February 19, 2018 / 12:17 PM / 2 years ago

UPDATE 3-Brazil's BB Seguridade shares fall after profit miss

(Adds CEO comments)

By Carolina Mandl

SAO PAULO, Feb 19 (Reuters) - Shares in Brazilian insurance holding company BB Seguridade fell on Monday after management said raising profit will continue to be a challenge this year as interest rates reach their lowest level ever in the country.

Shares were down 3.2 percent in mid-morning trading in Sao Paulo at 30.72 reais after BB Seguridade missed fourth-quarter profit estimates as a result of lower interest rates and falling premiums written.

BB Seguridade Chief Executive José Maurício Coelho told reporters he expects rising profitability only next year, and that efforts to improve operational results last year were not enough to offset the impact of lower interest rates in the insurer’s securities portfolio.

BB Seguridade reported recurring net income of 941 million reais ($291.24 million), down 12 percent from 1.074 billion reais a year earlier. Analysts expected a recurring profit of 1.020 billion reais for the quarter.

A higher loss ratio of the reinsurance company IRB Brasil Resseguros SA also impacted BB Seguridade’s results. IRB’s equity income totaled 32 million reais in the fourth quarter, down 58 percent from the same period a year earlier.

BB Seguridade posted a recurring return on equity of 42.2 percent, 10 percentage points lower than one year earlier. Coelho said the insurance holding will keep this year its policy of paying up to 80 percent of profits in dividends to shareholders.

The insurance holding company said it expects a variation in recurring net income of minus 2 percent to 2 percent in 2018, compared with a contraction of 4.8 percent last year.

CEO Coelho said he expects to conclude a discussion with partner Mapfre SA on a reorganization of BB Seguridade as early as this year.

Management will further discuss fourth-quarter results with analysts on Tuesday.

$1 = 3.2310 reais Reporting by Carolina Mandl; Editing by Marguerita Choy and Alistair Bell

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