabilities
55
–
26.648
15.310
3.336
2.371
4.795
4.751
–
–
–
(55.055)
(424.058)
(458.862)
–
(8.529)
–
(265)
(16.460)
(180.484)
(57)
(670)
(61.357)
(73.501)
(2.632)
–
(1.634)
–
(155.579)
245.624
(493.089)
565.611
–
–
758.308
547.771
1.030
(129.415)
(141.864)
50.510
675
2.684
(70.713)
(64.464)
Dividends and interest on shareholders' equity in subsidiaries
75.957
90.095
–
8.298
Change in accounts payable and other
(5.340)
148.477
242.665
338.835
Change in loans and financing
(23.192)
(64.132)
(23.192)
(64.132)
Change in third–party deposits
–
–
17.304
13.789
Change in accrued liabilities for contingencies
–
–
10.949
(3.801)
NET CASH FROM (USED IN) OPERATING ACTIVITIES
(70.897)
339.242
784.424
1.641.842
ADDITIONS
Interest and Monetary Variations on Loans and swaps
Other
DEDUCTIONS
Minority interest
Equity Gains in Subsidiaries
Profit from sale of permanent assets
Interest and Monetary Variations on Judicial Deposits
Other
OPERATING ACTIVITIES
Change in marketable securities
Change in receivables from insurance, reinsurance and
private pension operations
Change in accounts receivable
Change in deferred acquisition costs and other assets
The accompanying notes are an integral part of these financial statements.
93
2009 AnNual REPORT
2009 RESULTS
Statements of changes in shareholders’ equity for the years ended december 31, 2009 and 2008
(In thousands of brazilian reais – R$)
Parent Company
Capital
Goodwill
for merger
reserves
Goodwill on
subscription
for merger
reserves
1.185.831
25.995
355.000
–
–
381.187
165
23.445
–
329.808
192
31.529
384.974
8.411
–
1.960.376
Adjustments of marketable securities
–
–
–
–
–
–
–
–
–
–
–
–
–
(4.387)
–
(4.387)
Adjustments of derivatives financial instruments
–
–
–
–
–
–
–
–
–
–
–
–
–
18.718
–
18.718
Acquisition stock for treasury (Note 18.2)
–
–
–
–
(2.210)
(2.210)
–
–
–
–
–
–
–
–
–
(2.210)
Reversal of revaluation reserve (Note 4.1.8)
–
–
–
–
–
–
(165)
–
–
–
–
–
–
–
–
(165)
Realized on unrealized profit reserves
–
–
–
–
–
–
–
–
–
–
–
(31.529)
(31.529)
–
31.529
–
Increase on capital reserves
–
–
–
1.575
–
1.575
–
–
–
–
–
–
–
–
–
1.575
Realized on unrealized profit reserves
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
NET INCOME
–
–
–
–
–
–
–
–
–
–
–
–
–
–
415.641
415.641
BALANCES AS OF DECEMBER 31, 2007
Option to be
granted and
recognized
Treasury
stocks
Capital
reserves
Revaluation
reserves
Legal reserves
Suplemmentary reserves
Reserve for
business
expansion
Fiscal incentive reserves
Unrealized
profit reserves
ALLOCATION OF INCOME:
Total
Adjustments of
marketable
securities
Retained
earnings
Total
–
–
Legal reserve
–
–
–
–
–
–
–
20.782
–
–
–
–
20.782
–
(20.782)
–
Unrealized profit reserve
–
–
–
–
–
–
–
–
–
–
–
31.529
31.529
–
(31.529)
–
Reserve for business expansion
–
–
–
–
–
–
–
–
–
290.949
–
–
290.949
–
(290.949)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(103.910)
(103.910)
1.185.831
25.995
355.000
1.575
(2.210)
380.360
–
44.227
–
620.757
192
31.529
696.705
22.742
–
2.285.638
Adjustments of marketeble securities - reflex
–
–
–
–
–
–
–
–
–
–
–
–
–
(7.090)
–
(7.090)
Recognitional of capital reserve (Note 13.2)
–
–
–
3.746
–
3.746
–
–
–
–
–
–
–
–
–
3.746
Acquisition stock for treasury (Note 18.2)
–
–
–
–
(19.412)
(19.412)
–
–
–
–
–
–
–
–
–
(19.412)
Dividends paid
–
–
–
–
–
–
–
–
–
(139)
–
(139)
–
–
(139)
Loss on option to be granted
–
–
–
(271)
–
(271)
–
–
–
–
–
–
–
–
–
(271)
Realized on unrealized profit reserves
–
–
–
–
–
–
–
–
–
–
–
(31.529)
(31.529)
–
31.529
–
NET INCOME
–
–
–
–
–
–
–
–
–
–
–
–
–
–
419.093
419.093
Proposed dividends – R$0.3694 per thousand
common/ preferred shares
BALANCES AS OF DECEMBER 31, 2008
ALLOCATION OF INCOME:
–
–
Legal reserve
–
–
–
–
–
–
–
20.955
–
–
–
–
20.955
–
(20.955)
–
Unrealized profit reserve
–
–
–
–
–
–
–
–
–
–
–
31.529
31.529
–
(31.529)
–
Reserve for business expansion
–
–
–
–
–
–
–
–
–
199.069
–
–
199.069
–
(199.069)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(199.069)
(199.069)
1.185.831
25.995
355.000
5.050
(21.622)
364.423
–
65.182
–
819.687
192
31.529
916.590
15.652
–
2.482.496
Proposed dividends – R$0.71068 per thousand
common/ preferred shares
BALANCES AS OF DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements.
94
2009 ANnual REPORT
Accompanying Notes
(1) OPERATIONS
SUL AMÉRICA S.A. is a corporation, established on March
13, 1978 and headquartered in Rio de Janeiro. The Company
obtained from the Brazilian Securities and Exchange
Commission (CVM) its registration as public company on
October 3, 2007, and all of its 21,739,132 units started to be
traded at the Securities, Commodities and Futures Exchanges
(BM&FBOVESPA) on October 5, 2007 under the trading symbol
“SULA11”, listed in the Level 2 of Differentiated Corporate
Governance Practices. On November 6, 2007, the over allotment
option comprising 3,260,868 units was exercised, totaling a
distribution of 25,000,000 units amounting to R$775,000.
The Company, through its direct and indirect subsidiaries, is
engaged in the business of health, automobile, other property
and casualty and life insurance, private pension, management
of health care services and asset management.
(2) PRESENTATION OF THE FINANCIAL STATEMENTS
The accompanying financial statements have been prepared in
accordance with the accounting practices adopted in Brazil.
These aforementioned financial statements comprise the
balance sheets, the statements of income, of cash flows, which
consolidated balances take into account the buy and sell
movements of each marketable security of exclusive investment
Companies
funds, of added value and of changes in the shareholders’ equity
of the parent company and its direct and indirect subsidiaries
for the years ended December 31, 2009 and 2008.
The financial statements for the year ended December 31, 2008
were reclassified and adjusted, when applicable, to allow readers
to compare them to the current period. These reclassifications
and adjustments are mainly related to liabilities of reinsurance
contracts, which cannot be offset against liabilities of insurance
contracts, as defined in the chart of accounts issued by
Superintendency of Private Insurance (SUSEP) Circular No. 379, of
December 19, 2008, which became effective on January 1, 2009, for
indirect subsidiaries that operate insurance and private pension
businesses. Accordingly, the reserves related to risks contracted by
insureds with these indirect subsidiaries that operate insurance
and private pension businesses are accounted for in the group of
accounts Technical Reserves – Insurance and Technical Reserves –
Private Pension in current and non-current liabilities, whereas the
portion related to risk insured by reinsurance companies related
to premiums is accounted for in the group of accounts Deferred
Reinsurance and Retrocession Expenses in current and noncurrent assets, and the portion related to claims is recorded in the
group of accounts Receivables from Insurance and Reinsurance
Operations in current and non-current assets.
Listed below are the consolidated companies:
Ownership interest (%)
in total capital
Ownership interest (%)
in total capital
2009
2008
Main activities
Headquarters
Direct
Indirect
Direct
Indirect
Insurance
company
RJ
24.45
75.55
23.89
76.11
Equity interest
holding and
service company
RJ
100.00
–
100.00
–
Brasilsaúde Companhia de Seguros (IV)
and (V)
Insurance
company
RJ
–
50.05
–
50.05
Sul América Seguros de Pessoas e
Previdência S.A. (New corporate name
of Sul América Seguros de Vida e
Previdência S.A.) (XI) and (XIII)
Insurance
company
RJ
–
100.00
–
100.00
Sul América Companhia de Seguro Saúde
Insurance
company
RJ
33.95
66.05
33.95
66.05
Sul América Companhia de Seguros
Gerais (II)
Insurance
company
RJ
–
100.00
–
100.00
Insurance
company
RJ
–
30.00
–
30.00
Equity interest
holding
RJ
–
–
–
100.00
Insurance
company
RJ
–
100.00
–
100.00
Sul América Companhia Nacional de
Seguros (I), (II) and (VI)
Saepar Serviços e Participações S.A.
Brasilveículos Companhia de Seguros (I),
(V) and (VII)
Sul América Investimentos e
Participações S.A. (IX)
Sul América Seguro Saúde S.A. (III) and
(IV)
95
2009 ANnual REPORT
2009 RESULTS
Companies
Ownership interest (%)
in total capital
Ownership interest (%)
in total capital
2009
2008
Main activities
Headquarters
Direct
Indirect
Direct
Indirect
Asset
management
SP
–
100.00
–
100.00
Reinsurance
company
Cayman
Island
–
100.00
–
100.00
Equity interest
holding
RJ
–
100.00
–
100.00
Health insurance
company
SP
–
100.00
–
100.00
Partnership
RJ
–
100.00
–
100.00
Service
company
SP
–
100.00
–
100.00
Sul América International Limited (X)
Equity interest
holding
Cayman
Island
–
–
–
100.00
Corcovado S.A. (VI)
Equity interest
holding
Peru
–
–
–
99.46
Sul América Investimentos Distribuidora
de Títulos e Valores Mobiliários S.A.
Cival Reinsurance Company Ltd. (VIII)
Sul América Santa Cruz Participações S.A. (IX)
Sul América Serviços de Saúde S.A. (III)
Clube Sul América Saúde, Vida e
Previdência (XII)
Executivos S.A. Administração e Promoção
de Seguros (XII) and (XIII)
(I) As of December 31, 2009 and 2008, the Company has a total
of 100.00% indirect interest in Sul América Companhia Nacional
de Seguros, which in turn has a 60.00% interest in the voting
capital of Brasilveículos Companhia de Seguros;
(II) On July 3, 2008, the prior authorization for the transfer of the
insurance business, except for the portfolio related to DPVAT,
to the indirect subsidiary Sul América Companhia Nacional de
Seguros, was required from SUSEP, which is still analyzing it;
(III) On June 18, 2008, National Supplementary Health Plan
Agency (ANS) granted authorization for the split followed
by merger of Sul América Serviços Médicos S.A., and for the
voluntary cession of its managed health portfolio. On June 30,
2008, the shareholders of the indirect subsidiaries Sul América
Serviços de Saúde S.A., Sul América Serviços Médicos S.A. and
Sul América Seguro Saúde S.A. approved the split and merger,
including the cession of the managed plan portfolio of Sul
América Serviços Médicos S.A. to Sul América Serviços de Saúde
S.A. Of the total net book value amounting to R$89,248, at the
base date May 31, 2008, the amount of R$58,714 was directed
to Sul América Seguro Saúde S.A. and R$30,534 to Sul América
Serviços de Saúde S.A. The operations carried out during June
2008 were also directed at the same previously informed
proportions, in view of the need of fiscal calculation;
(IV) As of December 31, 2009, the Company has a total of 100.00%
indirect interest in Sul América Seguro Saúde S.A., which in turn
has a 50.05% direct interest in the voting capital of Brasilsaúde
Companhia de Seguros;
(V) The financial statements of these companies for the years
ended December 31, 2009 and 2008 were audited by BDO
Trevisan Auditores Independentes which opinions were issued
unqualified by Luiz Carlos de Carvalho – CRC 1 SP197193/O-6 “S”
– RJ as of December 31, 2009 and Mateus de Lima Soares - CRC
1RJ079681/O-0 as of December 31, 2008;
(VI) On August 20, 2009, the indirect subsidiary Sul América
Companhia Nacional de Seguros sold all of the interest,
comprising 12,586,880 shares, it held in Corcovado S.A. to A.J.
Vierci Perú S.A.C., for the amount of R$6,109, which was fully
received by September 30, 2009. This transaction resulted
in a profit of R$870, recorded under Income from Sale of
Permanent Assets;
(VII) At the Extraordinary Shareholders’ Meeting held on June
9, 2008, the shareholders of the subsidiary Brasilveículos
Companhia de Seguros resolved, based on the Protocol of Merger
and Management Justification, dated June 6, 2008, and the
corresponding Appraisal Report of net asset value prepared by
an independent appraisal company, to merge 50.00% of the Net
Book Value of the indirect subsidiary Alutrens Participações S.A.
amounting to R$244,679;
(VIII) At present, Cival Reinsurance Company Ltd. does not have
any operating activities;
(IX) On April 30, 2009, at the Extraordinary Shareholders’
Meeting of indirect subsidiary Sul América Santa Cruz
Participações S.A., the shareholders approved, based on the
Protocol of Merger and Justification of Management, dated
March 31, 2009, and the corresponding Appraisal Report
on the net asset value prepared by an independent expert
company, the merger of 100.00% of the Net Book Value of
the subsidiary Sul América Investimentos e Participações
S.A. in the amount of R$283,144, upon the issuance of 5,247
registered common shares, without par value. Net assets as
of March 31, 2009, object of the aforementioned merger, are
summarized as follows:
96
2009 ANnual REPORT
2009 RESULTS
March 31, 2009
Assets
Current
Liabilities
264,138
Cash and cash equivalents
Marketable securities
Accounts receivable
Non-current
Long-term assets
133
262,840
51,518
39,406
Accounts payable
4,349
Other current liabilities
2,006
Non-current
Accounts payable
26,157
19,058
Tax and labor contingencies
6,175
39,326
Other non-current liabilities
924
3,086
Property and equipment
9,026
315,656
(X) On October 30, 2009, the termination of the operations of Sul
América International Limited was approved;
(XI) On March 31, 2009, at the Extraordinary Shareholders’ Meeting,
the shareholders changed the corporate name of Sul América
Seguros de Vida e Previdência S.A. to Sul América Seguros de Pessoas
e Previdência S.A; this act was approved by SUSEP on June 2, 2009;
(XII) On November 30, 2009, at the Extraordinary
Shareholders’ Meeting of the indirect subsidiary Executivos
S.A. Administração e Promoção de Seguros, shareholders
approved, based on the Protocol of Merger and Justification
of Management, dated November 30, 2009, and the
corresponding Appraisal Report on the net asset value
prepared by an independent expert company, the merger of
100.00% of the Net Book Value of the subsidiary Clube Sul
América Saúde, Vida e Previdência in the amount of R$1,927;
(XIII) On December 30, 2009, at the Extraordinary Shareholders’
Meeting of the indirect subsidiary Sul América Seguros de Pessoas
e Previdência S.A. shareholders approved, based on the Protocol
of Merger and Justification of Management, dated December
30, 2009, and the corresponding Appraisal Report on the net
asset value prepared by an independent expert company, the
partial split of the Net Book Value of the subsidiary Executivos S.A.
Administração e Promoção de Seguros in the amount of R$6,169.
Transactions and balances with related parties, shareholders and
direct and indirect subsidiaries are described in Note (13).
(2.1) SIGNIFICANT PRACTICES ADOPTED IN CONSOLIDATION
(a) Elimination of intercompany balances and transactions
between the parent company and its direct and indirect
subsidiaries included in consolidation and among its
subsidiaries;
6,355
80
Investments
Total assets
Current
1,165
Marketable securities
Accounts receivable
March 31, 2009
Merged net assets
283,144
Total liabilities
315,656
(b) Elimination of the parent company’s investments in the
direct and indirect subsidiaries included in consolidation, as well
as intercompany investments;
(c) Disclosure of minority interest in the balance sheets and
statements of income;
(d) Consolidation of exclusive investment funds;
(e) The indirect subsidiary Alutrens Participações S.A. until
May 31, 2008 was consolidated, under the proportionate
consolidation method, using the total interest percentage in
capital. Alutrens Participações held 10.00% in the capital of
Telemar Participações S.A.
(3) SIGNIFICANT ACCOUNTING PRACTICES
The significant accounting practices adopted by the parent
company and its direct and indirect subsidiaries are
summarized below:
(a) RESULTS OF OPERATIONS
Determined on the accrual basis of accounting, except for
private pension contributions, and considers:
• Insurance premiums are recorded from the commencement
date of risk coverage of the related policies/invoices as Direct
Premiums. Premiums issued prior to the risk coverage period are
recognized in income upon the beginning of the risk coverage
period. Premiums related to risks in force, associated with
policies/invoices not yet issued are actuarially calculated;
• Amounts received for private pension contributions are
recognized as Income from Retained Contributions on a cash
basis. The contributors’ rights are reflected in technical reserves
through charges to income;
• Commissions from insurance relating to automobile and
property and casualty lines, except for the expired risks lines,
97
2009 ANnual REPORT
2009 RESULTS
are deferred and amortized over the insurance contract period,
and are recorded under the heading Deferred Acquisition
Costs - Insurance and Reinsurance. Commissions related to
expired risks lines are not deferred. Commissions related to
risks in force associated with policies/invoices not yet issued are
calculated statistically. Commissions which will be amortized
after 12 months are recorded under Deferred Acquisition Costs –
Insurance and Reinsurance, in non-current assets;
• Commissions from health and life insurance products are
deferred and amortized over the average period insureds remain
in the portfolio, taking into consideration the term of policies,
the coverage period to which the acquisition cost refers, and
the expectation of cancellation or non-renewal of policies.
Commissions which will be amortized in up to 12 months are
recorded under Deferred Acquisition Costs – Insurance and
Reinsurance in current assets, whereas those that will be amortized
in more than 12 months are recorded under Deferred Acquisition
Costs – Insurance and Reinsurance, in non-current assets;
• Commissions from private pension plans are deferred and
amortized over the average period participants remain in the
portfolio. These are recorded under Deferred Acquisition Costs –
Private Pension;
• Acquisition costs related to life and health insurance
products are deferred and amortized over the average period
insureds remain in the portfolio, taking into consideration
the expectation of cancellation or non-renewal of policies.
Acquisition costs, which will be amortized from the next 12
months, are recorded under Deferred Acquisition Costs –
Insurance and Reinsurance, in non-current assets;
• The calculation of interest on shareholders’ equity is based
on the variation of the Long-Term Interest Rate (TJLP) on
shareholders’ equity, limited to 50.00% of the net income for
the year before income tax or 50.00% of retained earnings
and earnings reserves, and the higher of these amounts may
be used according to the prevailing legislation. The interest
on shareholders’ equity paid is recorded under financial
expenses and that earned is recorded under financial income.
For purposes of disclosure of financial statements, they are
presented as deduction from retained earnings and addition to
investments, respectively, with a contra entry in the last line of
the statement of income before net income for the year.
(b) BALANCE SHEET
• Receivables and payables after 12 months are recorded in noncurrent assets and liabilities, respectively;
• Foreign currency transactions are recorded at the exchange
rate prevailing on the day of the transaction. Assets or liabilities
denominated in foreign currency are translated according to
the exchange rate prevailing on December 31, 2009 and 2008.
Exchange variations are recorded in the statements of income;
• Assets and liabilities subject to monetary variation are
adjusted based on indexes defined by the Law or agreement;
• The adjustment to present value is calculated regarding its
current and non-current financial assets and liabilities using the
country’s base interest rate (SELIC) as discount rate, except for
insurance and private pension operations of companies under
SUSEP regulation, pursuant to the provisions of SUSEP Circular
No. 379, of December 19, 2008. No effect of the adjustment to
present value on non-current financial assets and liabilities was
neither found, nor significant effects on current ones.
(3.1) CURRENT AND NON-CURRENT FINANCIAL ASSETS
From January 1, 2008, these assets are stated at present value
based on cost or realizable value, including, when applicable,
the respective income and monetary or exchange variations
earned through December 31, 2009 and 2008. Except for the
insurance and private pension operations of companies under
SUSEP regulation, such assets were adjusted to present value,
when applicable, taking into consideration that in the case of
financial assets in current assets, only those that would produce
significant effect were adjusted:
• The balance of Cash Equivalents, comprising financial assets
subject to repurchase agreement or daily renegotiation, and
incurring an insignificant risk of change in value, is shown under
Securities Purchased under Resale Agreements;
• Marketable securities are recorded and classified according to
the trading intent into one of the following categories:
- Securities at fair value through profit or loss:
Securities acquired for the purpose of being actively and frequently
traded are stated at cost, plus income earned in the year, adjusted
to fair value and classified in current assets. Earnings, gains and
losses on these securities are included in income for the year.
- Available-for-sale securities:
Securities that cannot be classified as “securities at fair value
through profit or loss” or “held-to-maturity securities” are stated
at cost, plus income earned in the year, recorded in income, and
adjusted to fair value. Gains and losses realizable are reported
in a separate shareholders’ equity account until realized, net of
their corresponding tax effects and, after realized, are allocated to
income as a contra entry to a separate shareholders’ equity account.
- Held-to-maturity securities:
Securities for which the parent company and its direct and
indirect subsidiaries have the intent and ability to maintain
in portfolio to maturity are stated at cost, plus income earned
through the year, and recorded in income.
- Derivative financial instruments:
These are classified in current assets, as securities measured at
fair value through profit or loss, being composed of swaps and
futures contracts held in the investment portfolio or exclusive
investment funds, used to manage the exposure related to
exchange rate variation and interest rate fluctuation, are stated
at fair value, and their related gains or losses are recorded
directly in the statements of income. In relation to swap, which
purpose is to hedge the principal of Senior Notes, falling due on
February 15, 2012, classified in long-term liabilities, the parent
company records this derivative instrument stated at fair
value according to the method for accounting cash flow hedge
transactions, with gains or losses, net of their tax effects, directly
recognized in Shareholders’ equity, since this swap is fully
effective.
98
2009 ANnual REPORT
2009 RESULTS
• Deferred income and social contribution tax credits were
recognized at the rates in effect on December 31, 2009 and 2008,
when applicable.
(3.2) PERMANENT ASSETS
Stated at cost, monetarily adjusted through December 31, 1995,
and, when applicable, reduced by a provision for losses when
its net book value exceeds the recoverable value (Impairment),
combined with the following aspects:
• Permanent investments in subsidiaries are accounted for
under the equity method;
• The financial statements of foreign subsidiaries have been
translated in accordance with the accounting practices
adopted in Brazil for consistency with the financial
statements of the other companies. These financial
statements have been translated into Brazilian Reais at
exchange rates prevailing on December 31, 2009 and 2008, as
released by the Brazilian Central Bank (BACEN). Translation
gains and losses of these financial statements arising
from the depreciation (or appreciation) of the currency of
the countries of each foreign subsidiary in relation to the
Brazilian Real are recorded in income under the heading
Equity Income of Subsidiaries, taking into consideration that
such subsidiaries operate, basically, as an extension of the
SulAmérica Seguros e Previdência Group;
• Depreciation of property and equipment is calculated under
the straight-line method, based on the estimated useful
lives of the assets and rates stated in Note (8.2), taking into
consideration that the rates are reviewed at least annually;
• Depreciation of property for rent, classified in investments, is
calculated under the straight-line method, based on a maximum
useful life of 25 years;
• The amortization of intangible assets is calculated under the
straight-line method, at the rates mentioned in Note (8.3) taking
into consideration that the rates are reviewed at least annually.
In relation to the goodwill of intangible assets, the amortization
was recorded up to December 31, 2009, as its economic rationale
is the expected future profitability;
• The reserve for impairment is recorded when the net book
value exceeds the recoverable value, which is the higher between
the estimated sales price and the value in use, determined by
the present value of estimated future cash flows as a result
of the use of the asset or the cash generating unit, taking into
consideration that the need of verification of recoverable value
of assets is evaluated at least annually.
(3.3) CURRENT AND NON-CURRENT FINANCIAL LIABILITIES
From January 1, 2008, these liabilities are stated at present value,
based on known or payable amounts, plus, when applicable, the
related charges and monetary or exchange variation incurred at
December 31, 2009 and 2008. Except for insurance and private
pension operations of companies under SUSEP regulation,
such liabilities are adjusted to present value, when applicable,
taking into consideration that in the case of financial liabilities
in current liabilities, only those that would produce significant
effect were adjusted:
(3.3.1) LOANS AND FINANCING
Loans and financing are stated at fair value (agreed-upon
amounts plus agreed charges, which include interest and
exchange variation incurred), net of transaction costs incurred,
and subsequently measured at amortized cost using the
effective interest rate method, until the base date of financial
statements.
In conformity with CVM Resolution No. 566/08, loans and
financing in foreign currency are protected by effective
derivative financial instruments of cash flow hedge, recorded at
fair value. Note (14).
(3.3.2) CURRENT AND DEFERRED INCOME AND SOCIAL
CONTRIBUTION TAXES
The provision for current income and social contribution taxes was
recognized at the rates in effect on December 31, 2009 and 2008.
The provision for deferred income and social contribution taxes is
recognized at the rates in effect on temporary differences.
(3.3.3) ASSETS AND LIABILITIES OF INSURANCE AND PRIVATE
PENSION
Assets are stated at cost or realizable value, including, when
applicable, the related interest and monetary or exchange
variations earned at December 31, 2009 and 2008, whereas
liabilities are stated at the amounts known or payable, plus,
when applicable, the related charges and monetary or exchange
variation incurred at December 31, 2009 and 2008.
(a) PREMIUMS RECEIVABLE
Premiums received in installments are recorded as Premiums
Receivable in current and non-current assets and written off as
installments are received (Note 6);
(b) THIRD-PARTY DEPOSITS
Third-party deposits refer mainly to insurance premiums received,
whose policies have not yet been issued, and to installments not
yet written off from Premiums Receivable (Note 10);
(c) ASSETS AND LIABILITIES OF INSURANCE, REINSURANCE AND
PRIVATE PENSION CONTRACTS
As mentioned in Note (2) the criteria adopted for setting up
asset and liability balances of insurance, reinsurance and private
pension contracts are as follows:
(c.1) UNEARNED PREMIUM RESERVE
The unearned premium reserve and the deferred reinsurance
and retrocession expenses are recognized on a daily pro
rata basis, based on the amount of premiums divided by the
number of days of total coverage, multiplied by the number
of days of unexpired risk coverage, that is, from the base date
of the financial statements to the expiration dates of the
insurance and reinsurance contracts’ risk coverage periods.
The unearned premium reserve is recognized for insurance
contracts relating to automobile, property and casualty, health
and group life.
99
2009 ANnual REPORT
2009 RESULTS
(c.2) UNEARNED PREMIUM RESERVE RELATED TO RISKS IN FORCE
ASSOCIATED WITH POLICY/ INVOICE NOT ISSUED
The unearned premium reserve related to risks in force associated
with policy/ invoice not issued and the respective deferred
reinsurance and retrocession expenses are recognized for
determining the portion of premiums not yet earned relating to
policies/invoices not yet issued which risks are already in force.
It is calculated by multiplying the unearned premium reserve
and the deferred reinsurance and retrocession expenses by the
expected late payment factor. The expected late payment factor is
calculated based on the weighted average of late issuances noted
in the last 16 (sixteen) months prior to the year ended December
31, 2008, in annual actuarial assessment studies, for insurance
contracts relating to automobile, property and casualty and group
life. For some lines which individual risk coverage periods do not
expire by the following month, the late payment factor is applied
and calculated based on the monthly premium issued and not
on the unearned premium reserve or deferred reinsurance
and retrocession expenses, adopting the above-mentioned
methodology for calculating the expected late payment factor.
(c.3) UNEXPIRED RISK RESERVE
The unexpired risk reserve is recognized on a daily pro rata basis,
based on the premium and contribution net of entry fee, divided
by the number of days of total coverage, multiplied by the
number of days of unexpired risk coverage, that is, from the base
date of the financial statements to the expiration dates of the
insurance contract’s risk coverage period relating to individual
life and private pension.
(c.4) UNEXPIRED RISK RESERVE FOR RISKS IN FORCE ASSOCIATED
WITH POLICY NOT ISSUED
The unexpired risk reserve for risks in force associated with
policy not issued is recognized for determining the portion of
premiums and contributions not yet earned relating to policies
not yet issued which risks are already in force. It is calculated by
multiplying the premium and the contribution by the expected
late payment factor. The expected late payment factor is
calculated based on the weighted average of late issuances noted
in the last 16 (sixteen) months prior to the year ended December
31, 2008, in annual actuarial assessment studies, for insurance
contracts relating to individual life and private pension.
(c.5) SUPPLEMENTARY PREMIUM RESERVE
The supplementary premium reserve was introduced by
the National Council of Private Insurance (CNSP) Resolution
No. 162/06, amended by Resolutions No. 181/07 and 195/08,
for private pension and insurance contracts, except for the
individual and group health insurance lines, and is recognized
under the heading Other – Technical Reserves – Insurance in
current liabilities. For insurance contracts relating to property
and casualty, except for automobile and group life lines, this
reserve is equal to zero (0) or the positive difference between
the average unearned premium reserve, calculated daily
during the month when it is recorded, and the unearned
premium reserve recognized at the end of the respective
month, whichever is higher; for individual life insurance and
private pension contracts, this reserve is equal to zero (0)
or the positive difference between the average unexpired
risk reserve, calculated daily during the month when it is
recorded, and that recognized at the end of the respective
month, whichever is higher.
(c.6) RESERVE FOR CLAIMS AND CLAIM ADJUSTMENT EXPENSES
The reserve for claims and claim adjustment expenses is
recognized to cover amounts payable for claims already
reported until the base date of the financial statements,
comprising the following:
(i) For automobile, property and casualty, and group life lines, the
reserve for claims and claim adjustment expenses is recognized
at the estimated indemnifiable amount, based on the notices of
claims received and is adjusted periodically based on analyses
made by technical areas. For these lines, the reserve for claims
and claim adjustment expenses is also adjusted based on
statistical-actuarial calculations, based on the final estimate
of unpaid claims incurred, known as IBNP, calculated based on
statistical methods known as monthly run-off triangles, which
consider the historical development of claims reported and/
or paid in order to make a future projection per period of claim
incurrence. Depending on the insurance line, the noted historical
development ranges from 60 (sixty) to 140 (one hundred and
forty) months. The final estimate of unpaid claims incurred
is net of the estimate of salvage receivable, also calculated by
run-off triangle methods. The statistical amount of adjustment,
which refers to the future development of claims incurred, and
that is proportionally recorded, a portion of which as adjustment
to the reserve for claims and claim adjustment expenses and
another portion as adjustment to the incurred but not reported
(IBNR) reserve, corresponds to the final estimate of unpaid
claims incurred, subtracted by the final estimate of IBNR; and
(ii) For the health insurance line, the reserve for claims and
claim adjustment expenses is recognized at the estimated
indemnifiable amount, based on the notices of claims received
and is adjusted periodically based on analyses made by
technical areas.
(c.7) RESERVE FOR CLAIMS AND CLAIM ADJUSTMENT EXPENSES
AND FOR FUTURE POLICY BENEFITS UNDER LEGAL DISPUTE
The reserve for claims and claim adjustment expenses and for
future policy benefits under legal dispute were periodically
reviewed and recorded based on the opinion of the internal
legal department, independent legal counsel and Management
regarding the probable outcome of lawsuits, and specific factors,
obtained based on the analysis of the history of payments made
in settled lawsuits, calculated taking into consideration the
nature of lawsuits, the respective likelihood of loss, the expected
financial loss and the related insurance line, if applicable. Until
December 2002, they were monthly adjusted according to the
National Consumer Price Index (INPC) and interest of 0.5% per
month. In the period from January 2003 to December 2008,
they were adjusted by the INPC and interest of 1% per month.
From January 1, 2009, they started to be monthly adjusted by
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the Broad National Consumer Price Index (IPCA) and interest of
0.75% per month. In December 2009, this analysis was updated
by extending the base period of analysis to 60 months, covering
the period from January 2005 to September 2009.
Said percentages were calculated based on an analysis of the
relationship between the amounts referring to the lawsuits
whose outcomes were successful, lawsuits that were settled in
court and those whose outcomes were unfavorable, and their
corresponding historical estimates of risk exposure. Reserves
are recorded under Claims and Claim Adjustment Expenses
in current and non-current liabilities and under Future Policy
Benefits in current liabilities. The attorney fee awards in civil
lawsuits related to contractual claim indemnification are
recorded under the heading Reserve for Claims and Claim
Adjustment Expenses in current and non-current liabilities, and
under Reserve for Future Policy Benefits in current liabilities.
The corresponding judicial deposits are recorded under Judicial
Deposits in non-current assets, and are monetarily adjusted by
the Referential Rate (TR), according to the prevailing legislation.
(c.8) RESERVE FOR FUTURE POLICY BENEFITS
The reserve for future policy benefits, related to private pension
and individual life insurance contracts, corresponds to total lump
sum benefits and annuities overdue and not paid to participants
and beneficiaries, calculated based on notices received arising
from events already occurred, including monetary adjustment.
For individual life insurance contracts, the reserve for future policy
benefits is adjusted based on statistical-actuarial calculations.
Such calculations use the final estimate of unpaid claims
incurred, known as IBNP and calculated based on statistical
methods known as monthly run-off triangles, which consider the
historical development of payments of claims in order to make
a future projection per period of claim incurrence. The historical
development considered is 140 (one hundred and forty) months.
By subtracting from the final estimate of unpaid claims incurred
the final estimate of claims incurred but not reported, the result
is the statistical amount of adjustment, which refers to the future
development of claims incurred, and is proportionally recorded,
a portion of which as adjustment to reserve for future policy
benefits and another portion as adjustment to IBNR reserve.
(c.9) IBNR RESERVE
The IBNR reserve is recognized to cover claims incurred but not
reported until the base date of financial statements.
(i) For insurance contracts relating to automobile, property and
casualty insurance and life lines, except individual life insurance
contracts and risk benefits of private pension, the IBNR reserve is
recognized based on the final estimate of claims incurred but not
reported, which is calculated based on statistical methods, known
as run-off triangles, that consider the monthly and/or quarterly
history development of claim notices to make a future projection
per period of incurrence. Such development is made based on the
number of claims as well as on volume of claims, depending on
the characteristics of contract lines and on the most adequate
methodology to the experience. Depending on the insurance
line, the noted historical development ranges from 60 (sixty) to
140 (one hundred and forty) months. For all of these contracts, in
addition to the final estimate of claims incurred but not reported,
the IBNR reserve includes the adjustment related to the future
development of claims already incurred. Such adjustment is
calculated by subtracting from the final estimate of unpaid claims
incurred the final estimate of claims incurred but not reported,
and separating the result proportionally between the adjustment
to reserve for claims and claim adjustment expenses/ reserve for
future policy benefits and the adjustment to IBNR reserve;
(ii) For health insurance contracts, the IBNR reserve is recognized
based on the final estimate of unpaid claims incurred less the
reserve for claims and claim adjustment expenses. The final
estimate of unpaid claims incurred for health insurance contracts
is calculated based on statistical method, known as run-off triangle,
that considers the monthly historical development of payments
of claims in order to make a future projection. The historical
development considered is from 12 (twelve) to 60 (sixty) months;
(iii) For individual life insurance contracts and for private
pension contracts, as there is no representative history of
internal experience, the IBNR reserve is calculated using the
percentages established by SUSEP Circular No. 288, of April 1,
2005, in the sum of contributions or premiums and in the sum
of benefits or claims paid over the latest 12 (twelve) months; and
(iv) For the DPVAT line, the IBNR reserve is recognized according to
National Council of Private Insurance (CNSP) Resolution No. 153/06.
(c.10) IBNR RESERVE – JUDICIAL
The incurred but not reported reserve related to occasional
lawsuits is set up to cover claims that, based on our historical
experience, give rise to financial expenses at the judicial level
to subsidiaries that operate insurance businesses, even though
these claims are denied on technical basis by such subsidiaries,
or have not been reported yet because the insured or third-party
decided to directly file a lawsuit without requesting first an
indemnification to such subsidiaries.
The judicial IBNR reserve is recognized for automobile, property
and casualty and life insurance lines based on mathematical
methods comprising an analysis period of 24 months, for the
automobile line, and up to 60 months for property and casualty
lines, taking into consideration the history of payments up to
December 2009, and up to 55 months for the life line, taking
into consideration the history of payments from May 2005 to
November 2009, which comprise the following:
1) average historical periods between the date the claim is
denied and the date the summons is registered, and between
the date of the claim is incurred and the date of summons;
2) percentage of history of indemnification requests which were
not granted, administratively, and that the historical experience
showed a financial expense later on at the judicial level, and
the percentage of claims that directly gave rise to lawsuits, over
the same periods, resulting in an estimate number of future
expenses at the judicial level;
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3) average value of judicial claims recorded in the Reserves
for Claim and Claim Adjustment Expenses and for Future
Policy Benefits in Court Dispute, resulting in the average
value of lawsuits.
(c.11) MATHEMATICAL RESERVE FOR BENEFITS TO BE GRANTED
The mathematical reserve for benefits to be granted is related
to private pension and individual life insurance contracts and
comprises the commitments taken with participants/insureds
while the event that generates the benefit does not occur. The
mathematical reserve for benefits to be granted is calculated
based on the financial movements of each participant.
Allocation to current and non-current liabilities is based on
the projected cash flow of benefits payable for the next years,
which considers actuarial assumptions, such as mortality table,
cancellation rates, and retirement age.
(c.12) MATHEMATICAL RESERVE FOR BENEFITS GRANTED
The mathematical reserve for benefits granted is related to private
pension, health and individual life insurance contracts, and
corresponds to the amount of benefits which generating event
was occurred and reported. The mathematical reserve for benefits
granted related to private pension and individual life insurance
contracts is calculated based on the value of the expected future
benefits discounted to the base date of the financial statements
for the participants who are already receiving the benefits and
estimated based on contracted guarantees of mortality tables
and interest rates. The mathematical reserve for benefits granted
for health insurance lines is recorded to guarantee the benefits of
premium refund to beneficiary’s dependant over the term set in
each policy, the maximum being 5 years, in view of the death of
the policyholder. The reserve is calculated based on the estimated
future claims of beneficiaries discounted to the base date of the
financial statements.
(c.13) FINANCIAL SURPLUS RESERVE
The financial surplus reserve, related to private pension plans
that have minimum income guarantee, is calculated based
on gains that exceed interest and/or monetary adjustment
guaranteed in the plans, as established in contract.
(c.14) RISK FLUCTUATION RESERVE
The purpose of the risk fluctuation reserve is to reduce the risk
of possible fluctuations in the volume of private pension claims.
The risk fluctuation reserve is calculated stochastically, based on
the fluctuations of historical claim rates, by projecting 30,000
(thirty thousand) possible claim rate scenarios, and considering
the possible need of an additional reserve for each of such
scenarios. The risk fluctuation reserve corresponds to the sum
of such additional reserves required for the 29,700 (twenty nine
thousand and seven hundred) top scenarios, thus ensuring a
reserve that is sufficient to reduce the probability of default of
the portfolio to one percent (1%).
(c.15) RESERVE FOR ADMINISTRATIVE EXPENSES
The reserve for administrative expenses is recognized to cover
expenses arising from payments of future benefits due to claims
that have been and will be incurred in private pension plans. The
reserve for administrative expenses is recorded under Other –
Technical Reserves – Private Pension in current and non-current
liabilities. The reserve for administrative expenses is calculated
based on the administrative expenses estimated for payments
of future benefits discounted to the base date of the financial
statements. For this purpose, the flow of expected payments
is projected, including assumptions of the average time the
participant remains in the portfolio, using the AT2000 and the
beginning of benefit payments.
(c.16) FINANCIAL FLUCTUATION RESERVE
The financial fluctuation reserve is recognized for private pension
plans. The financial fluctuation reserve is recorded under the
heading Other – Technical Reserves – Private Pension in noncurrent liabilities, and is calculated to cover occasional future
deviations between the inflation index established for the
private pension plans, and the annual variation of the pension
benefits paid by the National Institute of Social Security (INSS),
according to specific conditions established in a collective
agreement entered into by the indirect subsidiary Sul América
Seguros de Pessoas e Previdência S.A. The methodology takes into
consideration an interest rate in accordance with the minimum
guarantee defined and stochastic scenarios of inflation indexes,
which from September 2009 takes into consideration the
inflation index plus 50% of annual variation of GDP, with a gap
of 2 (two) years, from which 100 possible economic scenarios are
projected, and also consider the additional amounts of reserve
required to cover the differences between the indexes. The
financial fluctuation reserve is equivalent to the sum of such
additional reserves for the 90 top cases, thus guaranteeing a
sufficient reserve with 90% certainty.
(c.17) PREMIUM DEFICIENCY RESERVE
The premium deficiency reserve is calculated for insurance
contracts relating to automobile, property and casualty, life and
health lines. The premium deficiency reserve is aimed at covering
possible insufficiencies of the premiums of contracts in force
to cover the future commitments taken on these contracts. The
methodology for health contracts follows the formula set forth by
the National Council of Private Insurance (CNSP) Resolution No. 36,
of December 8, 2000, and does not indicate the need of recognizing
the premium deficiency reserve. For life insurance contracts, the
premium deficiency reserve is required because the premium
of most contracts is redeemed. In these contracts, the premium
deficiency reserve is equivalent to expected future obligations with
benefits and other future expenses discounted to the base date of
financial statements. For some individual life insurance contracts
with a contracting party, the premium deficiency reserve is also
required, and is equivalent to the value discounted to the base date
of the financial statements of the expected projected flow of claims
and future expenses less the corresponding future premiums of
these contracts. For the other automobile and other property and
casualty lines, a liability adequacy analysis was carried out. This
analysis was performed through a future cash flow considering
the contracts in force at the balance sheet date and the current
actuarial assumptions. The monthly result of cash flow was
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brought to present value using the risk-free rate (SELIC). Contracts
were grouped based on insurance contracts that generally incur
similar risks, as defined by SUSEP. The result of this analysis
indicated that the book value of insurance liabilities is below the
expected future cash flows only in insurance contracts of the cargo
and property lines.
(c.18) CONTRIBUTION DEFICIENCY RESERVE
The contribution deficiency reserve relating to private pension
aims at covering possible deficiencies of mathematical reserves
for benefits to be granted and granted, and unexpired risk reserve
in order to cover future benefits and expenses already covered. The
reserve is calculated based on expectations of future mortality
behavior of the AT2000-Male (AT83-Male until November 30,
2008) mortality table, and the expected time the participant
remains in the portfolio, and the beginning of benefit payments
discounted to the base date of the financial statements using the
rate guaranteed in contracts.
(3.4) ACCRUED LIABILITIES FOR CONTINGENCIES
• Civil contingencies, which were being challenged in court
until December 31, 2008 were periodically reviewed and
monthly adjusted according to the National Consumer Price
Index (INPC) and interest of 0.5% per month until December
2002, and 1% per month from January 2003 to December
2008. From January 1, 2009, the lawsuits started to be monthly
adjusted by the Broad National Consumer Price Index (IPCA)
and interest of 0.75% per month. Labor contingencies are
adjusted according to the single table for adjustment and
inflation and currency translation of labor debts. The accrued
liabilities for civil contingencies, not related to contractual
claim compensation, as well as those for labor contingencies,
are recorded based on the opinion of the internal legal
department, independent legal counsel and Management
regarding the probable outcome of lawsuits, and specific
percentages, obtained based on the analysis of the history
of payments made in settled lawsuits, calculated taking into
consideration the nature of lawsuits, the respective likelihood
of loss, the expected financial loss and the related insurance
line, if applicable. In December 2009, this analysis was updated,
still considering 60 months, covering the period from January
2005 to September 2009.
Said percentages were calculated based on an analysis of the
relationship between the amounts referring to the lawsuits
whose outcomes were successful, lawsuits that were settled
in court and those whose outcomes were unfavorable and
their corresponding historical estimates of risk exposure.
Accrued liabilities for contingencies are recorded under
Accrued Liabilities for Contingencies in current and noncurrent liabilities, and consider the current amounts of the
corresponding contingencies. The attorney fee awards in civil
lawsuits related to non-contractual claim compensation and
labor lawsuits are recorded under the heading Other Accounts
Payable in current and non-current liabilities. The corresponding
judicial deposits are recorded under Judicial Deposits in noncurrent assets, and are adjusted according to the TR, pursuant to
the prevailing legislation;
•Accrued liabilities for tax contingencies, contributions and
other tax liabilities, which are being challenged in court,
are periodically reviewed and monthly adjusted according
to the TR and SELIC, pursuant to the prevailing legislation,
and are recorded based on the opinion of the internal legal
department, independent legal counsel and Management
regarding the probable outcome of lawsuits. The parent
company and its direct and indirect subsidiaries adopt the
procedure of accruing the total tax contingencies whose
likelihood of loss was considered probable and for other tax
contingencies, based on an individual analysis of the expected
financial loss in each lawsuit. In conformity with Accounting
Standard and Procedure (NPC) No. 22, issued by the Brazilian
Institute of Accountants (IBRACON), and Resolution No.
489/2005, issued by CVM, the amounts referring to challenges
related to the illegality or unconstitutionality of taxes,
contributions and other tax liabilities, previously classified
under Tax Contingencies, are recorded under Accounts Payable
in non-current liabilities. The corresponding judicial deposits
are recorded under Judicial Deposits in non-current assets, and
are adjusted according to the TR and the SELIC, pursuant to the
prevailing legislation. The reclassification of judicial deposits
from assets to liabilities, in which they would be deducted from
Accrued Liabilities for Contingencies and Accounts Payable,
provided for by CVM Resolution No. 489/2005, was not made
because it is not provided for by SUSEP nor by ANS.
(3.5) EMPLOYEE AND POST-EMPLOYMENT BENEFITS
The benefits provided by the parent company and its direct and
indirect subsidiaries comprise the Defined Contribution Private
Pension Plan, through the Plan that Generates Benefits (PGBL),
the Single Life Annuity, and the Indemnity to Executives Program.
The commitments of such benefits are provisioned on accrual
basis and in conformity with CVM Resolution No. 371/2000, based
on calculations made by internal actuaries according to the
Projected Unit Credit Method and other actuarial assumptions
described in Note (21.3).
(3.6) STOCK OPTION PLAN
The recognition of the compensation of the Stock Option Plan
participants at the fair value of stock options is calculated by
internal actuaries, based on the Black-Scholes model, taking
into consideration the date when each option is vested and
accounted for under the heading Administrative Expenses as
contra entry to Capital Reserve – Recognized Granted Options.
Note (13.2).
(3.7) DIVIDENDS
The Company’s dividends, in accordance with the bylaws, are
recognized at the end of the fiscal year, taking into consideration
that the value related to mandatory minimum dividends is
equivalent to 25% of annual net income, adjusted pursuant to
current legislation.
(3.8) USE OF ESTIMATES
The preparation of financial statements in accordance with
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the Brazilian accounting practices requires the Management
of the parent company and its direct and indirect subsidiaries
to adopt estimates and judgments for recording certain
transactions that affect assets and liabilities, income and
expenses, as well as the disclosure of financial statements
data. The final results of these transactions and information,
when actually realized in subsequent periods, may differ
from these estimates. The main estimates related to
financial statements refer to the recording of the effects
arising from the allowance for doubtful accounts and other
assets, technical reserves, deferral and amortization of
acquisition costs and accrued liabilities for contingencies,
and the calculation of the fair value of derivative financial
instruments and other balances subject to this valuation.
(4) FINANCIAL INSTRUMENTS
(4.1) RISK MANAGEMENT
The main risks arising from the businesses of the parent
company and its direct and indirect subsidiaries are:
interest risk, credit risk, liquidity risk and exchange rate risk.
Management of these risks involves different departments
of the Company and its direct and indirect subsidiaries and
comprises a series of strategies and policies on use of funds
considered adequate by Management. These policies and
strategies, in addition to being frequently reviewed by Internal
Committees, include the adequacy of marketable securities
to liabilities according to a process called Asset and Liability
Management. The parent company and its subsidiaries
have internal controls that ensure that these policies and
strategies are complied with, so that the obtained results are
in accordance with the objectives set by the Management of
these companies.
• Interest risk
The interest rate risk is posed by the possibility that the parent
company and its direct and indirect subsidiaries face changes in
interest rates that may produce impacts on the present value of
the investment portfolio.
The parent company and its direct and indirect subsidiaries try
to reduce the impact of changes in interest rates by preparing
mandates of investments established individually for each of
the companies. In these mandates, aspects such as the following
are considered: business profile of each legal entity, actuarial
assessment studies and liquidity. In addition, maximum
VaR (Value at Risk) limits are set on consolidated basis, and
alternative scenarios known as stress testing are analyzed.
As explained in Notes (4.1.1) and (4.1.2), derivative financial
instruments may be used as a way to reduce impacts of change
in interest rates.
• Credit risk
Credit risk is posed by the possibility that the parent company
and its direct and indirect subsidiaries do not receive the
amounts arising from premiums sold and income from financial
institutions arising from marketable securities.
In relation to the risk regarding the receipt of premiums
receivable, the credit policy takes into account the peculiarities
of insurance operations and is formulated to maintain the
flexibility required by the market and customer needs. The
indirect subsidiaries have an approval plan for operations of risk
acceptance and respective insurance policy issuance, which also
includes analysis of customer credit history and risk exposure
of each operation. The method adopted for calculating the
Allowance for Doubtful Accounts is described in Note (6.1).
In relation to the exposure to credit risk of marketable securities,
the limits are set through the Credit Committee.
In brief, the criteria for credit exposure adopted by the parent
company and its direct and indirect subsidiaries are the following:
a) Federal government securities: up to 100%
b) State and municipal government securities: 0%
c) Non-financial companies (corporate securities): adopt
a methodology based on the analysis of quantitative and
qualitative aspects. Such analysis determines a score (internal
rating). Based on the score set, a credit limit is established, which
will be used to limit the maximum exposure to securities issued
by a certain non-financial company.
d) Financial institutions: adopt a methodology based on the
analysis of quantitative and qualitative aspects. Such analysis
determines a score (internal rating). Based on the score set,
establish a credit limit and maximum risk terms for purchase of
securities issued by financial institutions.
Regarding the issuances of time deposit with special guarantee
(DPGE) of Fundo Garantidor de Crédito (the Brazilian deposit
guarantee fund - FGC), maximum limits to the issuance of each bank
are set. The risk exposure limits are regularly monitored and assessed
on consolidated basis by the Quantitative and Risk Analysis.
e) Receivables Investment Fund (FIDC): adopt a methodology
based on the analysis of the fund’s structure, assessment
of receivables and subordination limits, in addition to the
determination of a score (internal rating). Based on the score set,
a credit limit and maximum risk terms for the purchase of FIDC
quotas are established. These securities are presented as NonExclusive Investment Fund Quotas.
The risk exposure limits are regularly monitored and assessed on
consolidated basis by the Quantitative and Risk Analysis.
• Liquidity risk
The main objective of liquidity risk management is to monitor
the terms for settling the receivables and payables of the
parent company and its direct and indirect subsidiaries, as well
as the liquidity of financial instruments. The parent company
and its direct and indirect subsidiaries prepare projected cash
flow analyses daily and review the liabilities assumed and
financial instruments used, principally related to assets held
in guarantee of technical reserves. Note (12) – Guarantee of
Technical Reserves.
• Exchange rate risk
The parent company and its direct and indirect subsidiaries are
exposed to exchange rate risk, mainly related to its industrial
and commercial insurance operations, due to insurance and
reinsurance contracts denominated in foreign currencies, to
investments (mainly in foreign subsidiaries), and to loans and
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2009 ANnual REPORT
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financing. The parent company and its direct and indirect
subsidiaries monitor and analyze their foreign currencydenominated accounts receivable and payable through
derivative contracts, mainly futures and swap contracts, aiming
at balancing exchange rates exposure and reducing the net
effect of the impact of exchange rate variations on their income.
As of December 31, 2009, the exchange rate risk exposure is
composed as follows:
Parent Company
Amortized Cost
Fair Value
2009
2008
2009
2008
Financial instruments - Marketable Securities
20,289
24,371
19,584
24,371
Total
20,289
24,371
19,584
24,371
(7,321)
(9,952)
(7,321)
(9,952)
(226,356)
(303,810)
(212,858)
(249,721)
226,356
303,810
212,858
249,721
Financial instruments - Future Contracts
(5,907)
–
(5,786)
–
Total
(13,228)
(9,952)
(13,107)
(9,952)
7,061
14,419
6,477
14,419
Assets
Liabilities
Interest - Senior Notes
Principal - Senior Notes
Swap - Principal - Senior Notes - asset portion
Total net exposure
Consolidated
Amortized Cost
Fair Value
2009
2008
2009
2008
17,811
–
17,811
–
Financial instruments
33,259
24,792
32,554
24,792
Accounts receivable - insurance operation
15,061
79,351
15,061
79,351
Accounts receivable - reinsurance operation
133,985
209,243
132,890
209,243
Total
201,506
331,648
199,706
331,648
(7,321)
(9,952)
(7,321)
(9,952)
(226,356)
(303,810)
(212,858)
(249,721)
226,356
303,810
212,858
249,721
Payable accounts - insurance operation
(168,572)
(248,704)
(168,572)
(248,704)
Payable accounts - insurance operation
(12,188)
(74,161)
(12,188)
(74,161)
Financial instruments - Future Contracts
(5,907)
–
(5,786)
–
(320)
(6,360)
(320)
(6,360)
(194,308)
(339,177)
(194,187)
(339,177)
7,198
(7,529)
5,519
(7,529)
Assets
Cash and Cash Equivalents
Liabilities
Interest - Senior Notes
Principal - Senior Notes
Swap - Principal - Senior Notes - asset portion
Other
Total
Total net exposure
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Particularly in relation to loans and financing, with the
intent to manage the exposure to exchange variation of
the Senior Note’s principal of US$130,000,000, issued in
February 2007 and falling due in February 2012, the parent
company has swap transactions with the União de Bancos
Brasileiros S.A. (Unibanco), as shown in Note (14). The contract,
registered with the CETIP - OTC Clearing House, provided for
monthly renegotiations until the maturity of Senior Notes.
In April 2008, at the event of the renegotiation provided for
in the contract, the parent company exercised the right to
renegotiate the total US$130,000,000 of the swap contract,
according to the conditions described in Note (14). The
management of exchange rate exposure regarding the
interests at 8.625% per year, paid every six-month period,
related to the Senior Notes’ principal, is usually made through
assets indexed to exchange rate variation or futures contracts
traded at the BM&FBOVESPA. When futures contracts
are used, these positions are taken through an exclusive
investment fund which rules clearly state the possibility of
investment in assets linked to exchange variation, in addition
to stating that the face value of transactions in derivative
markets shall be equal to or below the sum of the values of
other securities, financial assets and operational types that
are included in the fund’s portfolio maintained in the spot
market, thus the exposure of the fund portfolio at an amount
over the net equity of the fund is not permitted.
The methodology adopted for the risk management of
marketable securities and derivative financial instruments
involves the analysis of Credit (mentioned above) and Market
Risks. This monitoring is constant and in compliance with the
limits set, and according to the internal policies on use of funds
set forth by the Investment Committee. In relation to Market
Risk, the methodology adopted is the Parametric Value at Risk
(VaR) with confidence level at 95%.
(4.1.1) DERIVATIVES
According to the policies on investment and use of funds set and
approved by Management, the parent company and its direct
and indirect subsidiaries can make derivative transactions.
All transactions related to these instruments are traded and
registered with the BM&FBOVESPA or organized over-thecounter market. In indirect subsidiaries that operate insurance
and private pension operations, the maintenance of derivative
financial instruments, through futures contracts or swaps,
which can be held in exclusive investment funds, has the sole
purpose of hedging the exchange variations and interest rate
fluctuations. In the case of exclusive funds of PGBL and VGBL
plans, in addition to interest rate futures contracts, its indirect
subsidiary Sul América Seguros de Pessoas e Previdência S.A.
also use Bovespa Index futures contracts, in compliance with the
investment policy of such funds. The gains and losses arising
from these futures contracts do not produce any impacts on
income for the year or shareholders’ equity of such subsidiary,
because they are reflected at equal amount in the technical
reserves of private pensions. Although they do not cause
variations in income of the subsidiary, we show in Note (4.1.3) all
derivative financial instruments of these funds, in compliance
with the provisions of CVM Resolution No. 566.
The use of derivative financial instruments by direct and
indirect subsidiaries that operate insurance and private
pension is made pursuant to BACEN Resolutions Nos. 3,308/05
and 3,358/06, and CNSP Resolutions Nos. 98 and 106, which
provide for criteria for the realization of investments for these
subsidiaries. The other companies that are not subject to
such provisions can hold investments that use derivatives,
thus being able to generate exposure higher than 100% of
the invested amount provided that the parent company’s
Investment Committee pre-approves it.
CRITERIA FOR DETERMINING FAIR VALUE
The criterion for determining the fair value of derivative
financial instruments is the discounted cash flow method using
the rates released by BM&FBOVESPA.
In the particular case of swaps, the fair value is determined
adopting modeling techniques of discounted cash flow that
use yield curves. The information to build yield curves is mainly
obtained from trading prices available at BM&FBOVESPA. The
trading prices adopted to determine the swap contracted used
to hedge Senior Notes were the foreign exchange coupon “dirty”
rate and the fixed rate of the period from the closing of financial
statements to the maturity date of the transaction, in addition
to the Dollar ask price traded (PTAX-800) on December 31, 2009
and 2008, released by the Brazilian Central Bank Information
System (SISBACEN).
(4.1.2) SUMMARY CHART OF EXPOSURE OF DERIVATIVES
Derivative financial instruments - swaps and futures contracts held
in exclusive investment funds and portfolios by certain indirect
subsidiaries, used to manage the exposure related to exchange rate
variation and interest rate fluctuation, are stated at fair value, as
described in the criteria for determining fair value, and their related
gains or losses are recorded in income.
In relation to swap, which purpose is to hedge the principal of
Senior Notes, mentioned in Note (14) and in accordance with CVM
Resolution No. 566, which approved the Technical Pronouncement
CPC No. 14 (Financial Instruments), the parent company records this
derivative instrument stated at fair value according to the method
for accounting cash flow hedge transactions, with total gains
or losses, net of corresponding tax effects, recognized directly in
Shareholders’ Equity, since this swap is fully effective.
The derivative financial instruments of the parent company and
its direct and indirect subsidiaries shown below are traded at
BM&FBOVESPA, and classified into the securities category at fair
value through profit or loss.
106
2009 ANnual REPORT
2009 RESULTS
FUTURE CONTRACTS
As of December 31, 2009 and 2008, purchase and sale commitments
are shown in the charts below, and the counterparty and place of
registry of all futures contracts is BM&FBOVESPA.
Purchase commitment:
Consolidated
Reference
index
Maturity
Quantity
Notional amount
Fair value
Value in 2009
2009
2008
2009
2008
2009
2008
2009
2008
Value
receivable
/ received
Value
payable /
paid
DI
–
July/
2009
–
5
–
500
–
471
–
–
DI
–
January/
2010
–
300
–
30,000
–
26,748
–
–
DI
–
July/
2010
–
263
–
26,300
–
22,194
–
–
DI
January/
2011
January/
2011
437
590
43,700
59,000
39,539
46,896
895
1,005
DI
July/
2011
–
20
–
2,000
–
1,703
–
29
29
DI
January/
2012
January/
2012
616
130
61,600
13,000
49,246
9,195
2,913
2,859
1,073
1,288
107,300
128,800
90,488
105,504
3,837
3,893
Sale commitment:
Parent Company and
Consolidated
Reference index
Maturity
Quantity
Notional amount
Fair value
Value in 2009
2009
2008
2009
2008
2009
2008
2009
2008
Value
receivable/
received
Value
payable/
paid
Dollar
January/
2010
–
1
–
USD
50,000
–
87
–
723
798
Dollar
February/
2010
–
65
–
USD
3,250,000
–
5,699
–
170
31
66
–
USD
3,300,000
–
5,786
–
893
829
107
2009 ANnual REPORT
2009 RESULTS
Amounts receivable and payable of futures contracts are accounted
for under the heading Accounts Payable in current liabilities.
SWAP CONTRACT
As of December 31, the parent company has the following swap
contracts, which place of registry is CETIP:
Reference
Index
Asset/Liability
Dollar
Parent Company and Consolidated
Funds
(a)
Maturity
Counterparty
Unibanco
Notional amount
Amortized cost
Fair value
2009
2008
2009
2008
2009
2008
2009
2008
February/
2012
February/
2012
254,800
254,800
226,356
303,810
212,858
249,721
253,031
239,678
232,232
211,318
(26,675)
64,132
(19,374)
38,403
CDI
Total
Amount
payable
in 2009
(19,374)
(a) Swap initially contracted at the notional value of US$200,000,000, reduced to US$130,000,000 after 35% of the amount of Senior Notes was called
away in November 2007.
MARGINS PLEDGED IN GUARANTEE
As of December 31, 2009 total margins used to guarantee purchase
and selling transactions of DI futures contracts, recorded in
investment funds classified into securities at fair value through
profit or loss, are composed as follows:
Asset
pledged as
collateral
Maturity
Quantity
Value
LFT
03/17/2010
659
2,699
LFT
03/16/2011
40
164
LFT
03/07/2013
137
561
LFT
06/07/2013
2,756
11,258
LFT
03/07/2015
1,000
4,098
4,592
18,780
Total
There is no requirement of guarantee margin for the swap contract
related to the principal of Senior Notes.
SENSITIVITY ANALYSIS OF EXPOSURE IN DERIVATIVES
The parent company and its direct and indirect subsidiaries
have the following derivative transactions: (i) one-day
interest rate futures contracts (CDI), (ii) US dollar futures
contracts, and (iii) swap contract with an asset position in
US dollars for backing the exchange exposure from Senior
Notes principal. In addition, the criteria adopted for making
estimates of probable, possible and remote scenarios are
based on rates/prices released on the closing date of these
financial statements by BM&FBOVESPA for the respective
maturities. The possible and remote scenarios are constructed
by applying 25% and 50% of variation in these rates/prices
on a variable that represents the greatest influence over an
adverse scenario for the parent company and its indirect
subsidiaries. Variations at 25% and 50% correspond to the
minimum variations established in CVM rules.
Interest rate futures contracts
The parent company and its direct and indirect subsidiaries
considered that the risk of purchasing at rate in futures contract
is the drop in interest rate for the respective maturities.
The possible and remote scenarios are derived from the probable
scenario that uses the rates practiced on December 31, 2009 by
BM&FBOVESPA for the respective maturities:
As of December 31, 2009, the positions held by certain indirect
subsidiaries in interest rate futures contracts were used
with the intent to transform the fixed income of marketable
securities of a portion of their investment portfolio into
variable income. As of this date, these subsidiaries held the
following positions and net value of adjustments in the
respective scenarios (in futures contracts and variation in
market price in case of marketable securities):
108
2009 ANnual REPORT
2009 RESULTS
Maturity
Position
Future Contract /
Object
July/2010
January/2011
January/2012
Quantity
Rates
Scenario
Probable Scenario
(a)
Possible Scenario
Remote Scenario
11.35%
8.51%
5.68%
Purchased at Rate – DI
20
–
(68)
(139)
LTN
2,000
–
68
139
Net Value of
Adjustments
–
–
–
Rates
10.50%
7.88%
5.25%
Purchased at Rate – DI
437
–
(978)
(1,986)
NTN–F
19,200
–
455
932
LTN
23,100
–
511
1,045
Net Value of
Adjustments
–
(12)
(9)
Rates
11.86%
8.90%
5.93%
Purchased at Rate – DI
616
–
(2,721)
(5,664)
NTN–F
54,377
–
2,355
5,265
–
(366)
(399)
Net Value of
Adjustments
(a) The value of adjustments in the probable scenario as of December 31, 2009 is zero, because it reflects the market value. The analysis of sensitivity of
total fair value of adjustments in relation to the probable scenario is not applicable because the probable scenario is compared to itself.
Exchange rate futures contracts – US Dollar
The parent company and its direct and indirect subsidiaries
consider that the risk of selling in US dollar in futures contract is
the appreciation of the US dollar at the respective maturities.
The possible and remote scenarios are derived from the probable
scenario that uses the rates practiced on December 31, 2009 by
BM&FBOVESPA for the respective maturities.
As of December 31, 2009, the positions held by the parent
company in US Dollar futures contracts were used with
the intent to protect it against exchange rate fluctuations.
Therefore, the position and the net values of adjustments in
the respective scenarios (in futures contracts and variation in
market price in case of marketable securities) as of December
31, 2009 were as follows:
Parent Company and Consolidated
Maturity
Position
Future Contract /
Object
January/2010
Quantity
Exchange rate
Sold at Dollar
February/2010
1
Exchange rate
Scenario
Probable Scenario
(a)
Possible Scenario
Remote Scenario
1.74
2.18
2.61
–
(22)
(44)
1.75
2.19
2.63
Sold at Dollar
65
–
(1,425)
(2,850)
Senior Notes
4,557,866
–
1,339
2,677
–
(108)
(217)
Net Value of
Adjustments
Swap:
In order to back the exchange exposure of principal arising from
Senior Notes issued in February 2007, the parent company has
swap transaction with asset position in US dollars and liability
position in CDI reduced by 3.967% per year with maturity in
February 2012, as described in Note (14). As the values of principal
of Senior Notes and that of asset position of swap annuls each
other, as they represent US$130,000,000, the parent company
109
2009 ANnual REPORT
2009 RESULTS
considers that the risk of holding a liability position in CDI
because of swap would be the increase in the CDI rate, and
it would be offset by the increase in income from financial
investments linked to CDI.
The sensitivity analysis of fair value takes into consideration the
following variables:
- Foreign Exchange Coupon “Dirty” Rate (coupon adjustment)
from December 31, 2009 to the maturity date of the transaction;
- Fixed-income Rate from December 31, 2009 to the maturity
date of the transaction;
- Current exchange rate of USD;
- Expected exchange rate of USD at the maturity date of the
transaction that generates the foreign exchange coupon “dirty”
(coupon adjustment) and fixed-income rates.
Fair values are calculated by projecting the future flows of
transactions (asset and liability) and discounted to present value
based on the rates used at BM&FBOVESPA.
The following scenarios were built based on the rates practiced
as of December 31, 2009:
(a) The sensitivity analysis of total fair value of adjustments in
relation to the probable scenario is not applicable because the
probable scenario is compared to itself.
These sensitivity analyses aim at showing the changes in market
variables in the financial instruments of the parent company
and its indirect subsidiaries. The sensitivity analyses above were
made by using assumptions and presuppositions in relation to
future events. Despite of the periodical review of estimates and
presuppositions, the settlement of transactions involving these
estimates can result in different values from those estimated
because of the subjectivity inherent to the process adopted in
the preparation of these analyses. As of December 31, 2009, the
differences between the amortized costs and fair values resulted
in a gain of R$20,799 (R$13,727 net of taxes), recognized under
Valuation Adjustments to Shareholder’s Equity in Shareholders’
Equity, as shown below:
Amortized
Fair Value
Cost
(A) Senior
Notes Principal
(US$130,000,000)
Probable
Scenario
Possible
Scenario
Remote
Scenario
Fixed-income Rate
(DI)
12.0%
15.0%
18.0%
Foreign exchange
coupon (coupon
adjustment)
(B) Swap asset
portion (USD)
2.95%
3.68%
4.42%
2.08
2.17
2.26
R$/USD at the swap
maturity
Adjustment
(226,356)
(212,858)
13,498
226,356
212,858
(13,498)
(C) Swap liability
portion (CDI-3.97%
p.a.)
(253,031)
(232,232)
20,799
Total (A)+(B) +(C)
(253,031)
(232,232)
20,799
Taking into consideration that the credit risk is equivalent for
swap positions and principal of Senior Notes, we obtained for
the above scenarios the following fair values:
Probable
Scenario
Possible
Scenario
Remote
Scenario
(212,858)
(209,731)
(206,695)
212,858
209,731
206,695
(C) Swap liability
portion (CDI-3.97%
p.a.)
(232,232)
(232,232)
(232,232)
Net Effect
(A)+(B)+(C)
(232,232)
(232,232)
(232,232)
(A) Senior
Notes Principal
(US$130,000,000)
(B) Swap asset
portion (USD)
The table above confirms the effectiveness of hedge for different
scenarios. Accordingly, the sensitivity analysis of fair value
variation when compared to the probable scenario is shown
below:
Variation in
relation to
Probable Scenario
Probable
Scenario (a)
Possible
Scenario
Remote
Scenario
Not
applicable
–
–
110
2009 ANnual REPORT
2009 RESULTS
(4.1.3) SUMMARY CHART OF DERIVATIVES RELATED TO PGBL
AND VGBL INVESTMENT FUNDS
The futures contracts related to PGBL and VGBL investment
funds, as mentioned in Note (4.1.1), are shown as follows and
the counterparty and place of registry of all future contracts is
BM&FBOVESPA:
Purchase commitment:
Reference
index
Maturity
Quantity
Notional amount
Fair value
Value in 2009
Value
Value
receivable payable /
/ received
paid
2009
2008
2009
2008
2009
2008
2009
2008
DI
–
January/2009
–
2
–
200
–
200
–
–
DI
–
July/2009
–
30
–
3,000
–
2,830
–
–
DI
–
January/2010
–
460
–
46,000
–
41,034
–
–
DI
July/2010
July/2010
250
88
25,000
8,800
23,938
7,426
111
125
DI
January/2011
January/2011
252
10
25,200
1,000
22,804
796
499
472
DI
January/2012
January/2012
492
491
49,200
49,100
39,333
34,729
1,354
1,292
994
1,081
99,400
108,100
86,075
87,015
1,964
1,889
Sale commitment:
Reference
index
Maturity
2009
IND
Quantity
Notional amount
Fair value
Value in 2009
Value
2008 receivable
/ received
Value
payable /
paid
2008
2009
2008
2009
2008
2009
February/ February/
2010
2009
51
4
3,528
153
3,528
153
77
94
51
4
3,528
153
3,528
153
77
94
Amounts receivable and payable of futures contracts are accounted
for under the heading Accounts Payable in current liabilities.
MARGINS PLEDGED IN GUARANTEE
As of December 31, 2009, total margins used to guarantee
Asset pledged as collateral
purchase transactions of DI futures contracts and index
futures contracts, recorded in investment funds classified into
Securities at Fair Value through Profit or Loss, are composed
as follows:
Maturity
Quantity
Value
LFT
03/17/2010
472
1,933
LFT
06/07/2010
58
235
LFT
12/07/2010
70
287
LFT
01/01/2011
20
18
LFT
03/07/2013
145
592
LFT
06/07/2013
216
882
981
3,947
Total
111
2009 ANnual REPORT
2009 RESULTS
SENSITIVITY ANALYSIS OF EXPOSURE IN DERIVATIVES
The PGBL and VGBL funds have the following derivative
transactions with derivatives: (i) one-day interest rate futures
contracts (CDI), and (ii) index futures contracts.
In addition, the criteria adopted to estimate probable, possible
and remote scenarios are based on rates/prices released on the
closing date of these financial statements by BM&FBOVESPA
for the respective maturities. The possible and remote
scenarios are constructed by applying 25% and 50% of the
variation in these rates/prices on a variable that represents
the greatest influence over an adverse scenario for the indirect
subsidiary Sul América Seguros de Pessoas e Previdência
S.A. Variations at 25% and 50% correspond to the minimum
variations established in CVM rules.
Maturity
Position
Future Contract /
Object
July/2010
January/2011
January/2012
Futures Contracts
Sul América Seguros de Pessoas e Previdência S.A. considered
that the risk of purchasing at rate in future contracts is the drop
in interest rate.
The possible and remote scenarios are derived from the probable
scenario that uses the rates practiced on December 31, 2009 by
BM&FBOVESPA for the respective maturities.
As of December 31, 2009, the positions held in PGBL and VGBL funds
in interest rate futures contracts were used with the intent to
transform the fixed income of marketable securities of a portion of
its investment portfolio into variable income. As of this date, these
PGBL and VGBL funds held the following position and net values
of adjustments in the respective scenarios (in future contracts and
variation in market price in case of marketable securities):
Quantity
Rates
Scenario
Probable Scenario
(a)
Possible Scenario
Remote Scenario
9.22%
6.92%
4.61%
Purchased at Rate
250
–
(249)
(511)
LTN
4,000
–
40
82
NTN-F
20,000
–
212
430
Net Value of
Adjustments
–
3
1
Rates
10.50%
7.88%
5.25%
Purchased at Rate
252
–
(564)
(1,144)
LTN
23,500
–
524
1,066
NTN-F
1,582
–
37
77
Net Value of
Adjustments
–
(3)
(1)
Rates
11.86%
8.90%
5.93%
Purchased at Rate
492
–
(2,173)
(4,523)
LTN
43,590
–
2,178
4,538
–
5
15
Net Value of
Adjustments
(a) The sensitivity analysis of total fair value of adjustments in relation to the probable scenario is not applicable because the probable scenario is
compared to itself.
112
2009 ANnual REPORT
2009 RESULTS
In addition to interest rate futures contracts (CDI), the PGBL and
VGBL funds also hold Bovespa Index futures contracts. As shown
in the chart below, such indirect subsidiary considered that
the risk of selling at rate in a futures contract is the rise of the
Bovespa Index to the respective maturities. The Bovespa Index
value in points for Probable, Possible and Remote scenarios is
shown below.
Maturity
February/
2010
Position
Probable
Scenario
Possible
Scenario
Remote
Scenario
Sold at
Rate
BOVESPA
69
86
103
• Bank certificates of deposit (CDB): calculated according to
redemption characteristics: (i) CDBs with early redemption
clause at a fixed rate: calculated based on the agreed rate of the
operation; (ii) CDBs without early redemption clause and with
early redemption clause at market rate: calculated based on the
curve from Interbank Deposit (DI) futures contracts released by
BMF&FBOVESPA, and, for credit spread, the set formed by CDB
operations of managed portfolios/funds in which the Custodian
Bank provides asset pricing service;
• Time deposit with special guarantee (DPGE): these are variablereturn securities linked to CDI, Selic or inflation indexes, calculated
taking into consideration the market rate of the index and credit
spread, formed by the set of DPGE operations of managed portfolios/
funds in which the custodian bank provides asset pricing service;
As shown below, as of December 31, 2009, the PGBL and
VGBL funds do not hold exposure in index, in view that the
purchased position in shares held in these funds is higher
than the contracts.
Maturity
Position
Probable
Scenario
(a)
February/
2010
Sold at
Rate
BOVESPA
–
(874)
(1,749)
Stocks
–
874
1,749
–
–
–
Net Value of
Adjustments
the IBNR reserve for DPVAT (mandatory third-party liability for
vehicle owners): calculated based on the average market value of
securities, as set forth in BACEN Resolution No. 550;
Possible
Scenario
Remote
Scenario
(a) The value of adjustments in the probable scenario as of December 31, 2009 is
zero, because it reflects the market value. The analysis of sensitivity of total fair
value of adjustments in relation to the probable scenario is not applicable because
the probable scenario is compared to itself.
These sensitivity analyses have the purpose of showing the sensitivity to changes
in market variables in the financial instruments of Sul América Seguros de Pessoas
e Previdência S.A., and were made using assumptions and presuppositions
in relation to future events. Despite of the periodical review of estimates and
assumptions, the settlement of transactions involving these estimates can result
in different values from those estimated because of the subjectivity inherent in the
process adopted in the preparation of these analyses.
(4.2) CRITERIA ADOPTED TO ESTIMATE MARKET VALUES
The assets held in the portfolio or exclusive investment funds
are valued at market value, using the prices and indexes
disclosed by the National Association of Financial Market
Institutions (ANDIMA) and BM&FBOVESPA, except for held-tomaturity securities, which are adjusted based on indexes and
rates agreed upon purchase. The criteria adopted to estimate the
market value of marketable securities are as follows:
• Fixed income securities – government: calculated based on the
unit price lists for the secondary market disclosed by ANDIMA;
• Fixed income securities - government - held in guarantee of
• Debentures: calculated based on the unit price lists (for
government securities) for the secondary market disclosed by
ANDIMA, or, in case it does not exist, by the criteria established
by the Custodian Bank, according to the pricing criteria set forth
in its mark to market guidelines;
• Promissory notes: these are variable-return securities linked to
CDI, calculated taking into consideration the market rate of the
index and credit spread, formed by the set of promissory notes of
managed portfolios/funds in which the custodian bank provides
asset pricing service;
• Exclusive and Non-exclusive investment funds: calculated in
accordance with the mark to market criteria established by the
Manager of each Fund, expressed in the disclosed value of the
quota, except for held-to-maturity securities, which are calculated
based on the agreed-upon indexes, plus interest incurred;
• Equity securities and shares of publicly-held companies traded
on stock exchanges or the over-the-counter market: calculated
based on the closing price on the last day on which they were
traded in the month;
• Loans in foreign currency: represented by Senior Notes, which
principal, equivalent to US$130,000,000, is hedged and, according to
the method for accounting cash flow hedge transactions, is stated
at fair value. Its fair value is calculated according to the discounted
cash flow method using the rates disclosed by BM&FBOVESPA;
• Derivative financial instruments: calculated at fair value
according to the discounted cash flow method using the rates
disclosed by BM&FBOVESPA.
The criteria adopted by the parent company and its direct and
indirect subsidiaries to estimate the market value of other current
receivables and payables approximate their realizable and payable
values, respectively, due to their short-term maturities.
113
2009 ANnual REPORT
2009 RESULTS
(5) MARKETABLE SECURITIES
Parent Company
Parent Company
2009
2008
306,012
127,704
Exclusive investment funds
283,713
127,704
Bank certificates of deposit
21,703
–
596
–
Fixed income securities - government
–
86,832
National treasury notes
–
86,832
Total
306,012
214,536
Current
306,012
214,536
Consolidated
Consolidated
2009
2008
1,534,948
1,094,207
Bank certificates of deposit
939,149
880,523
Debentures
190,849
150,356
Time deposit with special guarantee of FGC (deposit guarantee fund)
272,316
–
Non-exclusive investment fund quotas
74,003
36,860
Senior Notes
19,584
24,372
Promissory Notes
39,039
2,126
8
(30)
4,555,363
4,190,160
National treasury notes
2,112,146
2,466,408
Financial treasury bills
2,334,309
1,567,836
National treasury bills
92,079
134,477
Agricultural debt securities
8,722
11,704
Federal treasury bonds
7,340
9,001
767
734
205,408
109,158
172,074
89,504
32,212
18,327
Other
1,122
1,327
Other
1,554
2,356
6,297,273
5,395,881
(3,508)
(10,374)
Total
6,293,765
5,385,507
Current
4,411,877
3,507,331
Non-current
1,881,888
1,878,176
Fixed income securities - private
Non-exclusive investment fund quotas
Fixed income securities - private
Other
Fixed income securities - government
Other
Equity securities
Shares
Equity investment fund quotas
Subtotal
Provision for losses
114
2009 ANnual REPORT
2009 RESULTS
The portion of marketable securities in non-current assets is
recorded under Marketable Securities, which also includes Tax
Incentives and its related provision for losses in the parent
company and consolidated balance, and Deposits and sundry
Funds linked to IRB-Brasil Resseguros S.A and related provision
for losses in the consolidated balance. As of December 31, 2009
the parent company balance amounts to R$11 (R$9 in 2008),
whereas the consolidated balance amounts to R$1,887,634
(R$1,883,765 in 2008).
The classification and maturities of marketable securities as of
December 31, 2009 and 2008, in accordance with the recognition
and valuation criteria described in Note (3.1), are as follows:
Parent Company
2009
Due in 2 years
or without
maturity
Due from 2 to 5
Cost plus income
years
Market value
Unrealized gains
(losses)
SECURITIES AT FAIR VALUE
THROUGH PROFIT OR LOSS
Fixed income - private
110,482
26,163
136,645
135,973
(672)
Bank certificates of deposit
109,923
–
109,923
109,926
3
596
–
596
596
–
Debentures
–
5,874
5,874
5,904
30
Senior Notes
–
20,289
20,289
19,584
(705)
(37)
–
(37)
(37)
–
Fixed income - government
3,926
112,207
116,133
116,124
(9)
Financial treasury bills
3,926
111,962
115,888
115,883
(5)
245
245
241
(4)
Non-exclusive investment fund
quotas
Other
National treasury notes
Equity securities
32,212
–
32,212
32,212
–
Equity investment fund quotas
32,212
–
32,212
32,212
–
Total as of December 31, 2009
146,620
138,370
284,990
284,309
(681)
Total as of December 31, 2008
19,327
108,422
127,749
127,704
(45)
Fixed income - private
21,688
–
21,688
21,703
15
Bank certificates of deposit
21,688
–
21,688
21,703
15
Total as of December 31, 2009
21,688
–
21,688
21,703
15
Total as of December 31, 2008
–
83,615
83,615
86,832
3,217
AVAILABLE-FOR-SALE SECURITIES
115
2009 ANnual REPORT
2009 RESULTS
Consolidated
2009
Due in 2 years
or without
maturity
Due from 2 to
5 years
Due from 5 to
10 years
Due up to 10
years
Cost plus
income
Market value
Unrealized
gains (losses)
Fixed income
- private
385,864
162,260
1,803
–
549,927
549,321
(606)
Non-exclusive
investment
fund quotas
63,271
10,732
–
–
74,003
74,003
–
Bank
certificates of
deposit
178,975
78,875
– – 257,850
257,185
(665)
Time deposit
with special
guarantee of
FGC (deposit
guarantee
fund)
76,222
–
–
–
76,222
76,676
454
Debentures
38,506
52,364
1,803
– 92,673
92,983
310
Promissory
notes
28,882
– – – 28,882
28,882
– Senior Notes
–
20,289
–
–
20,289
19,584
(705)
Others
8
–
–
–
8
8
–
Fixed income
- government
474,873
1,207,313
33,729
96,663
1,812,578
1,819,722
7,144
Financial
treasury bills
358,320
1,071,105
21,202
–
1,450,627
1,451,529
902
National
treasury bills
54,457
– – – 54,457
55,821
1,364
Federal
treasury
bonds
1,448
4,486
– – 5,934
7,340
1,406
Agricultural
debt
securities
3,898
2,954
1,016
46
7,914
8,712
798
56,750
128,768
11,511
96,617
293,646
296,320
2,674
163,409
–
–
–
163,409
204,327
40,918
130,195
–
–
–
130,195
171,113
40,918
32,212
– – – 32,212
32,212
– SECURITIES AT
FAIR VALUE
THROUGH
PROFIT OR
LOSS
National
treasury notes
Equity
securities
Shares
Equity
investment
fund quotas
116
2009 ANnual REPORT
2009 RESULTS
Consolidated
2009
Due in 2 years
or without
maturity
Due from 2 to
5 years
Due from 5 to
10 years
Due up to 10
years
Cost plus
income
Market value
Unrealized
gains (losses)
1,002
–
–
–
1,002
1,002
–
1,024,146
1,369,573
35,532
96,663
2,525,914
2,573,370
47,456
Total as of
December 31,
2008
1,134,524
890,769
26,822
88,587
2,140,702
2,127,946
(12,756)
Fixed income
- private
602,368
296,765
84,435
–
983,568
983,349
(219)
Bank
certificates of
deposit
467,525
129,813
84,435
–
681,773
680,320
(1,453)
Time deposit
with special
guarantee of
FGC (deposit
guarantee
fund)
118,740
76,485
–
–
195,225
195,234
9
Promissory
notes
10,157
–
–
–
10,157
10,157
–
Debentures
5,946
90,467
–
–
96,413
97,638
1,225
Fixed income
- government
405,762
823,221
54,327
–
1,283,310
1,284,450
1,140
Financial
treasury bills
141,963
686,078
51,970
– 880,011
879,900
(111)
1
– 9
– 10
10
– National
treasury notes
226,773
137,143
2,348
–
366,264
367,576
1,312
National
treasury bills
36,258
– – – 36,258
36,197
(61)
Other
767
–
–
–
767
767
–
Equity
securities
473
–
–
–
473
694
221
Shares
353
– – – 353
694
341
Other
120
– – – 120
– (120)
1,008,603
1,119,986
138,762
–
2,267,351
2,268,493
1,142
697,289
804,559
256,239
734
1,758,821
1,762,818
3,997
Other
Total as of
December 31,
2009
AVAILABLEFOR-SALE
SECURITIES
Agricultural
debt
securities
Total as of
December 31,
2009
Total as of
December 31,
2008
117
2009 ANnual REPORT
2009 RESULTS
Consolidated
2009
HELD-TOMATURITY
SECURITIES
Market value
Cost plus
income
Unrealized
gains/
(losses)
Fixed income
- government
336,601
211,487
291,636
610,624
1,565,263
1,450,348
114,915
Financial
treasury bills
2,377
357
– – 2,733
2,734
(1)
National
treasury notes
334,224
211,130
291,636
610,624
1,562,530
1,447,614
114,916
Total as of
December 31,
2009
336,601
211,487
291,636
610,624
1,565,263
1,450,348
114,915
115,386
473,991
281,281
621,729
1,534,726
1,492,387
42,339
Total as of
December 31,
2009
1,554
–
–
–
1,554
1,554
–
Total as of
December 31,
2008
2,356
–
–
–
2,356
2,356
–
Total as of
December 31,
2008
Other
(6) PREMIUMS RECEIVABLE
2009
Automobile
Consolidated
2008
964,281
692,501
Group health
89,344
112,487
Engineering risks
59,901
11,347
Individual health
38,131
56,769
Group life
35,723
34,653
Cargo liability
20,233
17,873
Cargo
14,539
18,605
Named perils and operating risks
13,246
17,626
Personal accidents
10,965
6,936
Business comprehensive
10,790
12,615
Hull
8,573
15,146
Third-party liability
7,206
7,906
Miscellaneous P&C
7,194
11,051
Aeronautic
3,236
57,456
Other
Total
Current
Non-current (a)
Premiums receivable consist of direct premiums issued,
accepted coinsurance, and retrocession operations. As of
16,967
18,601
1,300,329
1,091,572
1,263,023
37,306
1,091,441
131
December 31, 2009 and 2008 the premiums receivable, by
maturity, are as follows:
(a) As of December 31, 2009, premiums receivable classified into non-current assets are mainly composed of engineering risks.
118
2009 ANnual REPORT
2009 RESULTS
2009
2008
Overdue
240,573
254,586
Due from 1 to 30 days
391,244
341,505
Due from 31 to 60 days
209,911
162,584
Due from 61 to 180 days
365,292
281,608
Due from 181 to 365 days
56,003
51,158
Due up to 365 days
Total
(6.1) ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Allowance for doubtful accounts is estimated based
on premiums, due and falling due of expired risk, net of
commissions, Tax on Financial Operations (IOF), reinsurance,
judicial deposits and collection agreements.
The analysis of doubtful accounts of companies is made based on
a chart that shows the score (rating) for likelihood of loss, whereas
that of individuals is made based on the history of recovery
percentage of premiums due. Premiums due over 366 days,
whether they refer to companies or individuals, are fully accrued.
37,306
131
1,300,329
1,091,572
Premiums receivable of unexpired risk are usually cancelled
after 32, 60 and 90 days of default, depending on the
insurance line.
As of December 31, 2009, the Allowance of Doubtful Accounts totals
R$44,136 (R$66,386 as of December 31, 2008) in current assets.
(7) RECOVERABLE AND DEFERRED TAXES AND CONTRIBUTIONS
(7.1) RECOVERABLE TAXES AND CONTRIBUTIONS
2009
2008
Parent Company
Consolidated
Deferred taxes and
contributions - tax loss
carryforwards (7.1.2)
–
1,992
32,098
56,551
Deferred - temporary
differences (7.1.2)
–
–
4,521
4,478
Deferred - PIS / COFINS
(7.1.2)
–
–
53,448
44,050
Recoverable taxes and
contributions (7.1.1)
18,516
14,994
65,093
78,249
Tax loss carryforwards/
recoverable taxes
18,516
14,994
123,062
126,777
Deferred taxes and
contributions - tax loss
carryforwards (7.1.2)
11,278
10,636
150,322
172,230
Deferred - temporary
differences (7.1.2)
8,779
7,672
543,225
525,451
Deferred - PIS / COFINS
(7.1.2)
–
–
12,191
15,161
Tax loss carryforwards/
recoverable taxes (7.1.1)
–
–
19,874
38,541
8,779
7,672
575,290
579,153
2009
2008
2009
2008
Current
Non-current
Deferred taxes and
contributions
119
2009 ANnual REPORT
2009 RESULTS
(7.1.1) TAX LOSS CARRYFORWARDS /RECOVERABLE TAXES
The parent company balance is basically composed of Corporate
Income Tax (IRPJ) amounting to R$17,505 (R$14,713 in 2008) and
the IRPJ consolidated balance amounting to R$43,229 (R$48,151
in 2008), INSS amounting to R$13,482 (R$35,760 in 2008), social
contribution on net income (CSLL) amounting to R$6,451
(R$10,354 in 2008) and tax on revenue (COFINS) amounting to
R$16,922 (R$12,809 in 2008).
(7.1.2) OTHER RECOVERABLE TAXES AND CONTRIBUTIONS
Deferred tax bases are composed of the following:
Parent Company
Tax loss carryforwards
Rate
(1) Deferred - income
tax - tax loss
carryforwards
Accrued liabilities for
contingencies, taxes and
contribution liabilities
and provision for losses
Goodwill on
investments
Other
Consolidated
2009
2008
2009
2008
26,139
30,083
400,431
526,554
25%
25%
25%
25%
6,535
7,521
100,108
131,639
23,487
11,685
1,215,241
1,204,794
3,169
3,169
375,567
375,590
–
8,546
105,843
58,212
26,656
23,400
1,696,651
1,638,596
25%
25%
25%
25%
6,664
5,850
424,163
409,649
(3) = (1) + (2) Total
deferred - income tax
13,199
13,371
524,271
541,288
Social contribution tax
loss carryforwards
52,706
56,745
637,277
752,879
9%
9%
9% and 15%
9% and 15%
(4) Deferred - social
contribution - tax loss
carryforwards
4,744
5,107
82,312
97,143
Accrued liabilities for
contingencies, taxes
and contribution
liabilities and provision
for losses
23,499
16,249
739,393
734,534
Goodwill on
investments
–
–
20,811
19,219
Other
–
4,000
89,300
64,124
23,499
20,249
849,504
817,877
9%
9%
9% and 15%
9% and 15%
2,115
1,822
122,522
118,060
6,859
6,929
204,834
215,203
20,058
20,300
729,105
756,491
Tax basis
Rate
(2) Deferred - income
tax - temporary
differences
Rate
Tax basis
Rate
(5) Deferred - social
contribution temporary differences
(6) = (4) +(5) Total
deferred - social
contribution
(7) = (3) +(6) Total
deferred income tax
and social contribution
120
2009 ANnual REPORT
2009 RESULTS
Parent Company
Consolidated
2009
2008
2009
2008
(20,058)
(16,445)
(168,095)
(274,963)
(8) Subtotal (b)
–
3,855
561,010
481,528
(9) PIS/ COFINS (taxes
on revenue) Credits (c)
–
–
65,639
59,211
(10) Goodwill - Merger
(d)
–
–
1,061
2,219
(8) + (9) +(10) Total
deferred tax and
contributions - net
–
3,855
627,710
542,958
Current
–
1,992
90,067
105,079
Non-current
–
1,863
537,643
437,879
Allowance for doubtful
accounts (a)
As of December 31, 2009, the realizable amount of tax credits, taking
into consideration the face value of future results determined
in budgets prepared for the next 3 to 10 years, is R$651,380 in
consolidated. According to the CVM rules, the realizable amount
of tax credits was estimated based on future results discounted to
present value at the estimated future SELIC rate.
(a) The allowance for doubtful accounts related to deferred income
tax and social contribution was recorded based on Management’s
estimates as to the realization of future taxable income and on
certain temporary differences. In the line of Allowance for Doubtful
Accounts, in addition to the previously mentioned allowance, other
provisions for accounts receivable are recorded. The variation in
allowance for doubtful accounts basically occurred because of
the better projection of future taxable income in view of the new
economic scenario and the reduction in the estimated projected
interest rate used for calculating the adjustment to present
value, thus generating an addition to the valuation allowance
for doubtful accounts of R$3,613 in the parent company and a
reduction of R$106,868 in consolidated;
(b) The amounts represent deferred tax credits arising from tax
losses, social contribution tax loss carryforwards and temporary
differences, net of allowance for doubtful accounts. The estimates of
the Management of the parent company and its direct and indirect
subsidiaries as to the realization of tax credits are based on budgets
prepared and approved for the next 3 and 10 years.
As of December 31, 2009, the estimated realization of tax credits by
year is as follows:
Consolidated
Year
Income tax
Social contribution
2010
12%
6%
2011
17%
16%
2012
24%
30%
2013
5%
6%
2014
7%
6%
2015 to 2016
14%
9%
2017 to 2019
21%
27%
The realization of tax credits related to accrued liabilities for
contingencies, taxes and contribution payable and provision for
losses were allocated in our projections to the years subsequent
to the offset of tax loss carryforwards, due to the difficulty in
presently estimating the outcome and date of conclusion of
these litigations.
(c) Refers to the Contribution to the Social Integration Program
(PIS) and the Social Contribution on Revenues (COFINS) tax
credits calculated on the balance of reserves for claims and claim
adjustment expenses and IBNR reserve.
(d) Refers to the goodwill recorded by the indirect subsidiary
Sul América Investimentos Distribuidora de Títulos e Valores
Mobiliários S.A. in the merger of Sul América Investimentos
S.A. relating to balances of the investment, based on future
expected earnings. On November 30, 2000, the indirect
subsidiary Sul América Investimentos Distribuidora de Títulos
e Valores Mobiliários S.A. merged the above-mentioned
investor and recorded this goodwill in its accounting records.
As provided for CVM Instructions Nos. 319/99 and 349/2001,
the mentioned indirect subsidiary set up a reserve on the
difference between the merged goodwill and the expected
121
2009 ANnual REPORT
2009 RESULTS
future tax benefit arising from its amortization, which is
presented for purposes of disclosure under Recoverable Taxes
and Contributions in non-current asset. The amortization
of this goodwill, after being set up, at 10% per year, is being
included in the budgets prepared by Sul América Investimentos
Distribuidora de Títulos e Valores Mobiliários S.A.’s
Management;
As of December 31, 2009, the accumulated balances of tax loss
carryfowards are as follows:
Parent Company
Consolidated
Year
Income tax
Social contribution
Income tax
Social contribution
1994
–
7,482
4,006
10,787
1995
–
–
–
–
1996
–
–
–
–
1997
–
–
–
71,745
1998
–
–
–
13,973
1999
–
852
–
8,498
2000
–
1,599
–
1,599
2001
–
11,305
9,607
20,276
2002
–
–
50,380
102,281
2003
–
2,617
15,884
3,976
2004
–
–
91,629
106,203
2005
–
–
105,500
192,877
2006
–
–
60,279
60,953
2007
25,020
26,767
54,721
34,120
2008
–
965
525
1,492
2009
1,119
1,119
7,900
8,497
26,139
52,706
400,431
637,277
Tax loss carryforwards
balances as of
December 31, 2009
(7.2) DEFERRED TAXES
Parent Company
Consolidated
2009
2008
2009
2008
Interest and monetary
variation on judicial
deposits (a)
–
–
247,822
218,163
Adjustments of
marketable securities
28,360
28,360
38,903
43,128
–
–
5,403
4,624
28,360
28,360
292,128
265,915
25%
25%
25%
25%
7,090
7,090
73,032
66,479
– – 247,822
218,163
28,360
28,360
38,903
43,128
– – 779
– 28,360
28,360
287,504
261,291
9%
9%
15% and 9%
15% and 9%
Other
Tax basis
Rate
(1) Deferred taxes income tax
Interest and monetary
variation on judicial
deposits (a)
Adjustments of
marketable securities
Other
Tax basis
Rate
122
2009 ANnual REPORT
2009 RESULTS
Parent Company
(2) Deferred taxes social contribution
(3) = (1) + (2) Total
Deferred taxes
Current
Non-current
Consolidated
2009
2008
2009
2008
2,552
2,552
41,424
37,416
9,642
9,642
114,456
103,895
–
–
255
–
9,642
9,642
114,201
103,895
(a) The payment of IRPJ and CSLL on monetary variation of judicial deposits may only be made in case the direct and indirect subsidiaries obtain
favorable decisions in the respective lawsuits.
(8) PERMANENT ASSETS
(8.1) EQUITY IN SUBSIDIARIES AND ASSOCIATED
COMPANIES
Parent Company
Sul América
Companhia Nacional
de Seguros
Saepar Serviços e
Participações S.A.
Sul América
Companhia de Seguro
Saúde
24.45%
100.00%
33.95%
Number of common
shares held
100
3,540
20,417,758
Number of preferred
shares held
–
–
5,090,210
Description
Ownership interest
Capital
Total
878,134
857,772
825,934
1,762,306
1,544,815
1,673,161
241,904
249,183
332,707
Base date of equity in
subsidiaries
12/31/2009
12/31/2009
12/31/2009
Equity in subsidiaries
60,272
249,186
114,600
424,058
Book value of
investment
431,509
1,544,815
569,710
2,546,034
Investment balance as
of December 31, 2009
431,509
1,544,815
569,710
2,546,034
382,799
1,349,906
484,550
2,217,255
Shareholders’ equity
Net income for the year
Investment balance as
of December 31, 2008
123
2009 AnNual REPORT
2009 RESULTS
(8.2) PROPERTY AND EQUIPMENT
Consolidated
Land
Property and
equipment cost
Balance as of December
31, 2008
(+) Additions
Buildings
IT equipment
Telecom equipment
Furniture, machinery
and other equipment
Vehicles
Leasehold improvements
Others
Total
103,666
36,859
3,941
31,437
5,770
24,742
575
219,591
–
12,601
–
–
2,163
3,165
4,828
10,507
18,864
–
39,527
(11,304)
(100,847)
–
37
(37)
–
–
–
(112,151)
(76)
(80)
(2,624)
(1,120)
(7,813)
(1,980)
(45)
–
(13,738)
(+/-) Capital loss
–
–
2
(3)
(43)
–
–
–
(44)
(+/-) Exchange variation
–
–
(2)
–
–
–
–
–
(2)
Balance as of December
31, 2009
1,221
2,739
36,398
6,020
28,372
14,297
43,561
575
133,183
–
4%
20%
10%
10%
20%
10%
–
Balance as of December
31, 2008
–
(45,566)
(20,403)
(2,047)
(11,533)
(2,258)
(5,600)
(393)
(87,800)
(+) Depreciation
–
(2,892)
(6,401)
(696)
(6,100)
(2,293)
(4,131)
(27)
(22,540)
(-) Transfers (a)
–
46,510
5
(5)
–
–
–
–
46,510
(-) Write-offs
–
74
1,817
694
2,312
1,108
3
–
6,008
(+/-) Capital loss
–
–
–
3
41
–
–
–
44
Balance as of December
31, 2009
–
(1,874)
(24,982)
(2,051)
(15,280)
(3,443)
(9,728)
(420)
(57,778)
–
(96)
(8)
–
(490)
–
–
–
(594)
(+/-) Impairment
(14)
(79)
8
–
490
–
–
–
405
Balance as of December
31, 2009
(14)
(175)
–
–
–
–
–
–
(189)
1,207
690
11,416
3,969
13,092
10,854
33,833
155
75,216
12,601
58,004
16,448
1,894
19,414
3,512
19,142
182
131,197
(-) Transfers (a)
(-) Write-offs
Depreciation rate
Accumulated
depreciation
Provision for losses
Balance as of December
31, 2008
Net value of property
and equipment assets
Balance as of December
31, 2009
Balance as of December
31, 2008
(a) The management of certain subsidiaries transferred some of their property and equipment items to asset held for sale.
The total book value of R$65,641, net of depreciation was transferred to the heading Other Assets in current assets.
124
2009 ANnual REPORT
2009 RESULTS
(8.3) INTANGIBLE ASSETS
Parent Company
Goodwill
Software
Total
5,138
317
5,455
–
2,925
2,925
5,138
3,242
8,380
10%
10 and 20%
(3,168)
–
(3,168)
–
(17)
(17)
Balance as of December 31,
2009
(3,168)
(17)
(3,185)
Balance as of December 31,
2009
1,970
3,225
5,195
1,970
317
2,287
Intangible assets cost
Balance as of December 31,
2008
(+) Additions
Balance as of December 31,
2009
Amortization rate
Accumulated amortization
Balance as of December 31,
2008
(+) Amortization charges
Net value of intangible assets
Balance as of December 31,
2008
Consolidated
Goodwill (a)
Software
Total
20,573
102,326
122,899
(+) Additions
–
48,201
48,201
(-) Write-offs
–
(455)
(455)
(+/-) Exchange variation
–
(2,002)
(2,002)
20,573
148,070
168,643
10%
10 and 20%
(4,095)
(46,362)
(50,457)
(+) Amortization charges
–
(14,053)
(14,053)
(-) Write-offs
–
453
453
(4,095)
(59,962)
(64,057)
16,478
88,108
104,586
Intangible assets cost
Balance as of December 31,
2008
Balance as of December 31,
2009
Amortization rate
Accumulated amortization
Balance as of December 31,
2008
Balance as of December 31,
2009
Net value of intangible assets
Balance as of December 31,
2009
125
2009 ANnual REPORT
2009 RESULTS
Consolidated
Balance as of December 31,
2008
Goodwill
Software
Total
16,478
55,964
72,442
(9) OPERATING CHARGES OF INSURANCE AND REINSURANCE
(9.1) REINSURANCE COMPANIES
Consolidated
2009
2008
Engineering risks
48,750
6,952
Named perils and operating risks
33,787
25,866
Business comprehensive
19,511
16,337
Condominium comprehensive
7,355
3,601
Aeronautic
5,414
43,092
Miscellaneous P&C
4,265
5,350
Cargo
4,718
6,965
Hull
3,148
7,331
Third-party liability
1,692
625
D&O
1,347
1,327
Payment bond
1,087
1,497
14,656
20,424
Total
145,730
139,367
Current
145,730
139,367
Others
(10) THIRD-PARTY DEPOSITS
Consolidated
Description
2009
2008
Advanced collection of premiums - insurance
26,030
31,371
Premiums and fees received - insurance
and coinsurance
33,225
10,580
Total
59,255
41,951
Current
59,255
41,951
126
2009 ANnual REPORT
2009 RESULTS
(11) TECHNICAL RESERVES AND DEFERRED ACQUISITION
COSTS – INSURANCE AND REINSURANCE
Consolidated
2009
Unearned
premium reserve,
premium
deficiency reserve
and other reserves
Reserve for
benefits granted
and to be granted,
financial surplus
reserve and
reserve for future
policy benefits and
unexpired risk
reserve
Reserve for
claims and claim
adjustment
expenses
IBNR reserve
Deferred
acquisition costs
1,567,523
–
498,157
67,224
280,060
Engineering risks
64,176
–
21,509
360
1,859
Individual life
14,759
28,209
–
6,986
–
Named perils and
operating risks
62,031
–
251,373
6,184
–
Group life
34,811
–
123,452
68,285
15,504
Credit life
34,750
–
136
743
18,176
Business comprehensive
29,592
–
32,325
2,501
4,466
Group health
20,685
11,756
151,474
328,146
85,148
Third-party liability
17,638
–
59,641
7,858
2,811
Hull
15,163
–
24,926
12,461
2,464
Individual health
63,781
1,994
87,163
158,995
76,048
Condominium
comprehensive
13,206
–
4,717
138
3,012
Cargo
9,673
–
14,082
5,407
978
Homeowners comprehensive
8,461
–
2,652
452
3,232
Personal accidents
4,708
–
25,935
18,035
3,477
Cargo liability
4,473
–
13,105
4,739
392
Aeronautic
4,231
–
77,264
208
187
VGBL - Life that
Generates Free
Benefits
1,441
385,380
–
–
5,460
DPVAT (mandatory
third-party liability
for vehicle owners)
993
–
40,449
2,348
–
Traditional fire
insurance
977
–
29,348
1,022
1,181
63,396
10
34,523
3,674
2,051
2,036,468
427,349
1,492,231
695,766
506,506
1,913,980
111,423
1,176,844
695,766
367,874
122,488
315,926
315,387
–
138,632
Automobile
Other
Total
Current
Non-current
127
2009 ANnual REPORT
2009 RESULTS
2008
Automobile
Unearned
premium reserve,
premium
deficiency reserve
and other reserves
Reserve for
benefits granted
and to be granted,
financial surplus
reserve and
reserve for future
policy benefits and
unexpired risk
reserve
Reserve for
claims and claim
adjustment
expenses
IBNR reserve
Deferred
acquisition costs
1,215,651
–
439,748
49,585
217,621
Engineering risks
33,954
–
18,460
106
3,497
Individual life
15,801
25,075
13
5,432
–
Named perils and
operating risks
61,656
–
88,354
2,153
–
Group life
48,224
–
154,417
56,867
19,403
Credit life
11,378
–
68
360
3,400
Business comprehensive
32,011
–
45,119
4,377
4,918
Group health
13,822
10,313
122,248
271,468
76,016
Third-party liability
19,699
–
55,326
1,705
2,922
Hull
20,084
–
21,434
8,895
1,977
Individual health
62,913
2,289
88,416
147,552
86,708
Condominium
comprehensive
4,938
–
3,024
180
1,416
Cargo
5,026
–
23,539
4,613
63
Homeowners comprehensive
6,375
–
2,628
157
2,453
Personal accidents
5,120
–
29,202
10,884
3,570
Cargo liability
2,230
–
16,419
3,696
6
42,259
–
153,750
154
6,060
VGBL - Life that
Generates Free
Benefits
1,074
239,755
–
–
4,983
DPVAT (mandatory
third-party liability
for vehicle owners)
1,421
–
27,785
2,812
–
702
–
38,013
382
1,032
49,878
–
73,061
5,441
930
1,654,216
277,432
1,401,024
576,819
436,975
75,230
198,767
381,039
–
Aeronautic
Traditional fire
insurance
Other
Total
Current
Non-current
1,578,986
78,665
1,019,985
576,819
295,603
141,372
As of December 31, 2009 and 2008, the Reserve for Claims and
Claim Adjustment Expenses includes claims that are being
disputed in court, related mainly to denial of coverage for nonfulfillment of contract conditions, related mainly to automobile
and life lines.
128
2009 ANnual REPORT
2009 RESULTS
(11.1) ROLL FORWARD OF CLAIMS BEING DISPUTED IN COURT
Balance as of December 31, 2008
Addition
Write-offs
Balance as of December 31,
2009
(11.2) REINSURANCE COMPANIES
As set forth in SUSEP Circular No. 379, from January 1, 2009
reinsurance operations, that include insurance and private
pension operations, started to be recorded under the heading
Deferred Reinsurance and Retrocession Expenses and
Receivables from Insurance and Reinsurance Operations in
current and non-current assets and are shown below:
443,873
99,801
(142,944)
400,730
Consolidated
2009
Reinsurance
Unearned premium reserve
and other reserves
Reserve for claim and claims
adjustment expenses
IBNR reserve
Engineering risks
55,864
18,713
189
Named perils and operating
risks
40,098
228,612
4,031
28,731
4,336
9
10,300
14,406
1,519
Aeronautic
3,785
74,159
104
Condominium comprehensive
3,421
1,069
32
Third-party liability
3,228
21,994
1,197
Hull
2,919
3,272
8,367
Miscellaneous P&C
1,376
1,000
576
469
1,720
826
Group life
–
1,695
3,193
Individual life
–
1,590
372
Traditional fire insurance
–
24,363
642
Homeowners comprehensive
–
58
32
Credit life
–
–
41
Personal accidents
–
1,298
334
5,798
7,752
–
Total
155,989
406,037
21,464
Current
108,753
347,804
21,464
47,236
58,233
–
Oil risks
Business comprehensive
Cargo
Other
Non-current
129
2009 ANnual REPORT
2009 RESULTS
Consolidated
2008
Reinsurance
Unearned premium reserve
and other reserves
Reserve for claim and claims
adjustment expenses
IBNR reserve
Engineering risks
26,790
18,092
–
Named perils and operating
risks
47,299
87,878
1,092
Business comprehensive
16,937
17,770
2,247
Aeronautic
33,319
151,289
67
87
27
–
Third-party liability
5,755
20,303
45
Hull
7,804
6,390
6,835
Miscellaneous P&C
4,514
5,070
237
Cargo
1,226
8,529
995
302
3,491
4,684
–
–
462
1,887
304
26
Cargo liability
26
–
784
Traditional fire insurance
26
26,668
104
Other
34,698
20,128
1,078
Total
180,670
365,939
18,656
Current
151,023
311,579
18,656
Non-current
29,647
54,360
–
Homeowners comprehensive
Group life
Individual life
Condominium comprehensive
The technical reserves for claims and premiums of risks ceded
to reinsurance, as shown in the chart above, are recorded
in Reinsurance Companies and Deferred Reinsurance and
Retrocession Expenses, respectively, in current and noncurrent assets. The heading Reinsurance Companies also
includes the receivables from claims and commissions
recoverable from reinsurers, in the amount of R$84,524
(R$32,119 in 2008) in current assets, and R$2,658 in 2009 in
non-current assets.
130
2009 ANnual REPORT
2009 RESULTS
(11.3) ROLL FORWARD OF TECHNICAL RESERVES AND DEFERRED ACQUISITION COSTS – PRIVATE PENSION
Consolidated
2009
Technical reserves
IBNR reserve
Deferred acquisiton costs
1,652,504
973
3,917
184,507
1,036
–
87,486
–
–
Redemptions
(77,670)
–
–
Outgoing portability
(53,382)
–
–
Benefits
(44,333)
–
–
155,528
–
–
Commissions
–
–
6,738
Amortization
–
–
(5,418)
1,904,640
2,009
5,237
429,206
2,009
2,960
1,475,434
–
2,277
Balance as of December 31,
2008
Constitution
Income portability
Monetary variation
Balance as of December 31,
2009
Current
Non-current
2008
Technical reserves
IBNR reserve
Deferred acquisiton costs
1,368,893
868
4,171
149,841
105
–
111,128
–
–
(56,968)
–
–
Outgoing portability
(32,935)
–
–
Benefits
(38,351)
–
–
Monetary variation
150,896
–
–
Commissions
–
–
4,441
Amortization
–
–
(4,695)
1,652,504
973
3,917
377,964
973
2,526
1,274,540
–
1,391
Balance as of December 31,
2007
Constitution
Income portability
Redemptions
Balance as of December 31,
2008
Current
Non-current
131
2009 ANnual REPORT
2009 RESULTS
(12) GUARANTEE OF TECHNICAL RESERVES
The technical reserves have the following coverage:
Consolidated
2009
2008
703,633
726,285
Equity fund quotas
1,522,392
1,100,154
Credit assignments
801,327
591,994
2,102,525
2,008,895
Bank certificates of deposit
853,371
638,265
Properties, net of depreciation
48,200
44,783
Judicial deposits
23,497
42,042
5,754
6,311
90,697
8,326
10,157
-
6,161,553
5,167,055
Investment funds (a)
Fixed income securities - government
Special deposits at IRB
Shares and debentures
Promissory Notes
Total
(a) As of December 31, 2009, the line Investment Fund quotas includes the amount of R$558,622 (R$457,268 in 2008) in consolidated related to Resale
Commitments, which for the financial statements disclosure are represented under the heading Securities Purchased under Resale Agreements,
according to Note (3.1).
(13) RELATED PARTIES
(13.1) TRANSATIONS AND BALANCES
The main related-party transactions are summarized as follows:
Parent Company
Income (expenses)
Dividends received
/ receivable (paid/
payable)
Interest on
shareholders' equity
received / receivable
(paid/payable)
–
–
(99.826)
–
Saepar Serviços e
Participações S.A.
–
–
96.784
–
ING Insurance
International BV
–
–
(64.401)
–
Sul América Companhia
Nacional de Seguros (b)
–
(160)
25.722
–
Sul América Companhia
de Seguro Saúde (a)
–
(80)
29.427
11.158
Other subsidiaries
and shareholders and
individuals
(35)
(246)
(138.783)
(141)
Balances as of
December 31, 2009
(35)
(486)
(151.077)
11.017
(5.116)
(135)
(59.135)
48.239
Accounts receivable
(payable)
Sulasapar Participações
S.A.
Balances as of
December 31, 2008
132
2009 ANnual REPORT
2009 RESULTS
Consolidated
Income (expenses)
Dividends received
/ receivable (paid/
payable)
Interest on
shareholders' equity
received / receivable
(paid/payable)
136
(151)
–
–
Sulasapar Participações
S.A.
–
–
(99.842)
–
ING Insurance
International BV
–
–
(93.939)
–
BB Banco Investimentos
S.A.
–
–
(20.591)
–
Gouvêa Vieira Advocacia
(c)
–
(639)
–
–
Gouvêa Vieira Advogados
Associados (c)
–
(120)
–
–
Escritório de Advocacia
Gouvea Vieira (c)
–
(3.486)
–
–
J.H. Gouvea Vieira
Escritório de Advocacia (c)
–
(7.134)
–
–
Other subsidiaries and
shareholders and
individuals
(1.964)
196
(140.432)
(428)
Balances as of
December 31, 2009
(1.828)
(11.334)
(354.804)
(428)
(2.281)
(5.469)
(321.581)
(486)
Accounts receivable
(payable)
Sul América Capitalização S.A. - SULACAP (a),
(b)
Balances as of
December 31, 2008
The accounts receivable/payable and income/expenses refer
mainly to the following:
(a) Recovery of expenses for the shared use of operating systems
and supporting administrative structure, whose costs are
apportioned among the companies, settled on a monthly basis;
(b) Income of indirect subsidiary Sul América Investimentos
Distribuidora de Títulos e Valores Mobiliários S.A. arising from
asset management, with a 0.17% management fee on the net
equity of the portfolio and a 20% performance fee on the surplus
to benchmark, paid monthly and semiannually, respectively;
(c) Advisory services provided and follow up of lawsuits of civil,
labor and tax nature. These contracts are renewed annually and
terminated monthly, or when the process is settled.
133
2009 ANnual REPORT
2009 RESULTS
(13.2) COMPENSATION OF KEY MANAGEMENT MEMBERS
The key management members include those of the Board of
Directors, the president, vice-presidents and statutory directors. The
compensation paid or payable is shown below:
Parent Company
Consolidated
Accounts (payable)
(Expenses)
Accounts (payable)
(Expenses)
(1,743)
(2,405)
(34,813)
(69,235)
Post-employment benefits
–
–
(14,696)
(9,242)
Stock options (a)
–
(3,746)
–
(3,746)
Balances as of December 31, 2009
(1,743)
(6,151)
(49,509)
(82,223)
Balances as of December 31, 2008
(1,294)
(4,326)
(42,265)
(69,320)
Short-term benefits for managers
(a) MASTER STOCK OPTION PLAN OF SUL AMÉRICA S.A.
At the Extraordinary Shareholders’ Meeting of Sul América S.A. held
on March 31, 2008, shareholders approved the Stock Option Plan
(“Plan”). The Plan is managed by the Company’s Board of Directors,
who may periodically create Unit Option Programs (“Programs”),
and delegate duties to the Compensation Committee of the
Company related to the Programs management. Within the Plan,
the Board of Directors approved the Programs for 2008 and 2009,
and delegated to the Company’s Compensation Committee the
definition of the Program beneficiaries, among the Board of Executive
Officers members of the Company and its subsidiaries, as well as the
number of units to which they would be entitled. The Compensation
Committee defined the beneficiaries and the amounts. The options
granted within the Program for 2008 and 2009 will entitle to 1/3
of the total granted per year, from the end of the first, second and
third years counted from the date of signature of the respective
Unit Option Agreement (“Option Agreement”), considering that the
maximum exercise period of options is 5 years, counted from the
date of signature of the Option Agreement.
The changes in the balance of options are summarized as follows:
Stock Options Units (quantity)
Weighted Average Exercise Price (in Reais)
Balance of Options outstanding in 2008
680,789
26.52
Granted Options
1,331,639
20.18
Exercised Options
183,387
26.53
Cancelled Options
161,027
23.74
1,668,014
21.72
21,529
26.39
Balance of Options outstanding in 2009
Balance of Exercisible Options in 2009
The minimum and maximum exercise prices of outstanding
options as of December 31, 2009 are R$20.12 (twenty Reais
and twelve centavos) and R$30.45 (thirty Reais and forthy
five centavos), respectively. The remaining weighted average
contractual term is 3.87 years.
The weighted average fair value of stock options issued net of
cancellation is R$5.34 (five Reais and thirty four centavos), and
was measured using the Black-Scholes option pricing model,
considering the following assumptions:
• Expected average volatility of 43.0%
• Option exercise term of 3 years, the option exercise being 1/3 in
1 year, 1/3 in 2 years and 1/3 in 3 years
• Expected average dividend of 4.7%
• Average risk-free interest rate of 11.2%
The compensation expense from Stock Option Plan, for the year
ended December 31, 2009, taking the fair value of option at the
date of signature of each contract, is R$3,746, recorded under
Administrative Expenses as contra-entry to Capital Reserve
– Recognized Granted Options. Once the Stock Option Plan
provisions are complied with, the Board of Directors may launch
other option programs up to the limit of 4.0% of total shares
issued by the Company existing at the date of the respective
Program, plus the units that would have been issued if all
options granted under the Stock Option Plan had been exercised.
134
2009 ANnual REPORT
2009 RESULTS
(14) LOANS AND FINANCING
Parent Company and
Consolidated
2009
Institution
Senior Notes
Holders (1),
(5), (6)
Unibanco (2),
(5) Swap
Senior Notes
Holders (-)
Swap
2008
Principal
Interest
Maturity
Current
Non–current
Current
Non–current
US$
130,000,000
8.625% p.a.
02/15/2012
7,321
212,858
9,952
249,721
Exchange
variation of
US$ + interest
(2), (3), (4)
02/14/2012
–
19,374
–
(38,403)
7,321
232,232
9,952
211,318
Senior Notes
- Borrowing
Costs
Commission
02/14/2012
(1,558)
(1,750)
–
–
Unibanco (3)
100% of CDI
p.a.
02/14/2012
–
47,768
–
43,466
5,763
278,250
9,952
254,784
Total
In February 2007, the parent company issued Senior Notes,
guaranteed by its direct subsidiary Saepar Serviços e Participações
S.A., in the amount of US$200,000,000, at the rate of 8.625% p.a.,
in accordance with the terms and conditions contained in the
respective “Offering Circular”. These bonds mature within five years
from the date of their issuance.
(1) On November 26, 2007, as provided for in the agreement, the
amount of US$71,727,395.83 (R$128,758) was settled in advance,
corresponding to 35% of the total Senior Notes. In addition, the
same percentage was reverted from the derivative contract of swap
established for hedging the Senior Notes.
(2) On May 30, 2007, the parent company entered into swap
transactions, in which the index of the respective contract was
replaced with that mentioned in the above table.
(3) On March 3, 2008, as provided for in the agreement, the first
renegotiation of the swap transactions was made, resulting in a
change in charges from 44.75% to 50.95% p.a. of the CDI. The interim
adjustment value resulted in accounts payable amounting to
R$45,067, not settled at the renegotiation time, that will be adjusted
at 100% of the CDI until the maturity date of the transaction or
upon early settlement.
(4) On April 2, 2008, as provided for in the agreement, the swaps
were renegotiated, resulting in a change in charges from 50.95%
p.a. of the CDI to the CDI rate reduced by 3.967% p.a.. The interim
adjustment value resulted in a gain amounting to R$5,753, which
was offset against the interim adjustment value arising from the
renegotiation mentioned in item (3). This renegotiation will be
effective until February 14, 2012, when the Senior Notes falls due.
(5) As mentioned in Notes (3.3.1) and (4), Senior Notes, which are
hedged, and swap, financial instrument to hedge cash flow, were
adjusted to fair value resulting in a gain amounting to R$20,799
(R$13,727, net of tax effects) in 2009 and R$28,360 (R$18,758, net
of tax effects) in 2008 recorded under Valuation Adjustments to
Shareholders’ Equity in Shareholders’ Equity.
(6) Up to December 31, 2009, the payment of semiannual interest
amounted to R$23,192.
(15) COMMITMENTS AND ENCUMBRANCES
(15.1) ENCUMBERED PROPERTIES
Certain indirect subsidiaries, which operate in the insurance
business, record as property and equipment certain properties
that were pledged as collateral due to court decisions in
connection with civil lawsuits related to claims. The book value
of these properties, net of depreciation, was R$2,204 in 2009
(R$2,698 in 2008).
(15.2) BLOCKED BALANCES IN BANK ACCOUNTS
As of December 31, 2009, the parent company and certain direct
and indirect subsidiaries have blocked balances in their bank
accounts related to lawsuits. The parent company’s balance
amounts to R$95 (R$43 in 2008) and the consolidated balance
135
2009 ANnual REPORT
2009 RESULTS
amounts to R$112,263 (R$111,456 in 2008) recorded under Other –
Accounts Receivable in current assets.
(15.3) GUARANTEE OF TECHNICAL RESERVES
Certain indirect subsidiaries have assets linked to SUSEP and
ANS pledged as collateral for guarantee of technical reserves,
which are listed in Note (12).
17, 2010. This rental agreement contains restrictive covenants
on the unilateral termination of the agreement by the
indirect subsidiary and the landlord. The voluntary unilateral
termination will give rise to the payment of indemnification to
the other party, according to the condition established in the
agreement.
(15.5) BUSINESS PARTNERSHIP AGREEMENT
(15.4) NEW HEADQUARTERS
On December 17, 2007, the indirect subsidiary Sul América
Companhia Nacional de Seguros entered into an agreement to
rent the real estate of the new headquarters of the Sul América
Seguros e Previdência Group in Rio de Janeiro. The move was
completed in July 2009. The rental period is 10 years from April
18, 2009, which can be extended to an additional 60-month
period. For this period, the indirect subsidiary agreed to pay
10 annual installments of R$13,712, annually adjusted or after
the shortest period provided for by Law, by the accumulated
IGP-M variation, released by Fundação Getúlio Vargas from April
On May 27, 2008, the indirect subsidiary Sul América Companhia
Nacional de Seguros signed a business partnership agreement
for five years with BV Financeira S.A. Crédito, Financiamento
e Investimento, BV Leasing Arrendamento Mercantil S.A. and
VCS - Votorantim Corretora de Seguros Ltda. in order to promote
with exclusivity the SulAmérica Auto insurance in its entire
network; this agreement also contains a clause related to the
performance of future sales.
(16) JUDICIAL DEPOSITS, ACCRUED LIABILITIES FOR
CONTINGENCIES AND TAXES AND CONTRIBUTIONS LIABILITIES
Parent Company
2009
Judicial deposits
Accrued liabilities for
contingencies
Taxes and contributions
liabilities
773
–
747
Other
52
–
5
Total
825
–
752
Non-Current
825
–
752
Tax:
Income tax
2008
Judicial deposits
Accrued liabilities for
contingencies
Taxes and contributions
liabilities
638
–
500
10
–
5
Total
648
–
505
Non-Current
648
–
505
Tax:
Income tax
Other
Consolidated
2009
Judicial deposits
Accrued liabilities for
contingencies
Taxes and contributions
liabilities
COFINS
466,218
–
479,888
PIS
229,371
–
174,436
INSS
522,036
130,609
1,004
Tax:
136
2009 ANnual REPORT
2009 RESULTS
Consolidated
2009
Judicial deposits
Accrued liabilities for
contingencies
Taxes and contributions
liabilities
Social Contribution
101,765
2,350
99,853
Income tax
88,687
140
84,692
Other
59,220
24,574
62,477
Labor lawsuits
39,368
40,470
–
Civil lawsuits
147,498
305,196
–
DPVAT
1,019
1,020
–
Other
–
666
–
1,655,182
505,025
902,350
–
60,000
–
1,655,182
445,025
902,350
Labor and civil:
Total
Current
Non-Current
2008
Judicial deposits
Accrued liabilities for
contingencies
Taxes and contributions
liabilities
516,606
–
398,462
PIS
227,342
–
172,385
INSS
476,161
112,712
1,454
Social Contribution
80,442
–
75,034
Income tax
73,687
2,540
69,695
Other
55,041
27,848
58,970
Labor lawsuits
43,504
40,442
–
Civil lawsuits
143,980
322,253
–
DPVAT
961
961
–
Other
–
3,893
–
1,617,724
510,649
776,000
–
59,240
–
1,617,724
451,409
776,000
Tax:
COFINS
Labor and civil:
Total
Current
Non-Current
137
2009 ANnual REPORT
2009 RESULTS
(16.1) CIVIL, LABOR, TAX AND DPVAT LAWSUITS
Following are the parent company and its direct and indirect
subsidiaries’ lawsuits by nature, likelihood of loss, and estimated
and accrued amounts:
Parent Company
2009
Quantity
Estimate
Accrued liabilities for
contingencies and taxes and
contribution liabilities
Probable
1
720
720
Possible
2
43
32
Remote
5
433
–
Total
8
1,196
752
Tax
2008
Quantity
Estimate
Accrued liabilities for
contingencies and taxes and
contribution liabilities
Probable
1
473
473
Possible
1
35
32
Remote
3
427
–
Total
5
935
505
Tax
Consolidated
2009
Quantity
Estimate
Accrued liabilities for
contingencies
8,175
256,404
179,306
Possible
12,069
599,811
114,342
Remote
1,484
130,814
12,568
21,728
987,029
306,216
II - Labor
Quantity
Estimate
Accrued liabilities for
contingencies
Probable
497
54,412
26,614
Possible
315
70,662
13,673
Remote
104
142,533
183
Total
916
267,607
40,470
Quantity
Estimate
Accrued liabilities for
contingencies and taxes and
contribution liabilities
Probable
142
572,933
572,933
Possible
242
476,008
371,028
Remote
243
816,332
116,062
Total
627
1,865,273
1,060,023
I - Civil and DPVAT
Probable
Total
III - Tax
138
2009 ANnual REPORT
2009 RESULTS
Consolidated
2008
Quantity
Estimate
Accrued liabilities for
contingencies
Probable
7,149
217,671
157,286
Possible
11,754
514,024
152,187
Remote
1,632
117,005
13,741
20,535
848,700
323,214
II - Labor
Quantity
Estimate
Accrued liabilities for contingencies
Probable
403
34,877
13,647
Possible
581
102,432
26,261
Remote
141
149,217
534
1,125
286,526
40,442
Quantity
Estimate
Accrued liabilities for contingencies and taxes and contribution liabilities
Probable
295
335,374
335,374
Possible
132
589,285
496,390
Remote
127
743,187
87,336
Total
554
1,667,846
919,100
I - Civil and DPVAT
Total
Total
III - Tax
(16.2) ROLL FORWARD OF PROVISIONS FOR RELEVANT CONTINGENCIES
Consolidated
Balances as of
December 31, 2008
Additions
Monetary
variation and
interest
Write-offs
Balances as of
December 31, 2009
322,253
77,121
(16,902)
(77,276)
305,196
172,385
3,691
4,039
(5,679)
174,436
398,462
52,716
30,684
(1,974)
479,888
Income Tax
72,235
11,711
4,901
(4,015)
84,832
Social Contribution
81,813
29,824
2,294
(11,728)
102,203
80,039
21,656
1,869
(16,513)
87,051
114,166
17,358
4,142
(4,053)
131,613
Civil:
Tax:
PIS
COFINS
Other
Social securities
INSS
139
2009 ANnual REPORT
2009 RESULTS
(16.3) TAX LAWSUITS
COFINS – Since 1999, the COFINS is due by Brazilian insurance
companies, private pension companies and other financial
institutions at the rate of 3%. Since then, the indirect subsidiaries
Sul América Companhia Nacional de Seguros, Sul América
Seguros de Pessoas e Previdência S.A., Sul América Companhia de
Seguros Gerais, Sul América Santa Cruz Participações S.A., which
operated as insurance company until February 2003, Sul América
Seguro Saúde S.A. and Brasilveículos Companhia de Seguros
started to challenge in court the constitutionality of the Law
that established the payment of this contribution. In December
2006, a partially favorable decision, except for Sul América
Seguro Saúde S.A. and Brasilveículos Companhia de Seguros,
which decision is pending, was published, rendered by the
Federal Supreme Court (STF), accepting the extraordinary appeal
filed by the plaintiffs to disregard the expansion of the tax basis
on other revenues, although deciding for the constitutionality
of the contribution’s collection. These indirect subsidiaries
(except for Brasilveículos Companhia de Seguros) have, since
then, been paying COFINS on revenues from their insurance
and private pension activities, and based on the STF decision,
considered final and unappealable on February 12, 2007, made
the reversal of the related accrued amounts. On July 27, 2007, the
judicial deposits for the portion of the COFINS on revenues from
insurance and private pension activities of the aforementioned
indirect subsidiaries (except for Sul América Seguro Saúde S.A.
and Brasilveículos Companhia de Seguros), in the total amount
of R$276,225, were converted into Federal Government income,
and the corresponding accruals were written-off. On February
14, 2009, these subsidiaries obtained judicial authorization
to survey on the portions of judicial deposits made for other
revenues, and in March 2009 they identified the amount of
R$129,060. The indirect subsidiary Sul América Seguro Saúde
S.A. has been paying COFINS on revenue from its operations,
accruing the amount levied on other revenues. The lawyers
handling this lawsuit believe that loss is probable in relation
to the revenue from insurance activities and remote in relation
to other revenues. In October 2005, Brasilveículos Companhia
de Seguros obtained a decision by the Federal Regional Court
(TRF) of the 2nd Region determining the full payment of the
contribution based on gross revenue, so it started to fully
deposit and accrue the contribution value, and the lawyers
handling this lawsuit believe that loss is probable in relation to
revenue of insurance operations and remote in relation to other
revenues. With the revocation of the expansion of the tax basis
on other revenues, provided for by Law No. 11,941 of May 27, 2009,
the indirect subsidiary Sul América Seguro Saúde S.A. no longer
accrues the amount related to other revenues. The indirect
subsidiary Brasilveículos Companhia de Seguros continues to
deposit and accrue the contribution.
With the enactment of Law No. 10,684, of May 30, 2003, the
insurance and private pension indirect subsidiaries started to
challenge in court the constitutionality of the increase in the
COFINS rate to 4%, accruing and making a judicial deposit for
the difference of 1% on gross revenue. With the STF’s decision
to disregard the expansion of the tax basis to other revenues,
these subsidiaries stopped to deposit and accrue COFINS on
other revenues, making the reversal of R$12,982 provision set
up in relation to the expansion of the contribution basis. Sul
América Companhia de Seguro Saúde continued to deposit and
accrue COFINS on its gross revenue until the revocation of the
expansion of the tax basis on other revenues, and from June
2009 it started to deposit and accrue the contribution on the
revenue from its insurance operations, no longer depositing
and accruing the amount related to other revenues. The lawyers
handling these cases believe that loss is probable in relation to
the increase of 1% in the rate levied on insurance and private
pension revenues. The lawsuits related to COFINS have been
accrued according to the Management’s expectation of loss.
PIS – The indirect insurance and private pension subsidiaries
have been questioning and have made judicial deposits for the
PIS contribution, established by Constitutional Amendments
Nos. 1/1994, 10/1996 and 17/1997, levied at the rate of 0.75% on
gross revenue. The lawyers handling these cases believe that
loss is possible. In addition, beginning February 1999, with
the enactment of Laws Nos. 9,701/1998 and 9,718/1998, the PIS
tax basis was expanded due to the new concept of expanded
gross revenue, and its rate was lowered from 0.75% to 0.65%.
The indirect insurance and private pension subsidiaries had
been accruing and questioning the constitutionality of the
expansion of the PIS tax basis and obtained an injunction without
requirement of judicial deposits, except for indirect subsidiary Sul
América Seguro Saúde S.A. that had been making judicial deposits,
and had been paying PIS pursuant to Supplementary Law No.
7/1970. On March 1, 2007, a partially favorable court decision by
the Federal Regional Court of the 2nd Region was published,
determining the subsidiaries Sul América Companhia Nacional
de Seguros, Sul América Santa Cruz Participações S.A., which
operated as insurance company until February 2003, Sul América
Seguros de Pessoas e Previdência S.A. and Sul América Companhia
de Seguros Gerais to pay PIS based on revenues from the sale
of goods and/or services, disregarding the expansion of the tax
basis to other revenues. As a result, these companies paid R$52,231
in March 2007 of PIS on revenues from insurance and private
pension activities for the period from 1999 to 2006. From January
2007, these subsidiaries started to pay PIS on revenues from
insurance and private pension activities, while they continue to
fully accrue the amounts questioned on other revenues. On June
27, 2007, the decision rendered on March 1, 2007 was considered
final and unappealable, and, accordingly, the subsidiaries reversed
the liability recognized on other revenues amounting to R$22,978.
Sul América Seguro Saúde S.A. started to pay from January 2007
the PIS on its revenue, depositing and accruing amounts on other
revenues, and with the enactment of Law No. 11,941/2009, which
revoked the expansion of the tax basis on other revenues, from
June 2009 it started to deposit and accrue the PIS only on the
revenue from its insurance operations. Sul América Companhia
de Seguro Saúde obtained a partially favorable decision rendered
by a lower court to disregard the expansion of the tax basis
on other revenue, although it decided for the taxation of the
revenue from its operations. In view of this decision, the company
paid on September 30, 2008 the amount of R$59,350 related to
140
2009 ANnual REPORT
2009 RESULTS
PIS based on its revenue from insurance operations, accruing
the contribution calculated on total revenues, and with the
enactment of Law No. 11,941/09, which revoked the expansion
of the tax basis on other revenue, from June 2009 it stopped to
accrue the contribution on other revenues. The lawyers handling
this case believe that loss is probable for the case related to the
PIS on revenues from insurance and private pension activities,
and remote for the expansion of the tax basis to other revenues.
In relation to the indirect subsidiary Brasilveículos Companhia de
Seguros, the Federal Regional Court dismissed in October 2005
the lawsuit filed by the subsidiary for obtaining authorization
to suspend the payment of PIS based on Law No. 9,718/1998. On
July 3, 2006, this subsidiary filed an appeal against this decision,
but it was denied, so it is awaiting the decision on the motion
for clarification of judgment. The subsidiary has paid PIS on
gross revenue. The lawyers handling this case believe that loss is
possible. The lawsuits related to PIS have been accrued according
to the Management’s expectation of loss.
INSS – The indirect insurance and private pension subsidiaries
have been questioning and making judicial deposits for the
social security contributions on fees paid to medical service
providers and insurance brokers established by Supplementary
Law No. 84/1996, changed by Law No. 9,876/1999, at the rate of
20%, plus 2.5% based on the understanding that medical and
insurance brokerage services are not provided to insurance
companies but to policyholders. Therefore, the Companies
are not subject to the contribution provided for in item III,
article 22 of Law No. 8,212/1991. In April 2008, the Superior
Court of Justice judged and rendered a decision in favor of
the levy of the social security contribution on fees paid to
insurance brokers, established by Supplementary Law No.
84/1996 for the subsidiaries Sul América Companhia Nacional
de Seguros and Sul América Companhia de Seguros Gerais.
An extraordinary appeal was filed against the decision, which
follow up was denied. In this sense, the lawyers informed
that an interlocutory appeal will be filed. In relation to the
case in connection with Law No. 9,876/99, it is in the appeal
court awaiting judgment of the appeal against the decision
that disallowed the injunction. In relation to the contribution
in connection to the compensation on fees paid to medical
service providers, the case is in supreme court, awaiting the
decision on the special appeal filed by the National Treasury
Attorney General. The amounts are accrued according to the
Management’s expectation of loss. The consolidated contingent
liability related to brokers was added in 2009 by R$16,291. The
lawyers handling these cases believe that loss is remote for the
case related to the social security on fees paid to medical service
providers and possible for that on fees paid to insurance brokers.
In 2005, the dissolved indirect subsidiary Sul América Serviços
Médicos S.A. was assessed (tax notice of debt assessment) by
the National Institute of Social Security (INSS) in the amount of
R$49,680 based on the alleged failure to collect social security
contribution on amounts paid to medical service providers
related to the period from May 1996 to December 1998. Sul
América Serviços Médicos S.A. challenged said tax deficiency
notice and presented its defense. In August 2008, the 14th
Panel of the Federal Revenue Office for Judgment dismissed the
assessment, because of the STF’s understanding that considered
unconstitutional the term of 10 years for loss to the entitlement
to recoverable taxes. This decision is under appeal at the Second
Taxpayers’ Council of the Ministry of Finance, because the
total amount of recoverable taxes relief exceeds R$1,000 (one
thousand million Reais), and is awaiting decision. The lawyers
handling this case believe that loss is remote. Accordingly, the
indirect subsidiary’s Management has not recognized accrued
liabilities for contingencies related to said challenge. In view
of the total split and subsequent merger of indirect subsidiary
Sul América Serviços Médicos S.A., the successor of this charge
is the indirect subsidiary Sul América Seguro Saúde S.A. In May
2006, Sul América Serviços Médicos S.A. (dissolved by total
split) obtained a favorable final and unappealable decision
rendered by the Superior Court of Justice on the lawsuit for
offsetting credits from social security contribution payments,
required by item I, article 22 of Law No. 8,212/1991, on fees paid
or credited to executives and independent contractors in the
amount of R$14,692. In October of that same year, the subsidiary
obtained another favorable decision to offset credits from social
security contribution payments, required by item I, article 3 of
Law No. 7,787/1989, on the fees of executives and independent
contractors, as provided for by Supplementary Law No. 84/1996
in the amount of R$33,574. As a result of the favorable decisions
mentioned above, the total monetarily adjusted credits for
offset amounting to R$48,266 were recorded under Recoverable
Taxes and Contributions. As of December 31, 2009, the balance
of said credits, net of offsets, amounting to R$11,123 is recorded
in current assets. In 2008, this balance amounts to R$33,351, of
which R$18,000 is recorded in current assets and R$15,341 in noncurrent assets. As of June 30, 2008, as previously mentioned, Sul
América Serviços Médicos S. A. was totally split and subsequently
merged, and this credit was transferred to Sul América Seguro
Saúde S.A. The lawsuits related to INSS have been accrued
according to the Management’s expectation of loss.
IRPJ – From January 1, 1997, social contribution charges are
no longer deductible from the income tax basis. In view of
this change, the parent company and its indirect subsidiaries
applied for and obtained an injunction with judicial deposit,
guaranteeing the deductibility of the contribution from
income tax basis. The lawyers handling this case believe that
loss is probable and those handling the case of the indirect
subsidiary Brasilveículos Companhia de Seguros believe that
loss is possible. The lawsuits related to IRPJ have been accrued
according to the Management’s expectation of loss.
CSLL – From January 1997 to December 1998, insurance companies
were required to pay social contribution at 18% on taxable income,
which was the rate applicable to financial institutions, violating
the principle of isonomy. Its indirect subsidiaries that operate
insurance obtained an injunction to pay social contribution at
8%, making judicial deposits for the rate difference from the 18%
required, and fully recognizing the related accrued liabilities. The
lawyers handling this case believe that loss is probable.
In addition, with the publication of the Provisional Measure No.
141
2009 ANnual REPORT
2009 RESULTS
413/2008, converted into the Law No. 11,727/2008, the indirect
finance, insurance and private pension subsidiaries started to
make a provision for the social contribution rate increased by 6%
from May 2008, so the rate payable by these subsidiaries changed
from 9% to 15%. In relation to this matter, the indirect insurance
and private pension subsidiaries and the indirect subsidiary
Sul América Investimentos Distribuidora de Títulos e Valores
Mobiliários S.A. started to challenge the constitutionality of this
increase in the rate by applying for an injunction, and accruing
and making judicial deposit regarding the challenged amounts.
The lawyers handling this case believe that loss is possible.
(17) ACCOUNTS PAYABLE
Parent Company
2009
2008
–
5,000
Taxes and contribution liabilities - Note (16)
752
505
PAES - Special Plan for Tax Payment in Installments (a)
685
744
199,083
103,954
1,743
1,294
293
5,030
Total
202,556
116,527
Current
201,120
110,272
1,436
6,255
Accrued liabilities with related parties - Brasilveículos Companhia de
Seguros
Dividends payable - Note (13)
Management's Fees - Note (13)
Other
Non-Current
Consolidated
Taxes and contribution liabilities - Note (16)
PAES - Special Plan for Tax Payment in Installments (a)
Dividends and Interest on shareholder's equity payable - Note (13)
Profit sharing
Other
Total
Current
Non-Current
(a) PAES – SPECIAL PLAN FOR TAX PAYMENT IN INSTALLMENTS
Law No. 10,684, of May 31, 2003, established the Special Plan
for Tax Payment in Installments (PAES) whose purpose was the
regularization of credits of the Federal Government arising
from legal entities’ debts related to taxes and contributions
administered by the Federal Revenue Service, the National
Treasury Attorney General and the National Social Security
Institute (INSS). On July 31, 2003, the parent company and its
subsidiaries Sul América Companhia Nacional de Seguros,
Sul América Seguro Saúde S.A., Sul América Companhia de
Seguro Saúde, Sul América Investimentos e Participações S.A.,
Sul América Santa Cruz Participações S.A., Sul América Serviços
Médicos S.A., and Sul América Companhia de Seguros Gerais e
Executivos S.A. - Administração e Promoção de Seguros joined
2009
2008
902,350
776,000
106,577
136,491
208,430
116,444
32,916
51,358
107,622
88,071
1,357,895
1,168,364
348,983
254,873
1,008,912
913,491
PAES in order to pay amounts related to COFINS, income tax,
social contribution on net income, Finsocial (contribution
on revenue), CPMF (temporary contribution on banking
transactions) and INSS (social security contribution) in
installments, which were at the administrative and/or judicial
levels. In view of the merger of the indirect subsidiary Sul
América Investimentos e Participações S.A., the PAES balance
of this company related to CPMF, income tax and social
contribution on net income was transferred to its successor, the
subsidiary Sul América Santa Cruz Participações S.A.
The total amount of the obligations included in PAES was
R$253,353 (net of the 50% fine reduction). The program requires
payments of said taxes and contributions in up to 180 equal
142
2009 ANnual REPORT
2009 RESULTS
and monthly installments, according to the amount and
periods provided for in the prevailing legislation, with the final
payment due by June 30, 2018, according to the number of
months selected, monetarily adjusted according to the LongTerm Interest Rate (TJLP). As of December 31, 2009, the parent
company’s and consolidated current liabilities are recorded
under Taxes and Contributions Payable in the amounts of R$90
(R$87 in 2008) and R$36,724 (R$35,244 in 2008), respectively;
whereas the parent company’s and consolidated noncurrent liabilities are recorded under Accounts Payable in the
amounts of R$685 (R$744 in 2008) and R$106,577 (R$136,491 in
2008), respectively. Up to December 31, 2009, the amount of
R$502 was paid by the parent company and R$202,954 by its
indirect subsidiaries, corresponding to 77 and 78 installments,
respectively.
(18) SHAREHOLDERS’ EQUITY
(18.1) CAPITAL – PARENT COMPANY
From the beginning of the program for the repurchase of shares,
the Company purchased 729,632 units (729,632 common and
1,459,264 preferred shares) at a weighted average cost without
brokerage of R$40.52 (forty Reais and fifty two centavos), the
minimum cost amounting to R$14.21 (fourteen Reais and twenty
one centavos), and the maximum cost amounting to R$50.44
(fifty Reais and forty four centavos), totaling R$21,622 as of
December 31, 2009, recorded under Treasury stocks. The market
value of treasury stock types and classes, calculated based on
the latest trading price at stock exchange, was R$37,934 on
December 31, 2009 (R$2,040 in 2008).
(18.3) AUTHORIZED CAPITAL – PARENT COMPANY
The Company’s capital can reach up to 150,000,000 of new
common and/or preferred shares upon resolution of its Board
of Directors that will define the type and class of shares to be
issued, the issue price and placement conditions.
As of December 31, 2009, fully paid-up capital is represented
by 155,371,196 (546,245 in treasury stocks) registered common
shares and 125,924,735 (1,092,040 in treasury stocks) registered
preferred shares, without par value. In accordance with the parent company’s bylaws, shareholders are entitled to mandatory
minimum dividends equivalent to 25% of annual net income,
adjusted pursuant to current legislation.
(18.4) UNREALIZED EARNINGS RESERVE
(18.2) REPURCHASE SHARES
(18.5) VALUATION ADJUSTMENTS TO SHAREHOLDER’S EQUITY
On October 7, 2008, the Company’s Board of Directors disclosed
a material fact informing that it approved the program for the
repurchase of up to 1,052,636 certificates of stock - units, representing 1,052,636 common and 2,105,272 preferred shares, corresponding to 3% of the units in free float and approximately 1.1%
of total shares issued by the Company on September 29, 2008.
On October 7, 2009, the Company’s Board of Directors disclosed
another material fact informing that it approved the program
for the repurchase of up to 1,046,872 certificates of stock - units,
representing 1,046,872 common and 2,093,744 preferred shares,
corresponding to 3% of the units in free float and approximately
1.1% of total shares issued by the Company on September 30,
2009. The purchase of units, in both programs, is for holding
them in treasury and further using them in the Master Stock
Option Plan.
In compliance with Law no. 6,404/76, amended by Law No.
10,303/01, the unrealized earnings reserve is set up at the
amount of mandatory minimum dividends, pursuant to Article
202 of such Law, which exceed the net income earned for the
year.
The heading Valuation adjustments to Shareholder’s Equity
considers, pursuant to the prevailing legislation, the effects
arising from the criteria for recording and valuating marketable
securities classified into available-for-sale securities. As of
December 31, 2009, the effects related to own securities
amounted to a credit of R$11 (credit of R$2,123 in 2008) and a
credit of R$1,914 (credit of R$1,901 in 2008) of securities of its
indirect subsidiaries, net of the corresponding tax effects. In
addition, as mentioned in Note (4.1.2), it also considers the
valuation, net of tax effects, arising from the accounting at
fair value of derivative financial instruments – swap aimed at
hedging the principal of Senior Notes, according to the method
for accounting cash flow hedge transactions, amounting to a
credit of R$13,727 (credit of R$18,718 in 2008) as described in note
(4.1.2).
143
2009 ANnual REPORT
2009 RESULTS
(18.6) PROFIT SHARING
Parent Company
2009
2008
Net income
419,093
415,641
Recognition of legal reserve (5%)
(20,955)
(20,782)
Net income adjustment (article 202 - Laws 6,404/76 and 10,303/01)
398,138
394,859
99,535
98,715
199,069
103,910
199,069
290,949
Mandatory dividends
Proposal dividends
Destination:
Reserve for business expansion
The distribution of earnings shown in the table above was reflected in the financial statements, presupposing its approval at the
Annual Shareholders’ Meeting.
(19) BREAKDOWN OF CERTAIN STATEMENT OF OPERATION
ACCOUNTS
(19.1) MAIN BUSINESS LINES
As of December 31, earned premiums, claims rate and commissions
ratio for the main insurance lines, related to insurance activities of
indirect subsidiaries, are as follows:
2009
2008
Earned
premiums
Claims
ratio
Commissions
ratio
Earned
premiums
Claims
ratio
Commissions
Group health
3,105,376
77.9%
8.1%
2,684,130
72.6%
7.8%
Automobile
2,567,401
61.5%
18.3%
2,177,372
64.1%
18.9%
Individual
health
1,401,054
87.1%
0.9%
1,413,023
83.3%
1.0%
66.1%
17.2%
234,337
62.7%
17.7%
Group life
233,671
ratio
(19.2) ACQUISITION COSTS – INSURANCE
Consolidated
Commisions:
2009
2008
(1,104,040)
(949,264)
131,066
108,482
31,022
23,238
Change in deffered acquisition costs
63,046
43,140
Other
(1,820)
(1,995)
(880,726)
(776,399)
On direct premiums and coinsurance accept
On direct premiums and coinsurance cancelled and refunded
On premiums ceded
Total
144
2009 ANnual REPORT
2009 RESULTS
(19.3) ADMINISTRATIVE EXPENSES
Parent Company
2009
2008
Personnel expenses (a)
(6,157)
(5,780)
Third-party services
(4,275)
(3,321)
(519)
(765)
(1,085)
4,109
(12,036)
(5,757)
Location and operation
Other
Total
Consolidated
2009
2008
Personnel expenses (a), (b)
(474,578)
(469,523)
Third-party services
(184,060)
(173,172)
Location and operation
(197,277)
(184,502)
Advertising and publicity
(72,559)
(67,633)
DPVAT's administrative expenses
(6,873)
(4,326)
Other
(9,174)
(37,755)
(944,521)
(936,911)
Total
(a) As of December 31, the parent company’s and consolidated
personnel expenses include Management fees, charges and
benefits in the amount of R$6,151 (R$4,326 in 2008) and R$82,223
(R$69,320 in 2008), respectively.
(b) As of December 31, benefits to employees are represented by
the following:
Consolidated
2009
2008
Food Voucher and Transportation Voucher
(52,324)
(50,433)
Health and Dental insurance
(12,885)
(13,348)
Training session
(5,061)
(4,973)
Private Pension
(6,098)
(3,474)
Baby Sitter / Daycare Benefit
(2,919)
(2,842)
Other
(1,087)
(1,168)
(80,374)
(76,238)
Total
145
2009 ANnual REPORT
2009 RESULTS
(19.4) OTHER OPERATING INCOME – INSURANCE
Consolidated
Insurance policy cost recovery
Income from housing finance system administration (SFH)
Other income from insurance operations
Total
2009
2008
136,712
113,145
8,872
10,067
21,032
7,906
166,616
131,118
(19.5) OTHER OPERATING EXPENSES – INSURANCE
Consolidated
2009
2008
Insurance operation expenses
(92,888)
(73,047)
Pro-labore
(63,284)
(57,869)
Recognition of civil contingencies and other insurance operation
(88,505)
(59,818)
Technical services
(40,872)
(37,505)
(7,702)
(16,492)
Reversal of allowance for doubtful accounts (a)
17,734
30,346
Collection expenses
(1,777)
(3,719)
(277,294)
(218,104)
Insurance management fee
Total
(a) In 2009, the variation in the line Reversal of Allowance for Doubtful Accounts refers to the cancellation of premiums of the individual and
group health insurance by approximately R$14,000. In 2008, the change refers to the reversal of allowance recorded for 2007 to cover expected
default and other expenses arising from the collection of retroactive premiums of individual health insurance amounting to R$26,157.
(19.6) FINANCIAL INCOME
Parent Company
2009
2008
89,761
144,431
11,158
56,834
Income from exclusive investments funds
39,943
12,797
Fixed income securities - government (b)
10,349
6,969
2,378
727
153,589
221,758
Monetary and exchange variation and expenses on loans, financing and
swaps (a)
Interest on shareholders' equity
Other
Total
Consolidated
2009
2008
Fixed income securities - government (b)
281,754
260,447
Income from exclusive investments funds
343,671
279,838
Monetary and exchange variation and expenses on loans, financing and
swaps (a)
90,033
144,519
146
2009 ANnual REPORT
2009 RESULTS
Consolidated
2009
2008
Insurance operations
91,353
119,271
Fixed income securities - private
81,550
72,861
Interest and monetary variation on judicial deposits
68,159
74,549
Other
86,545
91,370
1,043,065
1,042,855
Total
(a) The line Monetary and exchange variation and expenses on Loans, Financing and Swaps of parent company and consolidated
comprise the effects of swap transactions described in Note (14).
(b) In 2009, the change in the parent company’s Fixed Income Securities – Government mainly refers to the income from the sale of
National Treasury Notes, the parent company’s balance amounting to R$6,608 and the consolidated balance amounting to R$33,338.
(19.7) FINANCIAL EXPENSES
Parent Company
Monetary and exchange variation and expenses on commitments receivable, loans, financing and swaps (a)
Other
Total
2009
2008
(133,073)
(191,968)
(3,959)
(2,155)
(137,032)
(194,123)
Consolidated
2009
2008
Monetary variation on technical reserve - private pension operations
(155,526)
(150,896)
Monetary and exchange variation and expenses on commitments receivable, loans, financing and swaps (a)
(133,630)
(193,674)
(87,915)
(97,718)
Insurance operations
(59,909)
(72,578)
Devaluation of investment fund quotas and fixed income securities government and private
(23,985)
(11,567)
Arreas interest
(7,887)
(8,376)
Other
(9,721)
(11,080)
(478,573)
(545,889)
Monetary variation and interest reserve for claims and claim adjustment
expenses, taxes and contributions liabilities and accrued liabilities for
contingencies
Total
(a) The line Monetary and Exchange Variations on Loans, Financing and Swaps of parent company and consolidated comprise the
effects of swap transactions described in Note (14).
(19.8) INCOME FROM SALE OF INVESTMENTS – PERMANENT
ASSETS
In 2008, the consolidated Income from Sale of Investments– Permanent Assets amounting to R$180,332 is basically composed of
R$177,862, mainly related to the income from the sale by indirect
subsidiary Alutrens Participações S.A., on April 25, 2008, of the
total investment it held in Telemar Participações S.A. comprising
343,290,112 registered common shares, which represented 10% of
voting and total capital. The effect of this transaction on consolidated net income, net of taxes and minority interests, amounts to
approximately R$34,000.
147
2009 ANnual REPORT
2009 RESULTS
(20) RECONCILIATION OF INCOME TAX AND SOCIAL CONTRIBUTION
Income tax and social contribution, calculated based on statutory
rates, are reconciled to the amounts recorded in the statements of
income, as follows:
Parent Company
Consolidated
2009
2009
2009
2009
Income tax
Social contribution
Income tax
Social contribution
438,167
438,167
620,402
620,402
(109,542)
(39,435)
(155,101)
(83,378)
(1)
–
(6,831)
–
–
–
(35)
(446)
(2)
(1)
(276)
–
(4,037)
(1,453)
(7,674)
(3,460)
Loss on investment abroad
–
–
(461)
(275)
Exchange variation - abroad invest (expenses)
–
–
(468)
(275)
Other
–
–
–
(1,256)
106,014
38,165
–
–
–
–
8,760
5,100
1,468
528
1,467
528
–
–
–
769
1,124
395
7,403
1,341
(4,976)
(1,801)
(153,216)
(81,352)
A - Recognition of tax credits and debts
(896)
(243)
56,066
48,738
Income tax and social contribution
expenses recorded in the statements of
income
(5,872)
(2,044)
(97,150)
(32,614)
Income before provision for income tax/
social contribution and profit sharing
Income tax and social contribution
expenses at statutory rates - 25%, 9%
and 15%
Additions:
Accrued liabilities for contingencies and
taxes and contributions liabilities
Allowance for doubtful account
Non-deductible provisions
Non-deductible expenses
Dedutions:
Equity in subsidiaries and associated
companies
Profit sharing charges
Capital gains
Interest on shareholders' equity
Other
Current income tax and social
contribution expenses
Parent Company
Consolidated
2008
2008
2008
2008
Income tax
Social contribution
Income tax
Social contribution
Income before provision for income tax/
social contribution and profit sharing
469,555
469,555
805,429
805,429
Income tax and social contribution
expenses at statutory rates - 25%, 9% and
15%
(117,389)
(42,260)
(201,357)
(93,398)
148
2009 ANnual REPORT
2009 RESULTS
Parent Company
Consolidated
2008
2008
2008
2008
Income tax
Social contribution
Income tax
Social contribution
Accrued liabilities for contingencies and
taxes and contributions liabilities
1
–
(5,984)
–
Allowance for doubtful account
–
–
(45)
(1,150)
Alowance for investment losses
–
–
(822)
(38)
Non-deductible provisions
–
–
(512)
(386)
Non-deductible expenses
–
–
(1,450)
(331)
(129)
–
(6,109)
–
–
–
(987)
(1,365)
(948)
(350)
–
(1,342)
114,715
41,297
2,132
770
–
–
–
871
Reversal of non-deductible expenses
3,592
1,399
–
–
Judicial deposits monetary variation
–
–
259
156
Exchange variation - abroad invest income
–
–
531
307
Profit sharing charges
–
–
11,747
6,615
Interest on shareholders' equity
–
–
5,459
680
Current income tax and social
contribution expenses
(158)
86
(197,138)
(88,611)
A - Recognition of tax credits and debts
2,331
661
35,815
38,008
Income tax and social contribution
expenses recorded in the statements of
income
2,173
747
(161,323)
(50,603)
Additions:
Goodwill amortization
Loss on investment abroad
Other
Dedutions:
Equity in subsidiaries
Reversal of accrued liabilities for contingencies and taxes and contributions
liabilities
(21) POST-EMPLOYMENT BENEFITS
The Management of certain direct and indirect subsidiaries
identified the following post-employment benefits:
(a) Private Pension Benefits
The private pension benefits that used to be granted to
employees, up to 60% of average compensation for the last 36
months, adjusted, in proportion to the number of years worked
for the companies, limited to 35 years, net of the government
pension benefit. The former plan was terminated and replaced
in the second half of 2004 by a defined contribution private
pension, through the Plan that Generates Free Benefits (PGBL),
purchased from Sul América Seguros de Pessoas e Previdência
S.A. Due to the aforementioned change, actuarial liabilities were
totally reversed against actuarial assets, and only the actuarial
credit remains, in the amount of R$28,620, related to past
contributions from employees who are no longer employed in
the companies, and will be used to cover future contributions;
(b) Single-Life Annuity
A benefit granted to a selected group of employees upon
retirement, under which income benefits are paid for the life of
the participant with no benefit payable to his/her dependants
after the participant’s death;
(c) Indemnity to Executives Program
A benefit offered to a selected group of employees upon
retirement, which in 2003 underwent the following changes:
• The number of participants decreased, and this event was
reflected in income as established by NPC No. 26, of the IBRACON,
approved by CVM Resolution No. 371;
• The calculation and eligibility for indemnity were changed.
Certain indirect subsidiaries granted to their executives a
defined contribution private pension plan through PGBL,
149
2009 ANnual REPORT
2009 RESULTS
purchased from Sul América Seguros de Pessoas e Previdência
S.A. Said benefit guarantees an individually calculated amount,
in which past service provided to certain direct and indirect
subsidiaries was recognized until the date the new plan was
implemented. The amount of the past benefit, calculated on
the plan’s implementation date, will be adjusted through the
retirement date according to the return on the investments of
the PGBL.
five-year period beginning January 1, 2002, and actuarial gains/
losses are being amortized over the average remaining years
of work estimated for employees participating in the plan. The
recognized amount of actuarial gains or losses will correspond
to the portion of gain or loss that exceeds the highest of 10%
of the present value of the actuarial obligations and 10% of the
fair value of the plan’s assets, in accordance with item 53 of said
standard.
(21.1) ACCOUNTING POLICY ADOPTED FOR RECOGNITION
OF ACTUARIAL SURPLUS/DEFICIT
(21.2) RESULTS OF ACTUARIAL VALUATION
According to IBRACON Accounting Standard and Procedure
(NPC) No. 26, certain indirect subsidiaries elected to record the
plan actuarial liabilities as of December 31, 2001 in income over a
We describe below the assets/ (liabilities) and the total expenses
recognized in the indirect subsidiaries’ financial statements, by
benefit granted:
Consolidated
Reconciliation of assets/(liabilities) to
be recognized
Single-life annuity
Indemnity to executives
program
Total
2009
2008
2009
2008
Present value of actuarial obligations,
totally uncovered
(11,415)
(10,785)
(14,631)
(9,588)
Net value of (gains) losses not recognized in the balance sheet
6,622
6,458
3,735
(649)
10,357
5,809
Cost of past service not yet recognized
in the balance sheet
–
–
997
1,649
997
1,649
(4,793)
(4,327)
(9,899)
(8,588)
(14,692)
(12,915)
Assets/(liabilities) to be recognized in
the balance sheet
2009
(26,046)
2008
(20,373)
Consolidated
Single-life annuity
Indemnity to executives
program
Total
2010
2009
2010
2009
2010
2009
(4,793)
(4,327)
(9,899)
(8,588)
(14,692)
(12,915)
(1,228)
(1,102)
(1,188)
(659)
(2,416)
(1,761)
(711)
(641)
(439)
–
(1,150)
(641)
Amortization of cost of past service
–
–
(652)
(652)
(652)
(652)
Contributions made in the year
–
1,277
–
–
–
1,277
(6,732)
(4,793)
(12,178)
(9,899)
(18,910)
(14,692)
Actuarial liabilities to be recorded/
recorded at beginning of year – Accounts
payable
Expenses to be recognized/recognized in
the year: (a)
Cost of interest
Amortization of actuarial (gains) losses
Actuarial liabilities to be recorded/
recorded at end of year – Accounts
payable
(a) For the year ended December 31, 2009, the amounts related to actuarial valuation expenses were recorded under Administrative
Expenses.
150
2009 ANnual REPORT
2009 RESULTS
(21.3) ACTUARIAL ASSUMPTIONS
Assumptions used for valuations prepared by the internal actuaries
were as follows:
Economic valuation method: Actuarial liabilities were determined
under the Projected unit Credit Method.
Economic hypothesis
2009/2008
Nominal discount rate
10.98% p.a. / 10.98% p.a.
Expected nominal rate of return on plan assets
Not applicable / Not applicable
Nominal future salary increase rate
Not applicable / Not applicable
Growth in social insurance and limits
4.7% p.a. / 4.7% p.a.
Inflation
4.7% p.a. / 4.7% p.a.
Capacity factors:
- salaries
Not applicable / Not applicable
- benefits
1/1
Demographic hypothesis
2009/2008
Mortality table
AT2000/ AT2000
Mortality table of individuals with disability
RRB 1944/ RRB 1944
Table of disability benefit vesting
RRB 1944/ RRB 1944
Turnover Table
SulAmérica Experience
Percentage of active participants married upon
retirement
Not applicable / Not applicable
Age difference between participants and spouses
Not applicable / Not applicable
The discount rate used by the Companies is that usually adopted in the market.
(22) OTHER INFORMATION
(22.1) INSURANCE
It is the direct and indirect subsidiaries’ policy to maintain
insurance coverage for property and equipment items subject to
risks and at amounts considered sufficient to cover possible losses,
considering the nature of their activities.
Items
Properties
Vehicles
Insurance coverage
Coverage amount
2009
2008
Material damages to properties,
machinery and equipment
173,865
102,417
Fire, robbery and collision
684
484
174,549
102,901
Total
The coverage risk of the aforementioned assets was ceded to IRB Brasil Resseguros S.A.
151
2009 ANnual REPORT
2009 RESULTS
(22.2) OPERATIONS RELATED TO THE MANAGEMENT OF
THIRD-PARTY FUNDS AND INVESTMENT FUNDS
As of December 31, net equities of investment funds and
portfolios managed by the indirect subsidiary Sul América
Investimentos Distribuidora de Títulos e Valores Mobiliários S.A.
totaled R$17,514,873 (R$14,889,831 in 2008), of which R$12,786,250
(R$10,698,770 in 2008) is from institutional clients (pension
funds and companies), external distributors and private clients.
(22.3) ESTABLISHMENT OF THE FISCAL COUNCIL
On March 31, 2009, at the Extraordinary Shareholders’ Meeting,
shareholders approved the establishment of the parent
company’s Fiscal Council for 2009 and the election of its
members.
(22.4) MATERIAL FACT
On October 6, 2009, the Company disclosed a Material Fact in
compliance with the provisions of Article 157, paragraph 4, of Law
No. 6,404/76, and the CVM Instruction No. 358/02, informing
its shareholders and the market that on that same date it
received a letter from Banco do Brasil S.A., expressing its interest
in purchasing the total interest in subsidiary Brasilveículos
Companhia de Seguros (“Brasilveículos”), in which SulAmérica
holds 60% of voting capital and 30% of total capital. Since then
they have been negotiating with the intention of selling such
interest and control held by the Company. By the publication
date of the financial statements it was not possible to complete
the sale and terminate activities.
In February 2010 the Company submitted to Banco do Brasil
a proposal for the purchase of total shares of Brasilsaúde
Companhia de Seguros (“Brasilsaúde”), in which the Company
holds 50.05% interest in total and voting capital. By the
publication date of financial statements it was not possible to
conclude the negotiations.
(22.5) RETROACTIVE COLLECTION OF PREMIUMS OF THE
INDIVIDUAL HEALTH INSURANCE
On December 20, 2004, the indirect subsidiary Sul América
Companhia de Seguro Saúde entered into Commitment Letter
No. 002/2004 with the National Supplementary Health Plan
Agency (ANS), with the participation of the Secretariat of
Economic Rights of the Ministry of Justice, which established,
among others, the premium adjustment methodology for and
commitment to calculate and adjust the premiums of the
portfolio of individual health insurance contracts issued by
January 1, 1999 and not adapted to Law No. 9,656/1998 with the
purpose of restoring their respective economic and financial
balance. In compliance with said Commitment Letter, the
ANS authorized, on June 16, 2005, a 26.10% adjustment to the
premium of said contracts beginning July 1, 2005. However, this
adjustment was questioned in court by third parties.
In July 2005, the Department for Consumer Protection and
Defense (Procon) of Feira de Santana filed a Public Civil Action
against the indirect subsidiary with the First Lower Court
of Consumer Defense of Salvador, State of Bahia, so that the
defendant refrain from charging customers with whom it
entered into a contract before the Law No. 9,656/1998 became
effective, relating to any value above 11.69%, regarding the
adjustment of 2005. On July 21, 2005, an injunction limited the
adjustment for this period to 11.69%.
In October 2009, the State Courts of Salvador ruled that it was
outside its jurisdiction and sent the records to the 12nd Federal
Court of Rio de Janeiro. On November 30, 2009, the 12nd Federal
Lower Court of Rio de Janeiro revoked the injunction that
impeded the application of an increase above 11.69% set forth in
the Law, applicable to contracts before the Law No. 9,656/1998.
From January 2010, insureds, who were still participating, were
informed about and received the charge of the retroactive
portion, which amounts to approximately R$82,000 having
four payment options, without monetary adjustments, as
follows: (i) cash payment with 40% of discount, (ii) payment
in two installments with 30% of discount, (iii) payment in six
installments with 10% of discount, and (iv) payment in twelve
installments, without discount and mandatory to all insureds
that did not opt for any of the above options.
This decision may have an impact on other preliminary
injunction in the State Courts of Rio de Janeiro so that it may
also be amended, resulting in the acknowledgement of the
regulatory power of the ANS and in the confirmation that said
adjustment of 26.10% is legal.
(22.6) MINIMUM AND ADDITIONAL CAPITAL/SOLVENCY
MARGIN
The indirect subsidiaries that have insurance and private
pension operations shall follow the specific rules on minimum
and additional capital for companies which are under SUSEP’s
regulation, and solvency margin for those under ANS’s
regulation.
As of December 31, 2009, the indirect subsidiaries that have
insurance operations are in compliance with the provisions of
SUSEP and ANS.
(23) SUBSEQUENTS EVENTS
(23.1) UPDATE OF MEDICAL PROCEDURES RELEASED BY ANS
On January 12, 2010, ANS issued the Regulatory Resolution No.
211, which updates the List of Covered Healthcare Procedures and
Events, introducing new services for policies sold from January
1, 1999. This Resolution will only enter into effect on June 7, 2010.
The Management of indirect subsidiaries that operate the
health insurance is still evaluation the effects that such change
could produce.
(23.2) CHANGE IN THE BRAZILIAN ACCOUNTING PRACTICES
With the introduction of Law No. 11,638/07, which updated the
Brazilian corporate legislation in order to enable the convergence
of the accounting practices adopted in Brazil and those of
the International Financial Reporting Standards (IFRS), new
accounting standards and technical pronouncements have
been issued in accordance with the international accounting
standards by the Committee of Accounting Pronouncements
(CPC), applicable to the periods subsequent to these financial
statements. The main changes that may affect the financial
statements of the Company and its subsidiaries are as follows:
152
2009 ANnual REPORT
2009 RESULTS
a) CPC 11 – Insurance contracts, approved by CVM Resolution No.
563/2008.
The main changes are as follows:
• Requirement of classification of contracts issued into insurance,
service and investment contracts;
• Requirement of separation of derivatives included in and
deposit items existing in a main contract (of insurance), and its
valuation at their fair values;
• Prohibition of recognizing reserves for future claims, if these
claims are originated from insurance contracts not in force (such
as reserves for catastrophes or equalization of risk);
• Requirement of annual test of liability related to insurance
contract or discretionary participation (LAT – Liability Adequacy
Test);
• Valuation at fair value of liabilities and assets of insurance
contracts taken up in a business combination or portfolio transfer
(subject to additional regulation);
• Permission to recognize the characteristic of the discretionary
participation as liability or separate item of Shareholders’ Equity;
and
• New requirements of disclosures related to insurance contracts.
As these changes have been recently introduced and some
of them still depend on regulation by certain authorities, the
Management of indirect subsidiaries has not concluded yet the
effects that such changes could have on its quarterly information
and income for the following years.
b) CPC 23 – Accounting policies, changes to estimates and
ratification of errors, approved by CVM Resolution No. 592/2009.
As these changes have been recently introduced and some of
them still depend on analysis and decision making by indirect
subsidiaries that operate insurance lines to be made, the
Management has not concluded yet the effects that such changes
could have on its financial statements and income for the
following years.
c) CPC 32 – Taxes on income, approved by CVM Resolution
No.599/2009.
The main modification is related to the determination of the
realizable value of recoverable taxes and contributions that,
according to the CVM rules, used to be estimated based on future
results determined in budgets prepared for the next 10 years,
discounted to present value at the estimated future SELIC rate.
As established by such CPC rule, deferred tax assets and liabilities
shall not be discounted to present value.
As mentioned in Note (7.1.2) – Other recoverable taxes and
contributions, the estimate resulting from the application of this
pronouncement, in case the recoverable tax would be accounted
for its face value, would be an addition of R$23,674 to the
consolidated balance at December 31, 2009.
(23.3) SOLVENCY MARGIN AND MINIMUM ADJUSTED SHAREHOLDERS’ EQUITY / TECHNICAL RESERVES AND PREMIUMS
ANS issued on December 2, 2009 the Resolution No. 209, and on
December 28, 2009 the Regulatory Instruction No. 38, which provide
for the new rule of solvency margin and minimum adjusted
shareholders’ equity that will enter into effect on January 1, 2010.
These rules revoke the Regulatory Resolution No. 14, of October
24, 2002, the Collegiate Board Resolution (RDC) No. 65 of April 6,
2001, the Regulatory Resolution (RN) No. 57 of December 17, 2003,
the Regulatory Instruction (IN)/Office of Rules and Qualification of
Health Insurance Operators (DIOPE) No. 17 of August 25, 2008 and
IN/DIOPE No. 35 of October 6, 2009.
In relation to the change to the calculation of the solvency margin
and the minimum adjusted shareholders’ equity, the health
insurance companies shall add and deduct new adjustments
due to economic effects. The adoption of such change, in case
it was applied as of December 31, 2009, by indirect subsidiaries
that operate health insurance, is not expected to give rise to an
additional need of contribution to capital for fulfilling the solvency
margin.
(23.4) CONCLUSION OF FINANCIAL STATEMENTS
At the Board of Directors’ Meeting held on February 22, 2010, the
Board approved these financial statements, which includes in
the Note of Subsequent Events all the events occurred after the
closing of the year ended December 31, 2009.
153
2009 ANnual REPORT
Opinion of fiscal council
SUL AMÉRICA S.A.
Authorized Capital Corporation
OPINION OF FISCAL COUNCIL
The Fiscal Council of Sul América S.A., exercising its vested legal and statutory duties, examined the Management Report and
Financial Statements and other statements prepared by the Company for the year ended December 31, 2009. Based on the
examination of these documents, on the report of the independent accountants Deloitte Touche Tohmatsu, which issued an
unqualified opinion, and the clarifications provided by the Company’s management, the undersigned Fiscal Council members have
the opinion that the aforementioned documents fairly present the ownership structure and financial position of the Company, and
concluded, as provided for in Article 163 of Law No. 6,404/76 (as amended), to submit such documents for approval of the Company’s
shareholders at the Annual Shareholders’ Meeting that will be held on March 31, 2010.
Rio de Janeiro, February 22, 2010.
Domingos Carelli Netto
Jorge Augusto Hirs Saab
Nelson Braune
Sergio Alfredo Diuana
Walter Iorio
154
2009 ANnual REPORT
Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
To the Shareholders and Management of
Sul América S.A.
Rio de Janeiro – RJ
1. We have audited the accompanying individual (Company) and
consolidated balance sheets of Sul América S.A. (the “Company”)
and subsidiaries as of December 31, 2009 and 2008, and the
related statements of income, changes in shareholders’ equity
(Company), cash flows, and value added for the year then
ended, all expressed in Brazilian reais and prepared under the
responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements. We have
not audited the financial statements of the indirect subsidiaries
Brasilveículos Companhia de Seguros and Brasilsaúde Companhia
de Seguros for the year ended December 31, 2009 and 2008,
whose assets represented 15.01% (14.79% in 2008) of the total
consolidated assets, insurance premiums represented 18.50%
(17.36% in 2008) of the consolidated insurance premiums, and
equity gains in subsidiaries totaled R$14,224 thousand (R$54,965
thousand in 2008). These financial statements were audited by
other independent auditors, and our report thereon, insofar as it
relates to the amounts of assets, liabilities and income of these
subsidiaries, is based solely on the report of those auditors.
2. Our audit was conducted in accordance with auditing standards
in Brazil and comprised: (a) planning of the work, taking into
consideration the significance of the balances, volume of
transactions, and the accounting and internal control systems of
the Company and its subsidiaries; (b) checking, on a test basis, the
evidence and records that support the amounts and accounting
information disclosed; and (c) evaluating the significant accounting
practices and estimates adopted by Management, as well as the
presentation of the financial statements taken as a whole.
3. In our opinion, based on our audits and the report of other
independent auditors, the financial statements referred to in
paragraph 1 present fairly, in all material respects, the individual and
consolidated financial positions of Sul América S.A and subsidiaries
as of December 31, 2009 and 2008, and the results of their
operations, the changes in their shareholders’ equity (Company),
their cash flows and the values added in operations for the year
then ended, in conformity with Brazilian accounting practices.
4. The accompanying financial statements have been translated
into English for the convenience of readers outside Brazil.
Rio de Janeiro, February 23, 2010
DELOITTE TOUCHE TOHMATSU
Auditores Independentes
José Barbosa da Silva Júnior
Engagement Partner
155
2009 ANnual REPORT
Corporate information
BOARD OF DIRECTORS
Patrick Antonio Claude de Larragoiti Lucas (Chairman)
Robert William Crispin (Vice-Chairman)
Carlos Jaime Muriel Gaxiola
Isabelle Rose Marie de Segur Lamoignon
Joaquim de Mello Magalhães Júnior
Jorge Hilário Gouvêa Vieira
Rony Castro de Oliveira Lyrio
Pierre Claude Perrenoud (Independent Member)
Roberto Teixeira da Costa (Independent Member)
ADVISORY COMMITTEES
Audit Committee
Rony Castro de Oliveira Lyrio (President)
Jorge Augusto Hirs Saab
Jorge Hilário Gouvêa Vieira
Roberto Teixeira da Costa
Timothy Scott Mackenzie
Walter Iorio
Compensation Committee
Patrick Antonio Claude de Larragoiti Lucas (President)
Carlos Jaime Muriel Gaxiola
Roberto Teixeira da Costa
Rony Castro de Oliveira Lyrio
Investment Committee
Patrick Antonio Claude de Larragoiti Lucas (President)
Carlos Infante Santos de Castro
Domingos Carelli Netto
Eric H. Anderson
Kevin Martins da Silva
Governance and Disclosure Committee
Patrick Antonio Claude de Larragoiti Lucas (President)
Arthur Farme d’Amoed Neto
Kevin Martins da Silva
Roberto Teixeira da Costa
Sergio Antonio Borriello
FISCAL COUNCIL
Domingos Carelli Neto
Jorge Augusto Hirs Saab
Nelson Braune
Sérgio Alfredo Diuana
Walter Iorio
BOARD OF EXECUTIVE OFFICERS
Patrick Antonio Claude de Larragoiti Lucas (Chief Executive Officer)
Arthur Farme d’Amoed Neto (Vice-President)
Carlos Alberto de Figueiredo Trindade Filho (Vice-President)
Gabriel Portella Fagundes Filho (Vice-President)
Luís Otávio Saliba Furtado (Vice-President)
Marcelo Pimentel Mello (Vice-President)
Marcus Vinicius Lopes Martins (Vice-President)
Maria Helena Cardoso Monteiro (Vice-President)
Oswaldo Mário Pêgo de Amorim Azevedo (Vice-President)
Renato Russo (Vice-President)
Sérgio Antônio Borriello (Vice-President)
Alexandre Petrone Vilardi (Executive Officer)
Anderson Lima de Mello (Executive Officer)
Bruno Peixoto de Alencar Sardinha (Executive Officer)
Carlos Alexandre Baldaque Guimarães (Executive Officer)
Carlos Gabriel Prezensky (Executive Officer)
Carolina de Molla (Executive Officer)
Edison Yoshiharu Kinoshita (Executive Officer)
Emil Andery (Executive Officer)
Enio Tetsuo Fukai (Executive Officer)
Jorge Manuel Euclides Noronha (Executive Officer)
José Carlos dos Santos Vieira (Executive Officer)
José Henrique Pimentel de Melo (Executive Officer)
Laênio Pereira dos Santos (Executive Officer)
Luciano Macedo de Lima (Executive Officer)
Luiz Fernando Ract Camps (Executive Officer)
Manoel Roberto Gottsfritz Cardoso (Executive Officer)
Marcelo Benevides Xavier (Executive Officer)
Marcelo Saddi Castro (Executive Officer)
Marco Antonio Antunes da Silva (Executive Officer)
Roberto André Galfi (Executive Officer)
Roberto Carlos Marucco Junior (Executive Officer)
MAIN COMPANIES AND ACTIVITIES
Companies
Sul América S.A.
Main activity
Holding
Sul América Companhia Nacional de Seguros
Insurance
Sul América Seguros de Pessoas e Previdência S.A.
Insurance
Sul América Companhia de Seguro Saúde
Insurance
Sul América Companhia de Seguros Gerais
Insurance
Sul América Seguro Saúde S.A.
Insurance
Sul América Investimentos Distribuidora de Títulos e Valores Mobiliários S.A.
Sul América Serviços de Saúde S.A.
Asset Management
ASO
156
2009 ANnual REPORT
CORPORATE INFORMATION
C.A.S.A.s & Branch addresses
Auto Super-Service Center - C.A.S.A.
Branch
ADDRESSES [GRI 2.4]
HEADQUARTERS – SULAMÉRICA
Rua Beatriz Larragoiti, 121
Cidade Nova – Rio de Janeiro – RJ
Phone: +55 (21) 2506-8585
BRANCH OFFICES
BELÉM
Rua Santo Antônio, 316 – 11th and 12th floors,
Centro – Belém – PA
Phone: +55 (91) 3216-2500
BELO HORIZONTE
Rua Ouro Preto, 1112, 5th floor, Sector 1
Santo Agostinho – Belo Horizonte – MG
Phone: +55 (31) 3348-9000
BLUMENAU
Rua Nereu Ramos, 463,
Centro – Blumenau – SC
Phone: +55 (47) 2102-7500
BRASÍLIA
Setor Comercial Norte - Quadra 3 - Bloco B, 120
Asa Norte – Brasília – DF
Phone: +55 (61) 4009-6700
CAMPINAS
Avenida Barão de Itapura, 1128, 2th floor
Guanabara – Campinas – SP
Phone: +55 (19) 3734-6800
CUIABÁ
Av. Rubens de Mendonça, 2000
Bosque da Saúde – Cuiabá – MT
Phone: +55 (65) 4009-2000
CURITIBA
Travessa Alfredo Bufren, 155 – stores 1 to 10
Centro – Curitiba – PR
(41) 2108-2255
FORTALEZA
Av. Santos Dumont, 1058,
Aldeota – Fortaleza – CE
Phone: +55 (85) 3455-3200
PORTO ALEGRE
Rua Sete de Setembro, 760
térreo, 1th e 4th ao 8th floor
Centro – Porto Alegre – RS
Phone: +55 (51) 2108-8200
157
2009 ANnual REPORT
CORPORATE INFORMATION
SALVADOR
Av. Antonio Carlos Magalhães, 3359,
Condomínio Torre do Iguatemi, store 1
Parque Bela Vista – Salvador – BA
Phone: +55 (71) 3503-6650
RECIFE
Av. Eng. Domingos Ferreira, 467
Pina – Recife – PE
Phone: +55 (81) 3447-6600
RIBEIRÃO PRETO
Avenida Portugal, 545, 2th floor,
Vila Seixas – Ribeirão Preto – SP
Phone: +55 (16) 3605-8585
SÃO PAULO
Rua Pedro Avancine, 73, 6th, 7th and 8th floor
Jardim Panorama – São Paulo – SP
Phone: +55 (11) 3779-5000 / +55 (11) 3779-7000
RIO DE JANEIRO
Rua Beatriz Larragoiti, 121
Cidade Nova – Rio de Janeiro – RJ
Phone: +55 (21) 2506-8585
Auto Super-Service Center - C.A.S.A.
1
ABC
Av. Dom Pedro ll, 759 – Jd. Santo André, CEP: 09090-230
2
Barra-RJ
Av. das Américas, 500, bloco 11, Subsolo, Barra da Tijuca/RJ
3
Belo Horizonte
Av. Nossa Senhora do Carmo, 261 e 277, Sion, Belo Horizonte/MG
4
Blumenau
Rua Sebastião Cruz, 103, Jardim Blumenau/SC
5
Campinas
Rua Nuporanga, 454, Chácara da Barra, Campinas/SP, CEP: 13090-713
6
Caxias do Sul
Rua Ernesto Alves, 1118, Centro, Caxias do Sul/RS, CEP: 95020-360
7
Curitiba
Rua Pasteur, 529 e 547, Batel, Curitiba/PR
8
Fortaleza
Av. Santos Dumont, 1450, Aldeota, Fortaleza/CE
9
Manaus
Av. Getúlio Vargas, 1065, Centro, Manaus/AM, CEP: 69020-011
10 Porto Alegre
Rua Edu Chaves, 500, São João, Porto Alegre/RJ, CEP: 90240-620
11
Ribeirão Preto
Rua Joaquim Antonio Nascimento, 2693, Jardim Canadá, Ribeirão Preto/SP
12
Rio de Janeiro
Rua Beatriz Larragoiti Lucas, 121, Cidade Nova, Rio de Janeiro/RJ
13
Salvador
Av. Otavio Mangabeira, 3279, Jardim de Alá, Salvador/Ba, Cep:41.830-050
14
São Paulo
Av. dos Bandeirantes, 4860, Planalto Paulista, São Paulo/SP
15
SP-Santana
Av. Luiz Dumont Villares, 580, Jardim São Paulo, São Paulo/SP, CEP: 02085-100
16 Uberlândia
Av. Governador Rondon Pacheco, 1750, Copacabana, Uberlândia/MG, CEP: 38408-343
17
Rua Gelu Vervloet dos Santos, 928, Jardim Camburi, Vitória/ES
Vitória
18 Zona Leste-Aricanduva
Av. Aricanduva, 5555, salas 22, 23, 24, 25 e 26, Jardim Santa Terezinha , São Paulo/SP, CEP: 03527-908
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2009 ANNUAL REPORT
About the report
Guidelines and criteria for the production of Annual Report 2009
Since it was founded in 1895, SulAmérica has been regularly
rendering accounts of its activities to its shareholders, releasing
its first Annual Report as soon as 1896. In addition to the
traditional publication, with a description of its operational,
economic, and financial performance, the company has been
publishing its Social Audit since 2002, with an overview of all
initiatives in the social and environmental area.
In 2009, for the second year running, the SulAmérica Annual
Report follows the third generation guidelines (G3) of the
Global Reporting Initiative (GRI), an international reference for
sustainability reports. [GRI 3.9]
The SulAmérica Annual Report aims at meeting readers’
expectations regarding the company’s performance in economic,
social and environmental areas. The selection of the information
presented in this report was based on the materiality of the topics
for the strategic directions adopted by SulAmérica. It endeavors
to portray the performance of the company in accurate and clear
fashion, having as a reference the recommendations made by
capital market institutions, both in adapting the structure of the
report and in the organization of its contents.
Starting in 2008, the Report has been released exclusively
online in the form of a website. The online version allows not
only adopting more adroit language, supported by multimedia
resources, but also contributes for SulAmérica to reach its goal of
reducing environmental impacts in all processes. Its publication
is supported by a small printed booklet, which features a brief
profile of the company and its main results, inviting the reader
to visit and experience the full report version. In addition, the
online solution encourages the participation of the reader, with
videos, interactive graphics, search engines and other solutions
that facilitate browsing and promote interactivity. [GRI 3.2]
The topics highlighted in the menus were selected based on
their materiality, as measured internally. In line with this, the
issues that the company believes to be the most relevant to its
stakeholders – customers, brokers, employees, suppliers and
community – are presented in convenient menus on every
page of the website. For audiences with specific interests, more
detailed information is available on the full report menu.
The information in this report covers all operations of
the company for the period January 1 to December 31
159
2009 ANNUAL REPORT
qualidade no atendimento
and presents no significant restatements of information
disclosed in previous reports. The company’s financial
statements have been audited by Deloitte Touche Tohmatsu
Independent Auditors. [GRI 3.5, 3.7]
The information contained in this report refers to the
consolidated operations of Sul América S.A., with headquarters
at Rua Beatriz Larragoiti Lucas, 121, Cidade Nova, Rio de Janeiro
(RJ), and its direct and indirect affiliated companies. [GRI 3.1, 3.13]
For questions, concerns or suggestions, please contact the area
of Investor Relations at SulAmérica by email [email protected]
com.br or by telephone +55 (21) 2506-9111. Additional corporate
information is available at www.sulamerica.com.br/ri. [GRI 3.4]
CONTACT POINT FOR QUESTIONS REGARDING THE REPORT OR ITS CONTENTS
INVESTOR RELATIONS
Arthur Farme d’Amoed Neto (Executive vice-President of
Corporate and Investor Relations)
Phone: +55 (21) 2506-8442
Fax: +55 (21) 2506-9111
Rua Beatriz Larragoiti Lucas, 121- 6th floor - Cidade Nova
20211-903, Rio de Janeiro
Talk to IR: [email protected]
www.sulamerica.com.br
STOCK EXCHANGE
BM&FBovespa: SULA11
EXTERNAL AUDIT
Deloitte Touche Tohmatsu
Av. Presidente Wilson, 231 - 22 floor
20030-021, Rio de Janeiro
Phone: +55 (21) 3981-0500
Fax: +55 (21) 3981-0600
www.deloitte.com.br
FINANCIAL STATEMENTS PUBLISHED IN NEWSPAPERS
Valor Econômico – Caderno Nacional [Economic Value - National
Edition] Diário Oficial do Estado do Rio de Janeiro [Official
Gazette of Rio de Janeiro State]
CUSTODIAN FINANCIAL INSTITUTION
Banco Itaú S.A.
Praça Alfredo de Souza Aranha, 100
Jabaquara
04344-902, São Paulo
Phone: +55 (11) 5029-1919
Fax: +55 (11) 5029-1917
160
2009 ANNUAL REPORT
GRI Index
PROFILE INDICATOR
page / Chapter
1.Strategy and analysis
1.1. Statement from the most senior decision maker.
21 - Message from the President
1.2. Description of key impacts, risks, and opportunities.
21 - Message from the President
2.Organizational profile
25 - Sustainability vision
2.1. Name of the organization.
4 - About SulAmérica
2.2. Primary brands, products, and/or services.
4 - About SulAmérica
2.3. Operational structure.
5 - About SulAmérica
2.4. Location of organization’s headquarters.
157 – Corporate information
2.5. Countries where the organization operates.
4 - About SulAmérica
2.6. Nature of ownership and legal form.
4 - About SulAmérica
2.7. Markets served.
42 - Business market
2.8. Scale of the reporting organization
4 - About SulAmérica
2.9. Significant changes during the reporting period.
2.10. Awards received in the reporting period.
61 - Human capital
14 - Awards and recognitions
3.Report parameters
Report profile
3.1. Reporting period for information provided.
159 - About the report
3.2. Date of most recent previous report. 9
160 - About the report
3.3. Reporting cycle. 9
159 - About the report
3.4. Contact point for questions.
159 - About the report
Report scope and boundary
3.5. Process for defining report content
159 - About the report
3.6. Boundary of the report.
160 - About the report
3.7. Specific limitations on the scope.
159 - About the report
3.8. Basis for reporting.
159 - About the report
161
2009 ANNUAL REPORT
GRI Index
PROFILE INDICATOR
page / Chapter
3.9. Data measurement techniques and the bases of calculations.
160 - About the report
3.10. Explanation of the effect of any re-statements.
159 - About the report
3.11. Significant changes from previous reporting periods.
159 - About the report
GRI content index
3.12. Location of standard disclosures.
161 to 166 - About the report
Assurance
3.13. External assurance.
160 - About the report
4. Governança, compromissos e engajamento
4. Governance
30 e 31 - Corporate governance
4.1. Governance structure.
31 - Corporate governance
4.2 Indication whether the Chair of the highest governance body is also an executive officer.
31 - Corporate governance
4.3. Statement of the number of members of the highest governance body that are
independent and/or non-executive members
35 a 37 - Corporate governance
4.4. Mechanisms for recommendations to the highest governance body.
34 - Corporate governance
4.5. Linkage between compensation / economic and environmental performance.
29 - Corporate governance
4.6. Processes to ensure conflicts of interest are avoided.
4.7. Qualifications and expertise of the members.
29 to 31 - Corporate governance
6 - Mission, Vision and Values
4.8. Internally developed statements of values, codes, and principles
36 - Corporate governance
4.9. Procedures of the highest governance body.
29 - Corporate governance
39 - Risk Management
29 a 31 - Corporate governance
Commitments to external initiatives
4.11. Precautionary approach. 2 25
39 - Risk Management
4.12. Social charters, principles, or other initiatives. 1 23 and 24
26 - Sustainability vision
4.13. Memberships in associations.
26 - Sustainability vision
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2009 ANNUAL REPORT
GRI Index
PROFILE INDICATOR
page / Chapter
Stakeholder engagement
4.14. List of stakeholder groups.
26 - Sustainability vision
4.15. Basis for identification and selection of stakeholders.
26 - Sustainability vision
4.16. Stakeholder engagement.
26 - Sustainability vision
4.17. Key topics and concerns raised through stakeholder engagement.
26 - Sustainability vision
PERFORMANCE INDICATORS
page / Chapter
EC.Economic performance
Economic management approach (goals and performance, policy, additional contextual
information).
EC1. Economic value generated and distributed.
EC2. Risks and opportunities due to climate change
EC3. Defined benefit plan.
71 - Capital Market
80 - Distribution of added value
40 - Risk Management
59 - Human capital
Market presence
EC5. Standard entry level wage compared to local minimum wage.
58 - Human capital
EC7. Local hiring.
59 - Human capital
Indirect economic impacts
EC8. Development and impact of infrastructure investments.
66 to 67- Social investment
EN.Environmental performance
Environmental aspects management approach (goals and performance, policy,
26 e 27 - Sustainability vision
69 - Social investment
Energy
EN7 Energy use reduction initiatives
69 - Social investment
Emissions, effluents, and waste
EN18. Initiatives to reduce greenhouse gas emissions
69 - Social investment
EN22. Total weight of waste by type and disposal method.
69 – Social Investment
163
2009 ANNUAL REPORT
GRI Index
PERFORMANCE INDICATORS
page / Chapter
LA.Social performance – Labor practices and decent work
Labor aspects management approach (goals and performance, policy,
organizational responsibility, training and awareness, monitoring and follow-up,
additional contextual information).
57 - Human capital
Employment
LA1. Total workforce by employment type and region.
56 to 57 - Human capital
LA2. Rate of employee turnover.
58 - Human capital
LA3. Benefits provided to employees.
59 - Human capital
Labor/Management relations
LA4. Collective bargaining agreements.
61 - Human capital
LA5. Minimum notice period(s) regarding operational changes, including whether it is
specified in collective agreements
61 - Human capital
Occupational health and safety
LA6. Workforce represented in formal health and safety committees.
61 - Human capital
LA7. Occupational diseases, lost days, and work related fatalities.
61 - Human capital
LA8. Education, counseling and prevention programs regarding serious diseases.
61 - Human capital
LA9. Health and safety topics covered in formal agreements with trade unions.
61 - Human capital
Training and education
LA10. Average hours of training.
59 - Human capital
LA11. Programs for skills management and lifelong learning.
60 - Human capital
LA12. Performance and career development reviews.
59 - Human capital
Diversity and equal opportunity
LA13. Composition of governance bodies.
58 - Human capital
LA14. Ratio of basic salary of men to women.
58 - Human capital
HR.Social performance – Human rights
Human rights aspects management approach (goals and performance, policy,
organizational responsibility, training and awareness, monitoring and follow-up,
additional contextual information).
61 - Human capital
Investment and procurement practices
HR3. Total hours of employee training on policies and procedures concerning aspects of
human rights that are relevant to operations, including the percentage of employees trained
61 - Human capital
164
2009 ANNUAL REPORT
GRI Index
PERFORMANCE INDICATORS
page / Chapter
Freedom of association and collective bargaining
HR5. Operations in which the right to exercise freedom of association and collective
bargaining may be at risk.
61 - Human capital
Child labor
HR6. Operations identified as having risk of child labor
61 - Human capital
Forced and compulsory labor
HR7. Operations identified as having risk of forced or compulsory labor.
61 - Human capital
Security practices
HR8. Security personnel trained in aspects of human rights.
61 - Human capital
SO.Social performance - Society
Social aspects management approach (goals and performance, policy,
organizational responsibility, training and awareness, monitoring and follow-up,
additional contextual information).
66 - Social investment
Community
SO1. Management of impacts of operations on communities.
66 - Social investment
Anti-corruption
SO3. Employees trained in anti-corruption policies.
60 - Human capital
PR.Social Performance – Product Responsibility
Customer health and safety
PR1. Life cycle stages in which health and safety impacts of
products and services are assessed for improvement, and
percentage of significant products and services categories subject
to such procedures.
The services offered by SulAmérica provide compensation
for direct impacts on health and property safety of its customers. The company has developed criteria to monitor
the entire lifecycle of products from the creation of policyholder kits and other documentation sent to policyholders to monitoring the safety of the environments to which
they are exposed. In 2009, the company reviewed its communication policy and implemented it initially in the segment of auto insurance. The change involved the creation
of a policyholder kit containing essential information and
directing the customer to the website, where updated information is available.
PR2. Total number of incidents of non-compliance with regulations
and voluntary codes concerning health and safety impacts of
products and services during their life cycle, by type of outcomes.
(additional)
There is no record of an incident concerning the use of promotional materials for products and services.
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2009 ANNUAL REPORT
GRI Index
PERFORMANCE INDICATORS
page / Chapter
Product and service labeling
PR3. Type of product and service information required by
procedures, and percentage of significant products and services
subject to such information requirements.
PR5. Practices related to customer satisfaction, including results of
surveys measuring customer satisfaction. (additional)
SulAmérica develops products and services aimed at the
safety and satisfaction of its customers and in compliance
with the Code of Consumer Rights, and obeying the regulations imposed by regulatory agencies.
64 – Quality Attention
Marketing communications
PR6. Programs for adherence to laws, standards, and voluntary
codes related to marketing communications, including
advertising, promotion, and sponsorship.
SulAmérica observes the rules established by the Code of
Consumer Rights and the Brazilian Code of Advertising
Self-Regulation in the creation of all its pieces and advertising campaigns. To ensure compliance with the law, the SulAmérica marketing team maintains an approval process
for all communications presented by its suppliers, together
with its legal department. SulAmérica believes that respecting and implementing these guidelines is the most effective
and correct way to advertise its products and services.
Compliance
PR9. Monetary value of significant fines for noncompliance
with laws and regulations concerning the provision and use of
products and services.
In 2009, SulAmérica paid less than 0.05% of its revenues
with premiums in fines for noncompliance with laws and
regulations concerning the provision and use of products
and services.
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2009 ANNUAL REPORT
Credits
General coordination and preparation of contents
Investor Relations Team:
Arthur Farme d’Amoed Neto
Executive Vice-President of Corporate and Investor Relations
Design, web development, videos
and content consultants
Report Comunicação
Klaus Meirose da Silva Costa
Superintendent of Investor Relations and New Businesses
Paula Vianna Raffo
Investor Relations Manager
Flávia Steinberg
Investor Relations Consultant
Marcelo Fonseca Lopes
Investor Relations Consultant
Julyana Fonseca Lagoas
Investor Relations Trainee
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