Good morning. Welcome to the conference call of Porto Seguro SA to announce the results of the fourth quarter of 2016. Here with us, we have Mr. Fábio Luchetti, CEO; Marcelo Picanço, Executive Vice President of Financial Services and Investor Relations; Celso Damadi, CFO and Controller; and Mr. Ricardo Fuzaro, Investor Relations Manager. This presentation is being recorded and simultaneously translated into English. All participants will be connected in listen-only mode during the company's presentation. Then we are going to start a questions- and- answer session, where further instructions will be provided. Should any of you need any assistance during this conference call, please request the help of an operator by pressing star zero. The audio and the slides of this conference call are being simultaneously presented on the internet at the address www.portoseguro.com.br/ri, and i n the platform, Engage-X.
At this address, you will find a banner called Conference Call, which will take you to the presentation platform. Questions may also be asked on the webcast platform by clicking on the icon, Ask a Speaker. These questions may be sent at any time, and they will be answered live during this conference call. Before continuing, we would like to clarify that statements made during this conference call relative to Porto Seguro's business prospects, financial and operational projections and goals are beliefs and assumptions of the company's management, and they are based on information currently available. Forward-looking statements are not guarantee of performance. They involve risks, uncertainties, and assumptions because they refer to future events and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, industry conditions, and other operational factors may affect the future performance of Porto Seguro and may lead to results that will be materially different from those expressed in such forward-looking statements. Now, we would like to turn the conference over to the company. Please, you may start, mister.
Good morning, everyone. My name is Fábio Luchetti. I would like to thank the participation of all of you in Porto Seguro's conference call to release the results of the fourth quarter of 2016. Now, moving straight to slide number 16 with our main accomplishments. In 2016, we faced the deterioration in the macroeconomic scenario, which affected several segments, especially car sales. That, combined with a higher violence and criminality in some regions of the country, has affected the growth and our profitability.
Even so, we close the year with an evolution in our main business lines, and many products have grown more than 10%. F or example, life insurance, Porto Seguro P&C, dental insurance, pension, our consortium, and also our MVNO company, Porto Seguro Conecta. The insurance fleet increased 4%, reaching 5.5 million vehicles insured, and the number of credit cards has reached almost 2 million units, growing 6%. The number of lives in our dental insurance has increased 10%, going to more than 500,000 lives. The profitability of our insurance businesses has gone down 18%, strictly due to the increase of theft and also due to higher competition as a result of the economy downturn.
On the other hand, our loss ratio in car is approximately 10 percentage points smaller than the average in the market, which is very good, especially considering the more adverse scenario with a falling SELIC interest rate. In spite of that, we are reviewing our price model to improve our profitability in 2017. In non-insurance operations, we have had a 15% increase. We tried to keep the return of our financial services, and we improved our service operations, especially Conecta, which broke even in December as we had already announced to the market. Also, default rates of our credit card have gone down, going to the smallest level in a year and have remained below the market average by more than 2 percentage points. In terms of expenses, we are increasing the efficiency of our operation.
Administrative and general expenses have declined by 1%, and now our G&A ratio has gone down by 1.6 percentage points in the past five years. Talking about our financial aspects, the yield of our financial expenses has gone down in the quarter, but it's still above the CDI in 2016. This year, we have also launched some products in order to reach new markets and different niches, especially in lower income products. Considering the economic difficulties, we have launched lower income car insurance, such as Azul Leve, Azul Popular, and Porto Seguro, Rastreador + Seguro or Porto Seguro Tracer + Insurance. We have also streamlined the company's operations and strongly invested in technology which will support our growth and assure our sustainability. In closing, I would like to thank our employees, brokers, service providers, partners, investors too, for another year of work with dedication and commitment.
I would like to say that we will continue to invest in our company, making the most of the opportunities in the many segments where we operate. Always seeking efficiency in service quality and focusing on profitability of our businesses. Now, I'm going to give the floor to Marcelo to continue the presentation. He'll be sharing with you the specific details of each business line. Thank you very much for the time being.
Good morning, everyone. This is Marcelo Picanço speaking. On page four of our presentation, talking about revenues and premiums. In the fourth quarter, we have basically had an adjusted item. Insurance premiums have gone down by 2%, suffering impact especially of auto insurance, a drop of 3%, and P&C down by 9%.
Basically, this is the result of the economic crisis in terms of volume of cars sold and in terms of insurance quotes, but especially, this is related to the tariff adjustment, which has limited the growth of the company. We are in a process of a recovery of our margins, considering higher loss ratios, and this is very dynamic and this has had an impact in our main products. Even so, our total revenue for the year has grown 4%, clearly below our history in the past few years. That's considering everything that we have mentioned before. We have also had some significant extension in businesses where we have a significant strategic presence, such as in people insurance, part of our property insurance.
And in this manner, these products have been gaining relevance, and they also have higher profitability and make it possible for us to expand our profitability. On page five, we have the operational results of insurance businesses. You are going to see the combined ratio. This was a difficult year. Our combined ratio has gone down by 2.3 percentage points. This is obviously related partly to the frequency in our loss ratio because our loss ratio has gone up in some states specifically, and because of the competitiveness in our industry. Also the economic crisis. If you look at SUSEP numbers, it is clear that loss ratio is high for most of the players in the auto market. The combined ratio was high for a fourth quarter. It was a fourth quarter when it is usually smaller.
This year, it was 99.4%. Last year, 97.1%. And with the superior financial result this year. In spite of that, it was not enough to make up for the extended combined ratio, considering the weight of financial results, considering interest rates that are in effect in our country. Even so, we have been able to expand it by 3.3 percentage points. In this manner, our profitability, looking just at insurance, is about 20.5% the return on equity in this quarter, 4 percentage points below the same period last year with a net income that is also below last year. In slide six, when we look at our financial and service businesses or our so-called non-insurance businesses, we have had a growth of 18% in revenues. Then our ROAE had grown 13% in quarter-on-quarter. So here we had a growth of our connected sales.
What we have to add here is our credit card, our largest non-insurance businesses. So there has been a rationalization of credit, and it is balancing in terms of revenues and losses. In this quarter, you can see a recovery of the expansion of revenues, which had been going down for many quarters in terms of our credit card. So there was an adjustment. Now, we have done it. Now, we are headed towards a healthy growth in 2017. The net earnings have grown 20%, gone to BRL 130 million. Some operations, such as Conecta, have broken even at the end of last year, so they are not weighing so much in terms of a negative performance in overall results. On slide number seven, you can see the result of our financial expenses.
2016 was a very good year even though we had a quarter with volatility in some assets, which has made our [yield] below last year. In here, we have had significant results because since 2010, this has been the largest nominal yield that we have had in many years, reaching 14.7%. The combination of a high CDI with a performance above the CDI is not frequent. But what matters for the final result is our result in real, and this result was very positive this year, which has balanced the impact in terms of our claims, especially. Now, specifically about the quarter, which was the worst quarter that we had along the year of 2016, which was a good year, as I said before. It is basically related to the two positions.
First, the positions that we have carried over because of inflation, and this is good for the economy as a whole, that inflation has gone down, especially in the last quarter. Especially this year, inflation rates are lower. The inflation of January, 0.38%, is the smallest inflation for a month in many years. Our bonds that are indexed by inflation have suffered, but these are important positions for us to carry in the long term because our liability is very much related to the payment of parts, services, and labor, which are influenced by inflation rates. Also considering our positions in stock, that has also suffered in last quarter. We have been able to make up for tactic positions in prefix bonds, but on the whole, the quarter was not so good, but it was a good year on the whole.
On page number eight, as I said before, you can see quite healthy financial performance. Our portfolios have remained quite stable with the maintenance that is very balanced, especially in terms of what we did in the last four quarters with a small reduction in our inflation-linked bonds and also a reduction in prefix bonds . Our risk was smaller than we had for the rest of the year. Our stress position was 1.1% of our equity, of all the assets under our management. There's a volatility of 0.8% that is quite reasonable in spite of all the ups and downs in the market. Lastly, on slide number nine, the net income of the quarter has grown 3%. It's not much of a growth, but it's still a growth.
Here, we had a reduction of 9% with the ROAE, reaching 19.6% in the quarter, a reduction of 3.1 percentage points for the year of 2016. Now, I would like to open for our Q&A session. Thank you very much.
Thank you. We are now going to start our questions- and- answer session. If you have any questions, please press star one, or you may also send your questions on the webcast platform on the icon, Ask the Speakers. Our first question comes from Marcelo Cintra from Goldman Sachs. Please, Mr. Cintra.
Hello. Good morning, everyone, and I have two questions. The first one related to the auto segment. When we look at the evolution of your loss ratio during 2016, clearly for you and for the whole industry, there has been a significant increase, and in the case of Porto Seguro. For three lines, there was an increase, especially for Azul. In the fourth quarter, this deterioration continued. I would like to hear from you how we should look at this, thinking about the future towards 2017. The economy has been showing a few signs of recovery. How do you see that in terms of the impact in your loss ratio? Can you already see any indication of recovery in January? What should we expect for the rest of the year? Then I'm going to ask a second question.
Good morning. Thank you for your question. We can see that we are going to have the impact of the economy more towards the whole year, during the year.
In terms of the economy, obviously, we are hoping that the scenario will get better, but more towards the second half of the year, closer to the fourth quarter, rather than in the first half of the year. On the other hand, our prices have been adjusted. We are hoping that the market will reposition itself, which may be a positive factor. We believe that this year, the reaction will be faster than it was last year. Also, because we are expecting a reduction in the public interest rate. Some of the projects that we have launched are focusing more on low-income insurance. Just to give you an idea, 70% we have new customers. We have a prospect that in this phase, when the economy is very new, we have the expectation of attracting more new customers to our lower-income products.
Just a follow-up. You talked about prices and price adjustments. Is there any room for you to increase more along 2017? Could you share with us on average how much were the adjustments that Porto has practiced?
Hi, Marcelo. More recently, on the whole, we have had 9% increases in some regions like Rio de Janeiro and Rio Grande do Sul, slightly more considering the prices we have, because robbery and theft have gone up more than average. Considering the whole market and all the scenario and SELIC interest rate and everything, all of this may create space for us to have some more corrections in addition to what we have already done.
My last question is related to your credit card business. You say this is all going very well, the quality has improved a lot. How do you see this going to the future? This high performance that Porto has been delivering, is it sustainable considering your current portfolio? My second question relates to the change that we had in December in the announcement that the government might change the time for card payment for retailers. Considering that Porto is an insurer, if this change is enacted in the medium, long term, could it impact your credit card sales? Do you have an internal estimate of how much the impact would be if the payment of retailers would migrate from 30 to 2 days?
Marcelo, thank you for your question. On the whole, in terms of our financial business, we are quite confident. As you are being very specific about something that has happened recently, I am going to give the floor to Marcelo Picanço for him to answer and to give you a more accurate answer.
Well, Marcelo, I think you have asked many questions. Let me go bit by bit. Number one, as you said, we have room. We have quite focused niche positions with our customers with middle income or middle high income or upper middle income. We are not operating with entire operation. Yes, we do think that we will keep our performance, and we even reduced a little bit, and we have sacrificed a little bit revenues. We are also seeking, in spite of the crisis, to expand our base within our strategic focus, but even more daring than we had been doing before. This is in terms of our strategies. Now, as to these regulations affecting the industry, there is one that is going to become effective in April with a rotation credit. We have run some simulations.
We are not really sure yet in terms of how consumers will behave. It will depend on the average time for them that they will choose to pay their bill in installments. If it's very short, it will affect our revenues because there will be a drop in the nominal rate or the SELIC rate. As the Central Bank has been anticipating, it might go down. There's also a loss ratio related to the portfolio. This will depend very much on the behavior of customers, whether they will go more towards longer or shorter choices. We are expecting a small impact, and we'll try to make up for it in other lines. This is our job. This is our work. We can't say anything for sure, but this is what we are trying to do.
Very good. I apologize for going back to the discussion about the migration of 30 days to 2 days. Do you have any estimates? Do you anticipate anything in terms of this discussion? I know that this was something that the government just said. It has not yet advanced. But is this concern still present? Do you have anything to say about that?
Well, Marcelo, this discussion is very much in the beginning, and this is more structural of the industry as a whole than the implementation that will take place in May, too, that is more related to parameters in terms of rates. This is related to product A or product B. This discussion is much more complex. It involves installments to retailers, the funding that the industry gives for those who do not go to the rotation credit. Rotation accounts for 2% of all credits to individuals.
I think there will be more in-depth discussion in the market than the press has announced so far. We do not believe anything will become effective in the short term. I think we will discuss this a lot. I can tell you that the impact, if that changes, might be much bigger for the industry as a whole. We have not yet assessed it than the first movement. It will be more of a structural change with deeper impact, and that's why we are thinking in a longer term, and that's why we do not yet have a consolidated vision to share with you now.
I understand that this will mean changes to all players in the market, but thank you very much for your answers.
Ladies and gentlemen, please stand by while we pull for questions. Our next question comes from Mr. Gustavo Schroeder from the Bank of America.
Good morning, everyone. I'm going to ask two questions. First of all, it relates to your financial results. If you could remind us the soft guidance you had given us in terms of the SELIC interest rate and its change. What would be the impact in your bottom line? Still regarding that, what should we expect in terms of allocation going into the future in trying to minimize the potential reduction in the financial result of the company, considering that we've been seeing some indication that interest rates will go down faster than we had anticipated before?
This is Marcelo. In fact, of course, the drop in the SELIC interest rate means that our expected or forecast financial revenue will go down. We can make up for this. We can offset this.
We have some positions that are in longer term, and we have some longer pre-fixed positions. In terms of interest rates and inflation, if it is very low, it will not affect the yield, at least not in 2017. This is an unanswered question. It is an open question. I think that our interest rates will be above, and then it will make it possible for us to be above the CDI for pre-fixed. We have some offsets for this drop in interest rates. Of course, this very much depends on what happens to the stock market. We are talking about BRL 30 million. Any 10% or 20% is significant. In fact, especially if we compare it to a CDI that is about 10% on average. What we are seeing here, and we are already using this.
As to future curves, we also put in our prices, especially in autos, and forecast that the financial result will be smaller and that we need to make up for that on the operational end. We estimate here a drop in terms of the realized [inaudible] of BRL 140 million before taxes, if we take out pension, which is very much transferred to customers. This is estimating a drop in a SELIC interest rate and considering our performance between BRL 130 million and BRL 150 million. This is before tax, so this is an impact in the net income.
So BRL 140 million. You are considering already that the SELIC interest rate going down.
I am speaking for the year as a whole. We think it will be between 9.5% and 10%, that most of the market estimates are around that ballpark number. We do not think it is going to go further than the market thinks. I think that the cuts have started more intensely than we had anticipated.
This is very clear. Thank you, Picanço. I have a broader question regarding your business. A ssuming that the improvement in loss ratio and the volumes in the car insurance will be gradual with a slow recovery along 2017 in spite of the price impact with a lower financial result. It is natural for us to expect 2017 to be a year when the company will not present the level of yield that you delivered in 2016. So you are not going to improve very much your earnings this year. The scenario is challenging for the car industry, and there is an additional component of the interest rate. It might be impossible for you to offset that in terms of your car prices.
Hi, Gustavo, this is Fábio. Thank you for your questions. On the whole, what goes into our pricing strategy has many different drivers. There are expenses, commercial expenses. We can break it down in many different lines. As the scenario, the financial scenario changes in this equation, we need to seek more efficiency in other lines of another drivers. Same thing for the financial market. The insurance curve is long, so anything that you want in 12 months, you need to start thinking about it right now. We expect to have a margin of compensation between operational and financial, and we are expecting to have a net income slightly higher than last year, about 10%.
So you are going to improve your earnings. You think that it might be possible to offset not just smaller expenses and also your underwriting on the whole.
Yes, for sure. As the market was very competitive and also considering the downturn in car sales, that increased its competitiveness in terms of renewals. Our margins were narrower, and we had to protect. Also, Azul faced fierce competition. If you look at the market rates, even though Porto has a market share that accounts for about 1/3 of the market. If you look at profitability, we have a higher share in terms of profitability. We think that we have attracted renewal. It is profit for sure. The results of our competitors, unfortunately, have not shown that theory translates into practice. Inevitably, the players will need to reposition themselves. That creates, at least for us, a scenario that gives more advantage.
Thank you very much.
Our next question comes from Thiago Kapulskis from BTG Pactual. Please, Mr. Kapulskis.
Hello, everyone. Thank you for the opportunity. I have two questions. The first one is a follow-up about loss ratio. Very brief. Considering the scenario as a whole, you do not yet see when there may be any improvement. Am I right? Or do you have a scenario, an outlook of when to expect some improvement?
Hello, Thiago. Thank you for your question. We are working with the prospect that we will be able to see the evolution of these results as of the second quarter, about four or five months from when we have implemented more significant increases.
Very good. My second question regards cost. In the last quarter, you had been showing a good improvement in terms of your admin expenses. This quarter, this movement was kind of flat. How should we think about this line going towards 2017? Is there any room for you to continue improving costs, especially thinking of a scenario where there are some challenges in terms of your profitability? Could you give us some color in terms of what to expect for 2017? I would appreciate it if you could share that with me.
Hi, Thiago. Specifically about the fourth quarter, nothing has changed in terms of us seeking or enhancing our efficiency. What happened in Q4 is that was more related to premiums. We tried to make the market with vision. We were more tolerant, and it is meant that we had a drop in premiums and of course, this affects the relative analysis. As for 2017, we are still seeking efficiency improvements. In the past, we tried to do that gradually and systemically. We are very much based on relationship.
We don't try to do anything too abrupt to cause any unbalance. We want to reduce our admin expenses as we have been doing in the past few years. But we can think of maybe about 0.5% .
Thank you very much for your answers.
Our next question comes from Eduardo Nishio from Plural Bank.
Good morning, everyone. Thank you for the opportunity. My first question regards 2017. You thought that you would improve your combined ratio by 2 percentage points. After the fourth quarter, do you still have the intention of improving the combined ratio by 2 percentage points? My second question to Picanço regarding the credit card industry. We have seen many changes that have taken place, especially regarding prices and also the change in rotation credit and this pressure regarding stress and the whole discussion regarding the 30-day cycle. What do you expect in terms of the final model coming from the regulator for the credit card industry? Do you think there will be a business model that will be totally different from what we have today?
Hi, Nishio. This is Fábio speaking. Our outlook remains. It has not changed considering the fourth quarter. We are expecting the global loss ratio between 1.5% and 2%. I am going to turn the floor over to Marcelo Picanço to answer the second part of the question.
Well, Nishio, I think that we need to break down in two stages, your question. The first stage will be working on the fees or the rates for the revolving lines in terms of the 30 days that we work for the implementation in the beginning of April.
As to this stage, considering our portfolio and our profile, the impact will range between small to almost none. This depends on a variable that we do not control, that we are only estimating, especially how many installments on average customers will choose to break down their payments. The more, the better for us. If it is too short, it is not so good for us. As many of our customers that will break down, say, their credit card installments, they were leaning more on the revolving line. Many of them will go towards their bill or invoice installments. They did not use to do that before. This is new. We are expecting the impact to be smaller for us than it will be for other players, because our average income is higher. We are working with upper middle class.
The conclusion for Porto might be different from the conclusion that we will hear from other major players in the market, especially large retailer banks, because in fact, they have portfolios that are different from ours. The financial equation has different variables. As to the second stage, which are the more structural changes related to times and our relationships with retailers. This is still far from consolidating. It is a much deeper change in the industry. It is much greater than you would expect it. In changing from 30 to 2 days, it is a very drastic change. We do not have a completely different model here in Brazil than it is in U.S. If that change becomes effective, our market will be more like the American market.
We do not want to do anything in a hurry that is artificial and not sustainable because this will mean many changes in the industry. We do not know how this second more structural and deeper stage will happen, but we are discussing this with the industry so that we have a clearer scenario. I think it will take a few months, maybe the whole first half of the year of discussions until we come to a model that can combine all the different parts, considering all issuers, customers, retailers, and everyone involved in this market, because this equation needs to be very well balanced for all players, o r we might lose the attractiveness of one of the most thriving markets in São Paulo.
Do you think these discussions will advance this year? Is there any schedule for the implementation?
I think the discussions are deep, and it might take the whole year, at least the first half of the year . This is just a discussion. As implementation, as this needs very deep changes, the implementation might be only in 2018. I am not the best person to answer this question to you. There are other organizations that have been working with that for longer and that are bigger that might give you a more appropriate answer. We are involved in the discussions of the market. These will be deep questions that will have to be very well-grounded in the financial impacts. This year, for this second phase, it is likely to be in the last quarter or not even this year. This is what we are expecting.
The first change will take place in April, then it will be an impact. It will become clear by the end of the second quarter of the real or the actual impact in our credit card portfolio.
In terms of the more structural change, what is Porto's opinion of our moving more towards the American model with shorter payment times? Among the banks, there is a discussion that is slightly different in terms of this issue. Do you like this? Do you think this is more positive? Or do you think this is better as it is? In your budget, you have an earnings growth of 10%. Am I right?
The first part, w e do not have a vision 100% sure of what is better. If the change is well-balanced, which means that will solve it as a whole.
Obviously, the American market works, it is profitable, but it needs to be done in full. We can't have a Frankenstein model. A little bit like that, a little bit like something else. If the change is done consistently with all elements and all players and stakeholders talk to each other, it could be still attractive so long as there are the compensations. We do not yet have a more in-depth vision because this model is not yet so clear. We are saying this is an American market, but it might not be the U.S. market. It might be a hybrid model. We know what we have today, but we do not know what will be in the future. We need to evolve more in the discussions of the industry with the regulators so that we have a clearer vision.
The time for settlement from 30 to 2 days, there are parts of the whole equation that are other elements. You can't change just a little bit. That is why we do not have a clear picture. It is not very well outlined, and we do not know whether it is headed towards the earnings or the budgets. We do not give guidance when you are thinking, and this is not easy. We want to expand our earnings at around 10%, a little bit more or less.
Thank you very much.
Our next question comes from Mr. Gustavo Lôbo from JP Morgan.
Good morning, everyone. Could you talk about your provision setting policies? Are you going to be more or less conservative in terms of the provisioning for your technical reserves? Now, especially looking at the technical reserves in the fourth quarter as a percentage, it was 3.6% in Q4, and then in 2014 it was 8.2%. This drop, is it basically because of a faster growth or is there any other variable in this equation?
Hi, Gustavo. This is Celso. Actually, our technical reserves, our financial statements, there are two parts. One related to premiums, and the other one related to claims. So, when our earned premiums go down, our reserves also go down. As for our technical reserves related to claims, we have not had any changes in the criteria or model. So we followed the base of our portfolio, the usual. So there has not been any changes in our methodology for the provisioning of these reserves. B asically, it is a consequence of the slowdown in growth, precisely.
The second question is slightly more related to the long term. When we look at the sales of new cars and thinking of your insured fleet, in five years, we are expecting a drop for a few years to come, unless there is a major recovery in the sales of new cars. Am I right? Is there any way for you to offset that?
Hi, Gustavo. This is Fábio Luchetti speaking. Well, in fact, for the last two years, we had to deal with a crisis that undeniably has had some impact in our profitability. We have tried to explore new niches to reach people who did not use to have insurance in the past, to include them. So we have this car tracing that has an insurance inbuilt. We are trying to reposition. Of course, this will not be like this forever.
The Brazilian fleet, in terms of new cars, is completely different from other countries. Even considering Mexico, for example. I think this will change going into the future. We are hoping it will be improved, and that there is an opportunity for us to reach new markets and segments, considering that just 1/3 of the Brazilian car fleet has insurance. Even if we do not consider brand-new cars, there are many entrants still to be included as new opportunities come up.
Thank you very much.
Now, we have a question asked through the webcast, and the question comes from Mr. Philip Semple from Rosas Participações. I would like to know if you have any forecast of additional dividends to be paid out in 2017. Referring to 2016, the payout of 35% w ill it be confirmed?
Well, for the dividends that will be paid out now in April, it has been approved. We are not going to increase, it is not going to change. It is 35% of the payout that we usually do for 2018. So to be paid out in 2018 regarding 2017, it will depend very much on the evolution of our projects in the future, CapEx and investments, and also on cash generation during the year. 2016 was not a very easy year. It will depend very much on what happens in 2017 in terms of cash generation and some of our projects that are almost completed. Some are well advanced, others not so much. So it depends very much on this performance for us to think of an extension of the payout.
Ladies and gentlemen, I would like to remind you that if you want to ask a question, please press star one. Please wait, stand by while we pull for questions. As a reminder, please press star one if you want to ask a question. The next question comes from Mr. [Alexandre Matsubal].
My question is about real estate assets. [inaudible]
Hi, Alexandre, this is Celso. Thank you for your question. We do not have any future prospects in terms of buying any real estate properties. We have some properties that are for sale, some branches and about BRL 80 million or BRL 90 million worth in terms of properties that we are in negotiation to sell. We are not expecting to grow in terms of the sale of real estate properties. We are expecting to sell some of our properties rather than increase. Part of our fixed assets will go down significantly over the next five years in terms of our total assets or total equity in terms of our fixed assets.
Thank you very much.
As a reminder, if you want to ask a question, please press star one. If you have no more questions, I would like to turn the floor back over to the company for their closing remarks.
I would like to thank you once again for your question, for your attendance, and for your interest in our company. I would like to take the opportunity and tell you that if you have any further questions, please feel free to get in contact with our investor relations department or to access our website, www.portoseguro.com.br. Thank you very much.
The conference call of Porto Seguro has now ended. We thank you very much for your participation, and we wish you all a good morning.