LATIN AMERICA EQUITY RESEARCH: LATAM FIRST TO MARKET

Research evidence excerpt

LATIN AMERICA EQUITY RESEARCH: LATAM FIRST TO MARKET

Latin America Equity Research

LatAm First to Market 24 July 2026

Top Stories

| Brazilian Insurers (Guilherme Grespan)

Rally Aftermath - Downgrading CXSE to UW, Downside to BBSE

We revisit our Brazilian insurance preference after the strong rally in the sector since June (15-28% vs Ibovespa 2%). Notably,

we downgrade Caixa Seguridade to Underweight with current share price offering 0% upside potential vs our R$22 Dec-27 PT.

We also reinforce our Underweight rating on BB Seguridade, as we now see ~20% downside vs. our newly established Dec-27

PT of R$34 (vs previous R$33 Dec-26 PT). Both companies are trading ~3x standard deviations above their 3-year historical

average P/E, with little change to earnings dynamics or growth outlook. We don’t think higher rates for longer justify the full

move as Selic sensitivity is limited nowadays - we estimate only a 1-2% EPS tailwind for each 100bps of Selic for CXSE/BBSE.

While insurance is undoubtedly a defensive sector amid higher rates and political volatility, we do not think BBSE and CXSE

offer attractive risk-reward at these levels. There is also a risk of loan growth deceleration at Caixa (notably in the mortgage

book) in 2027 and even for BBAS as agribusiness loans should grow on lower amortization, but new origination may not be as

solid as the bank needs to be selective on it. On a separate note, we take the opportunity to roll over our price target for IRB at

R$68 Dec-27 PT (vs R$63 Dec-26 PT) while maintaining our Dec-27 PT of R$63 for Porto. Our relative order of preference

among insurers is PSSA (OW), followed by IRB (OW), CXSE (UW) and BBSE (UW). In this environment, we favor BTG (link),

and to some extent XP given its attractive ~11-12% yield (link).