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Sul América books 2.2% rise in Q1 net income

Sul América SAposted a 2.2% rise in first-quarter profit as the company saw stronger revenuesfrom its health and dental segment more than offset weaker results from its autoinsurance business.

The Brazilian insurance giant posted net income after noncontrollinginterest of 105.9 million Brazilian reais, or 32 centavos per share, up from 103.5million reais, or 31 centavos per share, earned in the year-ago period.

In reporting its results, the company noted that results for the quarter, as compared tothe prior-year period, did not benefit from the contribution of the company's largerisks and mortgage portfolios. Results were also impacted by Brazil's new socialcontribution tax of 20%, which impacted the company's bottom line by 10 millionreais, and by the declarationof interest on shareholders' equity by some subsidiaries to Sul América.

Still, the company saw an 80-basis-point improvement in the overall loss ratio, whichcame in at 76.7% for the three-month period, largely due to growth in its healthand dental segment.

Total operating revenues increased 5.4% year-over-year to 3.88billion reais in first quarter, as revenues in the health and dental insurance segment,which rose 13.5% to 2.92 billion reais, offset a 13.1% decline in auto insurancerevenues.

"Performance for our auto insurance business, marked byshorter cycles, reflected the unstable macro scenario and an increasingly competitiveenvironment, with revenue contraction and a worse loss ratio," CEO GabrielPortella said in a statement.

The company also noted that a series of portfolio sales led toa 53.7% drop in the company's revenues for other property and casualty insurance,which reached 37.1 million reais. Life and personal accident insurance revenuesalso decreased 18.6% to 79.7 million reais.

Investment income, meanwhile, rose 11.4% year over year to 202.0million reais.

General and administrative expenses grew to 372.2 million reais,or 9.6% of operating revenues, from 320.8 million reais a year ago.

"Despite the current uncertainties, we maintain our convictionof a great potential for developing the segments in which we operate," Portellasaid. "Even with a long-term, value-oriented view, we are aware of the challengesthat 2016 present, but are confident in the solid base we have built to keep generatingpositive results."

As of April 27, US$1 wasequivalent to 3.54 Brazilian reais.