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Porto Seguro books 4.1% rise in Q1 net income despite insurance industry headwinds

Porto Seguro SAposted a 4.1% increase in its first-quarter net income, which reached 240.4 millionBrazilian reais against 230.9 million reais a year ago.

The improvement came amid an adverse economic scenario facingBrazil's insurance industry. Excluding a year-over-year increase in taxes, net incomewould have been 254 million reais, Porto Seguro said in a May 3 earnings statement.Meanwhile, EPS improved to 74 centavos from 71 centavos.

The company's insurance lines accounted for 170.3 million reaisof the net earnings, while financial and service businesses and the holdings segmentbooked 33.0 million reais and 37.1 million reais each.

The company tallied 3.50 billion reais in written premiums forthe quarter, up from 3.32 billion reais a year earlier. A large chunk of the totalwas from the auto segment, which grew 4% to 2.30 billion reais. The insurer's propertyand casualty segment expanded to 311.2 million reais from 293.1 million reais whilethe health segment rose to 304.9 million reais from 289.1 million reais.

Total revenues grew to 4.02 billion reais from 3.84 billion reaisin the year-ago period. A total of 3.51 billion reais of the revenue came from insurancepremiums while other businesses accounted for 508 billion reais.

Income from credit operations totaled 228 million reais in thequarter, 11% lower from the first quarter of 2015. Nonperforming loans over 90 dayshit 6.5% while loan-loss provisions hiked to 7.3%. Total credit portfolio reached4.4 billion reais.

The loss ratio increased to 57.1% from 55.8% a year ago. Thecombined ratio also rose to 98.9% from 97.4%. The insurer's return on average equity,meanwhile, fell to 16.8% from 17.8% in the period.

As of May 2, US$1 was equivalentto 3.50 Brazilian reais.