ESS Insurance
description
Transcript of ESS Insurance
FIT FOR
A NEW ERA
FOR IMPORTANT DISCLOSURE INFORMATION, INCLUDING DISCLOSURES RELATED TO THE U.S. DISTRIBUTOR OF THIS REPORT, PLEASE REFER TO THE
FINAL PAGES OF THIS REPORT - Please refer to the final pages of this report for important disclosures, analyst certifications and additional information. Espirito Santo
Investment Bank does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of
interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has
been prepared in whole or in part by research analysts based outside the US who are not registered/qualified as research analysts with FINRA
4th Life Insurance Conference
June 2014
Santosh Singh, CFA
+91 22 4315 6822
Nidhesh Jain
+91 22 4315 6823
1
Life Insurance conference – The way forward
Espirito Santo hosted its fourth Life insurance conference on 9th of June 2014. The life insurance sector is slowly but
surely turning a corner after four difficult years as the outlook for the economy improves and most of the
destabilizing regulatory changes are now behind it. The conference provided a platform for industry
players/investors to interact and share their views and thoughts on way forward for the sector.
I. Speaker Sessions
1. Mr. Sandeep Bakshi – CEO, ICICI Prudential Life Insurance
2. Mr. Kshitij Jain – CEO, Exide Life
3. Mr. S. Sreenivasan – President (Finance), Bajaj Finserv
4. Mr. Sam Ghosh – CEO, Reliance Capital
II. Panel discussion
1. Mr. Sandeep Batra, Executive Director, ICICI Prudential Life
2. Mr. Mayank Bathwal, Deputy CEO, Birla SunLife
3. Mr. Prashant Tripathy, CFO, Max Life
This year, the participants were upbeat about the potential of the insurance industry and maintained that 15% CAGR
growth in new business premium is likely over the next 4-5 years. Moreover, the participants expect the Insurance
Amendment Bill to be passed in the near term which will increase listing opportunities for Life Insurers.
2
I. Speaker Sessions I. Mr. Sandeep Bakshi – CEO, ICICI Prudential Life Insurance
II. Mr. Kshitij Jain – CEO, Exide Life
III. Mr. S. Sreenivasan – President (Finance), Bajaj Finserv
IV. Mr. Sam Ghosh – CEO, Reliance Capital
3
Mr. Sandeep Bakshi, CEO - ICICI Prudential Life Insurance
Industry has significant spare capacity for growth Product simplification and flexibility required
Quality of business has improved in the past four years Life Insurance versus other financial products
Industry has significant spare capacity — c.20% growth without any
increase in cost base for most of the players is possible. ICICI Pru can
increase premiums by more than Rs10bn without its operating costs
increasing.
Cost/Retail Weighted Average Premium (RWAP) is the best metric one
should look at when comparing life insurers. The private sector is
currently operating at more than 100% cost/RWAP.
There is significant scope of reduction in Cost/RWAP which will come
about as growth comes back to sector.
Just around 20% of banks’ branches sell life insurance currently.
Products should be made simpler to understand from both customer
and channel perspective.
Also, there should be flexibility in products — in terms of premium
holiday, premium amount, policy features etc.
This will improve the channel productivity, persistency, efficiency and
reduce the instances of mis-selling.
Digitization can lead to significant cost reductions and simplification of
policies.
Industry has continued to stress on new business premiums while
ignoring renewal premiums which are as important if not more.
Mortality and Annuity are unique to life insurance
Life insurance products compete with bank deposits, mutual funds,
general insurance, gold and real estate.
Unit-linked life insurance products with tenure of more than five years
is superior to mutual funds – Persistency risk is also borne by the
shareholders now.
One should compare the insurance products after peeling off features
like mortality and other riders – Post tax, IRR for a life insurance
product is comparable to other financial products.
Though the industry has witnessed a decline in new business premiums
since 2010, the quality of business has improved significantly
- Mortality cover is higher (10x of annual premium vs. 5x earlier)
- Tenure of product is higher (minimum of 5 years vs. 3 years earlier)
- Quality of premiums is better as stable money has flown into the
sector versus speculative money pre-2010.
- Value proposition for customer has improved
“Simplification is the biggest innovation in the industry” “ULIP is better than mutual fund over longer term”
“Mortality and Annuity are unique to us” “The question before the industry is that how to offer a product which is
as effective as other financial products.”
Key
comments
4
Interesting charts (ICICI Prudential Life)
Product Mix Channel mix
Life Insurance Industry – The story so far Impact of persistency
Policyholders Shareholders
Term Insurance Neutral Neutral
ULIP Neutral Negative
Traditional Negative Negative
1. Retail Weighted premium 2. ICICI Prudential Estimates 3. Source: ICICI Prudential Life Insurance
5
Mr. Kshitij Jain, CEO - Exide Life Insurance
Critical success factor for life insurers Mid-size players need to find their niche
Entry barriers have increased post the regulations Exide life remains a focused player
4Ps of Life Insurance
- People
- Policy
- Persistency
- Premium
Analysts/industry should also look at 49th and 61st month persistency
which are as important as 13th month persistency.
Individual retail weighted average premiums is the best metric to
compare life insurers.
Mid-size players cannot be pan-India and generic players due to the
costs involved and no differentiation
They need to focus either on geographies, customer segments,
distribution channels which are underserved or underutilized
Captive distribution channel, though costly over medium term, is
required over the longer term as it reduces the dependence on others
and improve the sustainability of business.
Highest share of traditional products at 96% in the private sector
Remained focused on the geographies where ING brand was strong
Exide Life is top five private player in Tamil Nadu, Karnataka and
Andhra Pradesh
The company has always concentrated only on Individual new business
premium. Group business is just transfer of business from one company
to other without any value addition for shareholders.
Rs100bn of AUM is the critical mass for breaking even on a sustainable
basis.
Top 1-6 private players have crossed that mark and are now profitable
sustainably. 1-15 mid-size players are near that critical mark, some of them
will reach it over the next two years. The future remains bleak for rest of
the players.
Entry barriers have increased in the segment as the regulator has plugged
the arbitrages where policyholders’ money was used to build scale. New
players will require deep pockets to build a sustainable franchise now.
Key
comments
“Online will be used as a comparative tool and not as a
fulfillment tool”
“Nobody takes life insurance to get rich but takes it not to
become poor”
6
Interesting charts (Exide Life Insurance)
Changing competitive landscape 49th Month persistency of life insurers (2012-13)
Scale is key – Sustainable profits require Rs100bn of AUM Balance between first year strain and value of new business
Source: Exide Life Insurance
7
Mr. S Sreenivasan, President (Finance) – Bajaj Finserv
Micro Insurance is a tough business M&A in life Insurance
Life beyond regulations Life Insurance is highly profitable over longer term
12% of Bajaj Allianz Life’s business comes from micro-insurance with
average ticket size of less than Rs3500. The company has low surcharge
rates, 8.5% annually declared return and 10x Life cover.
Draft guidelines for Insurance through MFIs seem very attractive.
Persistency is not very great in the product; Profitability is comparable to
a par products subjected to decent persistency.
It is sold as a group insurance policy to MFI.
It is a very tough product and is distributed through own channel on
account of low ticket size, cash-based collection and geographically
dispersed policyholders.
Does not see much value in acquiring other life insurance companies
unless there is a) high quality distribution channel, b) high quality book
with high persistency or c) acquiring company is entering the sector
and willing to pay license value.
Integrating two life insurance companies will be a very tough task and
may not be value accretive for shareholders.
Regulations are still not clear regarding M&A in life insurance.
Experience of global insurers like Allianz and MetLife show that
insurance can be a highly profitable business
However, in emerging markets only 15% players make PAT margins>10%
In India, LIC make 15bps margins and private players make 50-60bps
margins on the returns generated by the customers.
ULIP and Participating margins are capped at 120bps and 90-100bps
respectively. In non-participating margins of 200bps could be made but
risks are also higher.
In pensions, the primary objective should be to beat inflation by 100 bps.
Traditional products are in focus on account of higher channel
commissions.
In participating products, there is limited history of bonus rates.
Regulator may standardize the disclosures and make them mandatory
to improve transparency.
Life cover has increased and tenure of products has increased.
Growth opportunity remain very strong with 20% CAGR likely in new
business premium over the next six years.
“All players have made money on surrenders in the past”
Key
comments
“Unlike other sectors, there is least effort to understand or
segment customer base by Life Insurers”
“Insurance can be profitable in the long run”
8
Interesting charts (Bajaj Finserv)
The size of the opportunity is huge
Allianz has remained profitable over the longer term EUR Mn
20000
40000
60000 8000
4000
0
2010 1991 2000
Net Premium Earned (Non-Life and Life) Net Income 1991 2010 2000 2010 1991 2000
Life: 3.2%
Rs 6,532 Bn
FY 20 Estimate
Life: 4%
Rs 10,265 Bn OPTIMISTIC
(15%)
CONSERVATIVE
(12%)
NOMINAL GDP
(Factor Cost)
Growth Estimate
for FY13 to FY20
Starting Position
Life:
Rs 2,872 Bn
(FY13)
CAGR
12%
20%
0%
10%
20%
30%
40%
50%
<0% 0% - 5% 5% - 10% 10% - 20% >20%
Profit Margins of insurers, %
% o
f in
su
rers
Distribution of insurers by margin in Emerging Markets*
* Emerging Asia and Latin America , Emerging Asia refers to Asia ( excluding Japan, HK, Singapore, South Korea and Taiwan) Source: Swiss Re Report – Insurance in emerging markets – growth drivers and profitability – 2011, 2006-2009 analysis on 406 life and non-life companies
9
Mr. Sam Ghosh, CEO – Reliance Capital
The next 12 months could be difficult for industry Recent regulations have been a mixed bag
Indian Life Insurance – Consolidation phase (2011 onwards) Indian Life Insurance – growth phase (2000-2010)
Industry adjusts to the new product regime
Cap of 5 new products per year; bridging the product gap becomes
difficult
Lower surrender profits and decline in margins
ULIP inflows may be strengthened by buoyant capital markets
Initial signs of positive movement of policy duration towards longer
terms
Enabling regulations
- Bank as broker guidelines
- Guidelines for distribution and servicing of policies through over 1
Lac CSCs predominantly in interior locations
- Dematerialization of Insurance Policy
- E-KYC
Challenging
- New product design guidelines
- Bank account proof made mandatory
- Minimum persistency requirement
The industry was opened for private players in 2000 and remained in a
growth phase till 2010 with NBP growth of 31% CAGR.
Life Insurance penetration increased from 2.2% to 4.4% and penetration
increased from $9 to $56.
ULIP dominated the market (90% of private industry)
Bancassurance & corporate agency emerged as alternate channels.
Regulation focused on market development
Players focused on top-line growth and market share
“Life Insurance is a key conduit for routing small savings into the economy growth will make long-term funds available for developmental
projects”
New business premium declined at a CAGR of 8%.
Life Insurance penetration declined to 3.2% and density declined to $47
Resurgence of traditional products and they now account for 85% of
the industry.
Dominance of bancassurance and emergence of online channel
Regulation focused on market control
Strategic focus shifted to growth with profitability and persistency
Key
comments
10
Interesting charts
India Life Insurance - A snapshot Banks offer the much required scale…
Life Insurance remained a source of stable long-term capital Reliance is only life insurer with zero contribution from Banca
11
II. Panel Discussion I. Mr. Sandeep Batra, Executive Director, ICICI Prudential Life
II. Mr. Mayank Bathwal, Deputy CEO, Birla SunLife
III. Mr. Prashant Tripathy, CFO, Max Life
12
Panel Discussion – Key Takeaways
Insurance amendment bill Direct Tax Code – Not likely in the near term
Bancassurance guidelines Arbitrage between products is now gone
There is high likelihood that Insurance Amendment bill will get passed
in the near term with 49% FDI.
Apart of increasing FDI which will mean listing of couple of life insurers,
the act will give certain powers to IRDA.
The most important being the control over distribution compensation.
The total capital invested in the sector is around Rs35000crore.
Although, top-7 players do not need any capital at this moment, they
will need similar quantum of capital over next 10 years, if the sector is
to grow at 15% CAGR over the next 10 years.
Direct Tax Code had proposed increasing the tax rate for Life Insurers
from 12.5% to 30%.
This will have a c.200bps impact on the margins and c.20% impact on
the value of in force (c10%-15% impact on Embedded Value).
House panel has recommended 15% tax rate for life insurers which will
have minimal impact on life insurers.
Panelists believe that DTC is not likely in the near term.
Margins arbitrage among Par, Non-par and ULIPs is now gone
Insurers have to take risks to make high margins
Participating – Sensitivity of margins with respect to various assumptions
is lower. Margins are also lower.
Non-participating – Higher risk and higher reported margins. The
sensitivity of margins to investment return assumptions is very high.
These may come under regulatory scrutiny as interest of policyholders
and shareholders are not aligned.
Unit linked – Margins are between participating and non-participating
product and are sensitive to the cost/expense assumptions.
The company-wise cap of 50% for a single life Insurer and 25% for life
insurer with promoter group of bank is impractical
Moreover, there are doubts on the ability of PSU Bank employees to sell
life insurance policies of multiple companies.
Panelists believe that open architecture in bancassurance is inevitable
but it should be done in a gradual and more constructive manner.
13
Panel Discussion – Key Takeaways (cont’d)
Growth of 15% likely Distribution – Significant slack remains
Mergers seems more likely than acquisition M&A in Life Insurance
The insurance sector has borne the burnt of a) regulatory changes, b)
declining GDP growth and c) declining financial savings rate.
Even if insurance penetration remains at current level, the sector should
grow at 12% over the next three years.
However, with the improvement in equity markets and GDP growth
bottoming out, the panelist believe growth of 15% is achievable over
the next three years.
Agency – Active agents are less than 20% of the total agents for
private players. This needs to be increased for growth to come back
to the sector.
Bancassurance – Life Insurance is just sold through 20% of the bank
branches in India and there is room for growth here. Life insurance is
only one of the small focus areas for a bank which needs to be
changed for increasing utilization.
There is wide gap between the expectations of a seller and buyer in
the Life Insurance sector which has meant little consolidation in the
sector. The reasons/value of acquisition are
- Distribution in terms of a highly productive agency or a strong
bancassurance partnership
- Quality In-force book with high persistency
- A complementary customer base where value can be generated
beyond the usual life insurance products.
Integrating two life insurance companies is a difficult task on account
of hosts of regulatory approvals required, integration of operations,
managing employee relations, managing customers etc. In the end, it
may not be value accretive for the shareholder of the acquiring
company.
Mergers seem more likely at this point in time than acquisition as
valuation expectations fall in a wide range.
14
M E M B E R F I N R A / S I P C
Important Disclosures IMPORTANT DISCLOSURES
120614
This report was prepared by Espírito Santo Investment Bank Research, a global brand name for the equity research teams of Banco Espírito Santo de Investimento, S.A., with headquarters in Lisbon, Portugal, of its Branches in Spain and Poland and of its affiliates BES Securities do Brasil, S.A – Corretora de Câmbio e Valores Mobiliários, in Brazil, Execution Noble Limited, in the United Kingdom, and Espirito Santo Securities India Private Limited, in India, all authorized to engage in securities activities according to each domestic legislation. All of these entities are included within the perimeter of the Financial Group controlled by Espírito Santo Financial Group S.A. (“Banco Espírito Santo Group”).
Analyst Certification
Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; the issuers were not previously informed about the content of the recommendation included in this research report and the assumptions were not validated by the issuers; (2) no part of his or her compensation is directly or indirectly related to: (a) the specific recommendations or views expressed by that research analyst in the research report; and/or (b) any services provided or to be provided by Banco Espírito Santo de Investimento, S.A. and/or by any of its affiliates to the issuer of the securities under recommendation. Moreover, each of the analysts hereby certifies that he or she has no economic or financial interest whatsoever in the companies subject to his or her opinion and does not own or trade any securities issued by the latter.
Ratings Distribution
Espirito Santo Investment Bank Research hereby provides the distribution of the equity research ratings in relation to the total Issuers covered and to the investment banking clients as of end of March 2014.
Explanation of Rating System Ratings Distribution
12-MONTH RATING DEFINITION
BUY Analyst expects at least 10% upside potential to fair value, which should be realized in the next 12 months
NEUTRAL Analyst expects upside/downside potential of between +10% and -10% to fair value, which should be realized in the next 12 months
SELL Analyst expects at least 10% downside potential to fair value, which should be realized in the next 12 months
As at end March 2014 Total ESIB Research
Total Investment Banking Clients (IBC)
Recommendation Count % of Total Count % of IBC % of Total
12 Month Rating:
Buy 199 46.1% 26 81.3% 6.0%
Neutral 135 31.3% 4 12.5% 0.9%
Sell 97 22.5% 2 6.3% 0.5%
Restricted 0 0.0% 0 0.0% 0.0%
Under Review 1 0.2% 0 0.0% 0.0%
TRADING RATING DEFINITION
TRADING BUY Analyst expects a positive short-term movement in the share price (max duration 3 months from the time Trading Buy is announced) and may move out of line with the fair value estimate during that period
TRADING SELL Analyst expects a negative short-term movement in the share price (max duration 3 months from time Trading Sell is announced) and may move out of line with the fair value estimate during that period
Trading Rating:
Trading Buy 0 0.0% 0 0.0% 0.0%
Trading Sell 0 0.0% 0 0.0% 0.0%
Total recommendations 432 100% 32 100% 7.4%
For further information on Rating System please see “Definitions and distribution of ratings” on: http://www.espiritosantoib-research.com.
Share Prices
Share prices are as at the close of business on the day preceding publication, unless otherwise specified.
Coverage Policy
Espírito Santo Investment Bank Research reserves the right to choose the securities it expresses opinions on. The main criteria to choose such securities are: 1) markets in which they trade 2) market capitalisation 3) liquidity, 4) sector suitability. Espírito Santo Investment Bank Research has no specific policy regarding the frequency in which opinions and investment recommendations are released.
15
M E M B E R F I N R A / S I P C
Representation to Investors
Espírito Santo Investment Bank Research has issued this report for information purposes only. This material constitutes "investment research" for the purposes of the Markets in Financial Instruments Directive and as such contains an objective or independent explanation of the matters contained in the material.
Any recommendations contained in this document must not be relied upon as investment advice based on the recipient's personal circumstances. This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities or related financial instruments. The investment discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. The material in this research report is general information intended for recipients who understand the risks associated with investment. It does not take account of whether an investment, course of action, or associated risks are suitable for the recipient. This research report does not purport to be comprehensive or to contain all the information on which a prospective investor may need in order to make an investment decision and the recipient of this report must make its own independent assessment and decisions regarding any securities or financial instruments mentioned herein. In the event that further clarification is required on the words or phrases used in this material, the recipient is strongly recommended to seek independent legal or financial advice. Where an investment is denominated in a currency other than the investor’s currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation and opinion contained in this report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. The securities mentioned in this publication may not be eligible for sale in some states or countries.
All the information contained herein is based upon information available to the public and has been obtained from sources believed to be reliable. However, Espírito Santo Investment Bank Research does not guarantee the accuracy or completeness of the information contained in this report. The opinions expressed herein are Espírito Santo Investment Bank Research present opinions only, and are subject to change without prior notice. Espírito Santo Investment Bank Research is not under any obligation to update or keep current the information and the opinions expressed herein nor to provide the recipient with access to any additional information.
Espírito Santo Investment Bank Research has not entered into any agreement with the issuer relating to production of this report. Espírito Santo Investment Bank Research does not accept any form of liability for losses or damages which may arise from the use of this report or its contents.
Ownership and Material Conflicts of Interest
Banco Espírito Santo de Investimento, S.A. and/or its Affiliates (including all entities within Espírito Santo Investment Bank Research) and/or their directors, officers and employees, may have, or have had, interests or qualified holdings on issuers mentioned in this report. Banco Espírito Santo de Investimento, S.A. and/or its Affiliates may have, or have had, business relationships with the companies mentioned in this report.
For a complete list of the covered Issuers in which Banco Espírito Santo de Investimento, S.A. or its Affiliates hold stakes in excess of 1% and for information on possible material conflicts of interest arising from investment banking activities please see Disclosures on Ownership and Material Conflicts of Interest on http://www.espiritosantoib-research.com.
Market Making UK
Execution Noble Limited is a Market Maker in companies covered and may sell to or buy from customers as principal in certain financial instruments listed or admitted to listing on the London Stock Exchange. For information on Companies to which Execution Noble Limited is a Market Maker please see “Execution Noble Limited UK Market Making” on http://www.espiritosantoib-research.com.
Confidentiality
This report cannot be reproduced, in whole or in part, in any form or by any means, without Espírito Santo Investment Bank Research’s specific written authorization. This report is confidential and is intended solely for the designated addressee. Therefore any disclosure, replication, distribution or any action taken in reliance on it, is prohibited and unlawful. Receipt and/or review of this research report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this report (including any investment recommendations, estimates or price targets without first obtaining express permission from an authorized officer of Banco Espírito Santo de Investimento, S.A.
Regulatory Authorities
For information on the identity of the Regulatory Authorities that supervise the entities included within Espírito Santo Investment Bank Research please see http://www.espiritosantoib-research.com.
IMPORTANT DISCLOSURES FOR U.S. PERSONS
This report was prepared by Espírito Santo Investment Bank Research, a global brand name for the equity research teams of Banco Espírito Santo de Investimento, S.A., with headquarters in Lisbon, Portugal, of its Branches in Spain and Poland and of its affiliates BES Securities do Brasil, S.A – Corretora de Câmbio e Valores Mobiliários, in Brazil, Execution Noble Limited, in the United Kingdom, and Espirito Santo Securities India Private Limited, in India, all authorized to engage in securities activities according to each domestic legislation. Neither Banco Espírito Santo de Investimento, S.A. nor these affiliates are registered as a broker-dealer in the United States and therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is provided for distribution to U.S. institutional investors in reliance upon the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended.
This report is confidential and not intended for distribution to, or use by, persons other than the addressee and its employees, agents and advisors.
16
M E M B E R F I N R A / S I P C
E.S. Financial Services, Inc. is the U.S. distributor of this report. E.S. Financial Services, Inc. accepts responsibility for the contents of this report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Any U.S. person receiving this report and wishing to effect securities transactions in any security discussed in the report should do so only through E.S. Financial Services, Inc.
Contact Information
Garreth Hodgson Senior Managing Director / Head of Sales (212) 351-6054 [email protected]
Eva Gendell Vice President (212) 351-6058 [email protected]
Hande Cuhruk Vice President (212) 351-6070 [email protected]
Jack Fernandez Executive Director (212) 351-6064 [email protected]
James Kaloudis Executive Director (212) 351-6065 [email protected]
Mike Williams Vice President (212) 351-6052 [email protected]
Pedro Marques Vice President (212) 351-6051 [email protected]
Tatiana Sarandinaki Vice President (212) 351-6055 [email protected]
E.S. Financial Services, Inc. New York Branch 340 Madison Avenue, 12th Floor New York, N.Y. 10173
Each analyst whose name appears in this report certifies the following, with respect to each security or issuer that the analyst covers in this report: (1) that all of the views expressed in this report accurately reflect the personal views of the analyst about those securities and issuers; and (2) that no part of the compensation of the analyst was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the analyst in this report.
The analysts whose names appear in this report are not registered or qualified as research analysts with the Financial Industry Regulatory Authority ("FINRA") and may not be associated persons of E.S. Financial Services, Inc. and therefore may not be subject to the applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
Ownership and Material Conflicts of Interest
Banco Espírito Santo de Investimento, S.A. and/or its Affiliates and/or their directors, officers and employees, may have, or have had, interests or qualified holdings on issuers mentioned in this report. Banco Espírito Santo de Investimento, S.A. and/or its Affiliates may have, or have had, business relationships with the companies mentioned in this report.
For a complete list of the covered Issuers in which Banco Espírito Santo de Investimento, S.A. or its Affiliates hold stakes in excess of 1% and for information on possible material conflicts of interest arising from investment banking activities please see “Important disclosures for US persons” on http://www.espiritosantoib-research.com.
Receipt of Compensation
For information on Receipt of Compensation from subject Issuers please see “Important disclosures for US persons” on http://www.espiritosantoib-research.com.
Representation to Investors
Espírito Santo Investment Bank Research has issued this report for information purposes only. All the information contained therein is based upon information available to the public and has been obtained from sources believed to be reliable. However, Espírito Santo Investment Bank Research does not guarantee the accuracy or completeness of the information contained in this report. The opinions expressed herein are our present opinions only, and are subject to change without prior notice. Espírito Santo Investment Bank Research is not under any obligation to update or keep current the information and the opinions expressed herein. This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities or related financial instruments. The investment discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Where an investment is denominated in a currency other than the investor’s currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation and opinion contained in this report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. The securities mentioned in this publication may not be eligible for sale in some states or countries. Espírito Santo Investment Bank Research does not accept any form of liability for losses or damages which may arise from the use of this report. Please note that investing in any non-U.S. securities or related financial instruments discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with the U.S. Securities and Exchange Commission or subject to regulation in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in the United States.