Good morning, one and all, and welcome to the earnings result conference for the seventh quarter, 2023 for Porto Seguro S.A. We would like to inform you that the presentation is being recorded and simultaneously translated into English. The slides are available for download at the IR site.
Audio in English. For those listening to the conference call in English, there's an option to mute the original audio in Portuguese by clicking on Mute Original Audio for a better experience.
After the closing of the presentation, we will go on to the question and answer session. Please send your name and company through the Q&A icon located at the bottom of your screen. As part of the dynamic, your names will be announced so that you can pose your own question. You will see a prompt for your microphone to be unmuted, should you not wish to pose your question yourselves right without a microphone at the end of the question so the operator can read it out. Forward-looking statements made during this conference call regarding the Porto business outlooks are based on the beliefs and assumptions of the company management and on information currently available. Such forward-looking statements are no guarantee of performance. They involve risks, uncertainties, and assumptions relating to future events, and therefore depend on circumstances that may or may not occur.
Overall economic conditions of the business sector in which Porto Seguro acts and other operating factors could impact the company's future performance. I would like to invite Mr. Roberto Santos to begin his presentation. A good morning to one and all. Thank you for your participation in our second quarter results conference call for the second quarter, 2023. This quarter, we achieved record results in the second quarter and in the first half of the year. Quarterly recurring profit was BRL 670 million, and for the first time, we delivered a half year recurring profit of BRL 1 billion. Our recurring ROAE for the quarter was 24.5% and 18.4% for the half year. After a highly challenging period, we have been delivering high profitability levels in recent quarters.
As a result of the advances that we made in the period, revenues grew above two digits for the quarter. This happens in all of the business verticals, which were able to increase their revenues and expand the customer and business base. In the insurance vertical, premiums continued to grow in double digits. Auto stood out. Besides an increase in the prices, they increased 90,000 vehicles in the insured fleet in just three months. Thanks to the strategy of accelerating sales in certain markets, also in Auto, we had a significant improvement in claims, mainly due to adjustments in pricing, improvement in risk underwriting, and of course, initiatives to reduce claim costs.
In the Porto Saúde vertical, quarterly premiums and revenues maintained a strong growth rate observed in recent quarters, with an increase of the portfolio, where we reached 461,000 lives, an expressive increase in the last 24 months. In Porto Bank, revenues increased by 9%, with an emphasis on the consumption. Now, NPL remains stable vis-à-vis the first quarter, with 0.6 percentage points better than the market average. This because of our strict concession policies, where we favor granting credit to customers who have a relationship with the company. In the services vertical, revenues increased 20.2%. Now, regarding the return on our financial applications, we had a profitability equivalent to 100% of CDI, with a favorable impact on variable income in inflation-linked options.
We have given back to society in terms of indemnizations and capitalization, BRL 8 billion this quarter. Simply to conclude, I would like to make some important recognitions. We won the Best in ESG 2023 in Guia Exame. Our brand was the second strongest brand in the country, with a growth of 3% when compared to the last publication. I would like to thank all of you for your participation in this conference call. Without further ado, I will give the floor to Celso to continue speaking about our revenues and profitability in greater detail. Celso? Well, thank you, Roberto. A good day to all of you. I would like to highlight that our growth in the quarter was quite robust, 17.6%, very aligned with our projections for this second quarter.
Our 4 business verticals are also in line with what we wanted. Porto Seguro growth, 14%, Porto Seguro, 32.2%, Porto Seguro Bank, 9.1%. We're growing somewhat less because of the stringent policies in our portfolio. This quarter, we also enhanced our growth with an improvement of processes, which gives us better profitability because of our expenses that are dropping because of the process improvement, a reduction of headcount, and gains in productivity of the last few years. Our profitability on recurrent results was the highest in history for the second quarter. We reached a return on average equity of 24.5% in the quarter, a very high recurrent rate. We have been saying this in the last quarters, that we're seeking profitability in the different portfolios, not only in auto, but in other verticals as well.
We reach almost 200% of CDI of profitability in the second quarter, and 18.4% in the first half of the year, which seasonally is not our best half-year. Normally, the second half of the year is better. We got a profitability of 18.4% of return. In the first quarter, we also had heavy rainfall hampering the first quarter. Despite this, we recovered profitability with 24.5%. This was a half-year with a great deal that we are harvesting due to what we have done in the last 12 months. I give the floor to Rivaldo to speak about the insurance vertical. Good morning, everybody. This is Rivaldo Leite.
As expected, this was a very good quarter, perhaps somewhat better than we had expected, with a growth above two digits in the main segments and a drop of loss ratio in all of the verticals. This is a composition that was not only for the auto part, the other segments also did very well in terms of growth and loss ratio, especially life and property and casualty. In a comparison of the second quarter 2022 with the second quarter 2023, we had a significant increase, going from 10.5%- 42.5%. Truly, a very robust result, reaching BRL 511 million in the second quarter 2023 in the vertical. The combined ratio also had an expressive gain from 99.6 to 85.1%, with a highlight to an equalization in DANDC.
We had a reduction in commercial expenses as well. We have been following up the fee table month after month. It has an average of 0.5% drop per month. For the entire year, the drop is of 3.2. 3.2% in our volume, with the size of our portfolio, also represents significant gains and this aided and abetted our results, besides our pricing and our underwriting, and we also had process improvements, of course. If we go back to the fee table for the last 12 months, there is a reduction of 3.8%. In truth, this is a very important factor. The loss ratio for the group in auto is 67.1%- 51.7%, a considerable improvement.
Here we see a summary. After all of the other colleagues make their presentations, we will clear your doubts. I now would like to give the floor to Sami. Thank you, Rivaldo, and a good day to all. Health in this quarter achieved an important brand. We reached BRL 1.1 billion in revenues and premiums, practically doubled compared to the first quarter of 2023, following our growth strategy. This growth is leveraged by a growth in the base of health, where we reached 461,000 lives at the end of the second quarter. Along with a joint venture, Oncoclínicas, this led to a result of BRL 54 million net earnings for the quarter, a record of earnings. To speak about the-...
Loss ratio, we see a return to a seasonal curve and a change of level between the first and second quarter, something which is quite normal. To anticipate some questions, the loss ratio pre-pandemic in 2017-2019, the number average loss ratio was at 6.9 points. At present, we had 5.5 percentage points. You see that this increase of loss ratio between quarters as a seasonal curve, still high levels after the pandemic, we had 82.5%, we now reach 81%, this shows that Porto has resumed its work mass-- faster than the competition to the pre-pandemic levels, levels that are quite adequate compared to the competitors, with a very appropriate curve, thanks to the pricing actions and the fight against fraud, benefiting the entire industries.
All of this leads us to a result of 54% of return on equity of 30.3%. During this period, we closed an agreement with a JV, with Oncoclínicas, to bolster our asset light thesis. This has made it feasible, and this is just the beginning. Thank you. I would like to give the floor to Loução. Good morning. Thank you, everybody. This quarter, we observe the impacts of the risk management we carried out since 2022, with an impact on the first quarter and the strategy that we have for 2023. Diversifying the products, we reach revenues of BRL 1.115 million in the quarter, and the efficiency ratio, which is another leverage, is harvesting all of the benefits and reach 43%.
In the next slide, I would like to draw your attention to the strategy that we mentioned, to the sale of consortium products with a sale of with a result of 48% increase, thanks to the activities we have adopted. The highlight as well, our sales of products that have a higher risk credit, they reach levels that are higher than 80%. I highlight the credit card, which is very important in our strategy. Although the sales sort of went sideways in the second quarter, we had 14,000 credits additionally to what we had, executing what we had imagined. In the next slide, we see an update of what we do in terms of risk. You see that for NPL, we have stability, a reflection of all of the actions that we carried out to control.
We have proceeded with caution, and of course, we have a faster focus on collection, and we have come up with a strategy where the payment capacity of the customer is ever more important, and this has helped us to obtain good results in our portfolio. That is all, and we are then at your disposal, should you have any more questions. Well, when we speak about services, we have a growth of 20% in revenues. Once again, thanks to our businesses and the sale of Porto Seguro Assistência, new accounts that we have offered to larger accounts. The result is still under the pressure of the financial results of auto, the subscription auto program that we have. Now, we are reassessing the product, considering perhaps not carrying this asset anymore because it is no longer asset light, which is our product.
Another highlight for Renova, we had 11,000 auto parts placed in the market, 815 dismantled vehicles, 50.6% more than last year, reinforcing our commitment with circular economy. Good morning, everybody. This is Loução. Well, very generally, this quarter, we had a result of 3.15% in our investment portfolio, totaling 100% of CDI. If we exclude the assets that are part of our ALM portfolio, this return drops to BRL 329 million, 70 some percent of the CDI. The highlight is our location in variable income that more than offset the carryover of securities linked to the IPCA. In terms of allocation, it is important to mention that the increase in our credit portfolio was obtained in the second quarter.
We see this as an opportunity. We also had a reduction in our real interest rate portfolio that should resume during the coming quarters. These are the highlights I wanted to mention. I will now give the floor to Lenny. Good morning, everybody. I represent ESG. Well, Porto, for more than 25 years, has been working with initiatives relating to education, but we have never left aside what it refers to governance and circular economy, and much more. Recently, as Roberto mentioned, we won the Best in ESG 2023 award in the financial service categories from Guia Exame. More than winning the award, what is important are the actions, actions of a sustainable and responsible company in Renova. To mention this very quickly, we had a series of measures.
Renova celebrates a decade since it was created, and in that period, we have dismantled more than 21,000 vehicles and marketed more than 400,000 items. Additionally to the environmentally correct disposal of 76,000 tons of steel, 35,000 batteries, and 160,000 tires. To conclude, another important and relevant issue for us is diversity. At this moment, we have an initiative that is within our agenda called Lidera, which seeks to encourage the personal and professional development of women at Porto. As part of this, we had a in-person meeting and remote meeting at the Porto Theater. Well, well, to bolster the success of women, these are some of the activities that I wanted to highlight, and once again, we will respond to doubts in the question and answer session. Well, thank you.
We will now go on to the question and answer session. We remind you that should you wish to ask a question, click on the Q&A icon and write in your question. If you don't want to use the microphone, put this at the end of your question so that our operator can read it. Please hold while we pull for questions. Our first question comes from Guilherme Grespan, from JP Morgan. Good morning, Guilherme. Good morning, Alexandre, Roberto, and the entire team. Thank you for the presentation, and this will be a topic for questions, and the question is about your financial results. There is a significant reduction in the part of securities when it comes to maturity. Are these the securities that are linked to investment?
Now, looking towards 2024, there's a question about these securities that are in health maturity and the in interest rate is quite low. I would like to explore which are these securities that you're removing from the ATM portfolio, and which is your outlook in terms of financial results for 2024? Now, there will be an improvement in terms of CDI compared to 2023. Now, are you looking at financial results in nominal terms, increasing or decreasing in 2024? Thank you very much. Grespan, very generally, there, as I mentioned, we had a reduction that will happen in this coming quarter or in the fourth quarter. We will be putting these securities on our curve. Now, the idea is not to have anything highly relevant. We continue on with our strategy of having a relevant allocation linked to the IPCA.
We had a good result, 2021. In 2022, we were impacted, and as Selic rate continues to be very high, with IPCA numbers around 4%, looking forward, we do believe that this protection that we have for a stronger inflation event or a scenario with lower interest rates in the long term will be favorable. For 2024, we understand that the Selic rate is that it will return to being a single digit. At the real interest rates, we may have a higher IPCA, will be very close to the CDI, and faced by this, we will have a result that will protect us from a risk of having higher inflation.
In nominal terms, if we have a Selic rate of one digit already at the beginning of the year, our revenues could be somewhat below those of this year, but without a doubt, much closer to the CDI, and always offering us that protection against a higher interest rate or IPCA that will be higher. Thank you very much. The next question comes from Kaio Prato, from UBS. You may proceed. Good morning. Thank you for taking my questions. I would like to speak about auto and to speak about loss ratio and premiums. First, to speak about the loss ratio, which is your outlook for the third quarter? The second quarter was the catch-up that we expected from written premiums, and if for the second half of the year, we should see an increase of loss ratio in auto?
If not, which would be the drivers for this, if you could relate to the industry and yourself specifically? On the other hand, the growth of premiums, how do you consider the competitive environment? We see that players are recomposing their margins with the improvement in loss ratio. Are people more competitive in terms of prices or not? How can this translate in terms of the growth of premiums for the second half of the year? I see that the fleet grew again. If you could refer to your expectations for the second half of the year regarding fleets as well. Thank you. Hello, Caio. Good morning. This is Rivaldo Leite. Now, regarding the premiums, we truly do observe that the market is somewhat more competitive. As I have said before, as a market leader, we have made sure to have a good price competition.
Any movement of ours can shake the market. This strategy has worked out. For the time being, we have maintained our prices within our expectations. Well, because we have to fulfill our budget, we see the results. We should not despair in terms of this. We do observe that there are some companies that, due to the good market results, are making their movements. Of course, this is a reason of concern. We have held back in doing this so as not to cause an imbalance in the market as a whole. Now, regarding the loss ratio, yes, we did surprise the market with our figures. Now, the main effect of all of this is pricing and the underwriting that was done way back. We did have some surprises, which helped us a bit.
The fee table, as I announced here, there was a 3.5% accrual. Now, in our volume, this has a very favorable impact, and it could be that this will lengthen out a bit more, and I would say that our expectations are good. We cannot guarantee anything, but the expectations are very good. This is Roberto. I'm going to add something to what was said by Rivaldo in terms of premiums. It's important to recall that although the scenario is somewhat more competitive than in the previous quarter, the fact that the average value of the fee, despite that 3.5% accrual, this is insufficient, allowing companies to transfer to consumers a price reduction. The market is more concentrated in terms of number of players than it was before.
The market has become more responsible when it comes to reducing prices in a non-technical fashion. We have observed this. We are able to sustain a higher average premium for some time. As Rivaldo mentioned, last year, we suffered because of the increase of the fee paid table, where we had priced based on lower fee fee levels. We had to pay higher indemnities because of this. Looking forward, the effect is the contrary one, it will be positive. If I have priced with a higher fee fee, it will be 3.8% lower, and this should also lead to more adequate loss ratios in the coming months. Thank you. Thank you very much, Rivaldo and Roberto Santos. Our next question comes from Bank of America, from Antonio Huet. Congratulations for the results, and thank you for taking my questions. I have two questions at my end.
First, a follow-up in auto. How has the drop in used cars impacted the growth of premiums? Which is your outlook for demand for new vehicles, used vehicles, and the growth of premiums in the coming quarters? The second question refers to health and the strategy. I would like to better understand your pricing strategy, which is the rationale in the market, and your outlook on competition. Thank you. Antonio, this is Rivaldo Leite. Referring to that reduction in FIPE, it has a much greater meaning for our loss ratio than for price. In price, the impact is almost imperceptible, but there will be an impact in loss ratio.
Regarding the sale of new vehicles, we have been following up on the government measures to incentivize the industry, and we believe that with a drop in interest rates, perhaps consumption will be resumed very soon. Our expectation is that more vehicles will be manufactured and we will have, we will surf the wave of sales. Our expectations, therefore, are very positive. Guilherme, to capture your question about the prices in health. The question refers more to price. First, trying to understand the coverage of a potential inflation, are you transferring costs more or less to customers, and how you see that price dynamic? Thank you. We work exclusively with entrepreneurial plans.
Here we have two significant sub-segments: the small and medium-sized companies, where we have a pool, and we had a readjustment in the market of 24.9% in this pool. Obviously, the dynamic of the pool is monthly, and with a great deal of discipline, we have been proceeding, and the market is very close to this level. We perceive that the market use technical criteria for their pricing. Now, we price this one by one, and we have been repositioning the prices as necessary. The companies have been sufficiently responsible to put in mechanisms to reduce frequency, increase participation, and other elements in our dialogues for readjustment. Now, the risk premium here is made up differently, where based on the configuration of the product, which has a significant impact.
Very generally, we foresee a positive trend, and as we have been mentioning during the last three or four quarters, the future forecast for profitability of monthly sales will continue at very reasonable levels and evermore adequate levels. Thank you. That's very clear. The next question comes from Daniel Vaz, from Credit Suisse. Good morning, Daniel. Good morning, Alex. Good morning, everybody. Thank you for taking my questions. We have two questions. One is a follow-up in health. We see a repricing when we compare loss ratio year on year, there has been a slight increase. I would like to understand if there are more contracts that have to be repriced.
If you have a large number of contracts that will undergo repricing in large companies and in medium and small companies, and if this will be sufficient, of course, so that you can begin working in a more normal way in terms of your pricing. I will then pose my second question. The period of 2021 and the beginning of 2022, this seems to be nonsense, but last year, in the first and second quarter, we still had problems with COVID and other material events, if we think about 2017 - 2019, before the pandemic, we had a return to normalcy in terms of seasonality, and this was important. If I think about 2017, 2018, and 2019, with an increase in 5% during the first and second quarters, the increase was 6.9% pre-pandemic period.
In 23, it was 5 point something. This curve is adequate. Secondly, if we think of 217 - 219, only in 219, we were at 82.5, and as was mentioned now, there's an increase of 1.5% above this, at 84 and some %. We saw that in the pre-pandemic curve, and the curve was coming closer together. If we see this versus the competition in the first quarter or second quarter, we will see that Porto has a position of a great deal of strength. We thank you for your question because it enables us to speak about this. We are now at a level, and you did mention that some players dropped level. They dropped from very high levels, and they got to the seco nd quarter at higher levels.
We're quite calm regarding all of these elements. The second part of the question, by looking forward, we continue to see evolution as we have readjustments, as they accumulate, and all of this will work. Historically, we have the maturity of policies, especially in the third quarter. When we get to the third quarter, our loss ratio naturally will be higher, and after these readjustments, they tend to drop. We have this composition of this maturity between Porto and player one, two three , and we don't know what they will do. We can't comment on this, but we're quite comfortable with the progression of our results. Thank you. Very valid response. If you allow me to ask another about Porto Bank.
By looking at your sales in the presentation, we see there is a significant expansion, and perhaps this will play against you at the time of origination. How do you consider these sales with relationship compared to sales without this relationship? The relationship is a very important product in what we tend to call the open seas. How do you balance these, and what is happening in your new funding and credit card attempts? Once again, thank you for your results at Porto Bank. Thank you. To speak a bit about our credit strategy, at this point in time, and the entire market has done this, we're beginning to have a greater release within the Porto Bank system, and we have billions of tax customers, tax numbers.
We have 20% that we continue to work on in terms of a learning of NPL, and the levels of NPL have been very good. In the last two years, we had an expansion of credit card and relationship where we suffered a great deal, the entire market. In our case, we continued to work with a more direct sale online, with the NPL levels that were fully expected and consolidated with our indicators. We're prepared for a favorable market, and the growth that we expect for 2023 is within what we wanted. There's still a great deal to do in terms of relationship with some customers. Thank you. Thank you very much. That was excellent. Thank you for the question. The next question comes from Tiago Paura from BTG Pactual. Good morning, Tiago. Thank you, Alexandre, a good morning to all of you.
Congratulations for your results. Thank you for taking my question. If you allow me, I would like to carry out a follow-up on what was said at the beginning of the call regarding the strategy for cars by subscription. What are you thinking in terms of that avenue? The second question refers to services. Yes, we have seen that you have incorporated CDF, and in the bottom line of the quarter, there has been an improvement quarter-on-quarter on losses. When we look at the pre-tax result, the operational result, there is a worsening, perhaps due to the consolidation. What is it that we can expect in terms of results for this vertical going forward? We understand that CDF led to a break-even in 2023.
The rest of the portfolio will support a considerable improvement, or will growth be more timid with better expectations for 2024? Thank you very much. Thank you for the question. Let's begin with your last question about services. As part of our results, we have several businesses. Some businesses that have a greater impact in terms of cash generation and the financial results, such as cars by subscription. In CDF, yes, we made some adjustments. They are now fully consolidated. In these results, we still do not have the Pronto Socorro operation that will be demonstrated beginning next year as part of the service vertical. The figures are extremely incipient compared with what we're planning for it. If we look at our results that were impacted, financial expenses of cars by subscription, and there's a consolidation of CDF.
These are the two positive aspects in revenue, and we still have some contracts that are pending, and this shows the potential that we have for growth. To speak specifically about the Carro Fácil strategy, we began the year with the idea of preserving this instead of having an aggressive expansion of subscription. We're going to spend the year seeing how we can include this in our business. These are important businesses for the customer, and our strategy is to no longer carry this asset. We have a sales force, we have the brand and a digital presence to continue offering a car by subscription without the need of purchasing the asset, but allowing the customer and the broker to have the same service in our insurance operation. This makes a difference for the market. We began the year with 15,000 cars.
We are now at 12,000 cars. We're demobilizing all of these cars. Thank you, Loução. Thank you very much. Thank you. As we have no further questions, our question and answer session has come to an end. I will return the floor to Roberto Santos for the company's closing remarks. You may proceed, sir. We would like to thank all of you for attending our earnings result conference. I would like to remind you that should you have additional doubts, please contact our IR team. The information for contact is available at our IR website at ri.portoseguro.com.br. Thank you very much. We hope to see you at the next quarter and Porto for all of your cares. Thank you. The Porto Seguro S.A. conference call has come to an end. Thank you once again, and have a wonderful day.