By Brazil Stock Guide – Porto Seguro (B3: PSSA3) ended the third quarter of 2025 in robust financial shape, posting a net profit of R$832 million, up 13% year-on-year, and maintaining a 23% return on equity (ROE) — the fifth straight quarter above 20%. Management is now studying whether to advance dividend payments before Brazil’s tax reform introduces a levy on distributed profits as early as 2025. The decision, however, will hinge on how Congress defines the new rules and whether legal certainty can be guaranteed.
Tax reform creates a payout dilemma
CFO Celso Damardi explained that the company is closely monitoring the progress of the reform, which aims to impose direct taxation on dividends, currently exempt in Brazil. If the law takes effect next year without a transition period, firms like Porto could be taxed on payouts approved after enactment, even if they relate to prior-year earnings. “If the law is enacted as it stands, we’d have to make the payment still in 2025,” he said. “The ideal scenario would allow us to declare dividends now and pay them by 2028, as originally proposed.”
For now, Porto is holding off on any move. “We’re watching the legislative process before making any decision. Our priority is legal security and fiscal predictability,” Damardi said. Despite the uncertainty, he confirmed the company plans to raise its payout ratio from 45% to 50%, reflecting its strong cash generation and consistent performance across its four business verticals — insurance, health, banking, and services.
Capital buffer supports calm growth
Porto holds about R$3 billion in excess capital, roughly half in liquid assets, and a R$4 billion solvency margin, enough to sustain organic growth through 2030 without new funding. “We have enough capital to grow serenely, without having to choose where to allocate resources,” Damardi said. He reiterated that the company’s retention of profits is not a defensive stance but a strategic advantage that ensures self-financed expansion.
A culture of conservatism
CEO Paulo Kakinoff reinforced that the company’s cautious approach is intentional. “Porto wants to preserve its ability to grow in a volatile environment. We prefer to protect margins rather than chase market share,” he said. Kakinoff reminded investors that the company weathered the pandemic without tapping the capital markets — proof, he argued, that its disciplined model works. “This prudence allows us to discuss extraordinary dividends today without compromising our long-term growth,” he added.
Operational performance across verticals
Executives detailed solid results across Porto’s four business arms. In insurance, revenue grew 3.3%, with claims stable at 51.6% and auto premiums rising 4% in items sold, even with a lower average ticket — the result of product mix adjustments amid fierce competition. Porto Saúde delivered R$2.2 billion in premiums, up 27%, and net income up 65% with 143,000 new lives added. Claims fell to 78.3%, and the ROI reached 26%. The Porto Bank expanded its credit portfolio by 20% with low delinquency and a 26% ROE, driven by fee monetization and diversification. The services vertical posted a slight revenue drop due to fewer auto assistance requests, but digital services jumped 60% while administrative expenses fell by 100 basis points.
Competition and financial returns
Questions from analysts at Bank of America and HSBC centered on the surge in auto competition and falling average prices. Kakinoff and Auto head Rivaldo Leite stressed that Porto refuses to join “price wars,” preferring to defend margins. The higher claims ratio, they said, reflects a deliberate shift toward more Azul and Itaú policies — with fewer bundled services — and should normalize by 2026. “Our strategy is to preserve profitability, not volume,” said Kakinoff.
On the financial side, the focus was how Porto plans to maintain its strong financial income amid falling interest rates. Porto outlined plans to roll over part of the bond portfolio to lock in higher real yields and gradually increase exposure to risk assets like private equity and equities. “We’re challenging ourselves to mitigate — even neutralize — the impact of rate cuts on nominal returns,” Kakinoff said.
Efficiency and discipline
Porto also reported its lowest administrative cost ratio in history — 9.9% at the insurer and 10.8% consolidated, down from 14.8% in 2020. The decline reflects stronger diversification and cost dilution. “It shows the structural reorganization is delivering the expected leverage,” said Damardi.