By Brazil Stock Guide — BTG Pactual expects Brazilian insurer Porto Seguro (B3: PSSA3) to deliver a stronger performance in 2027 after a difficult second half of 2026, maintaining its Buy rating despite cutting earnings forecasts and warning that fourth-quarter profit could reach its lowest level of the year.
In a report, the investment bank projected recurring net income of R$3.16 billion in 2026, down 6.5% from a year earlier, before recovering nearly 18% to R$3.73 billion in 2027. BTG maintained a R$60 price target, implying total return potential of about 38%, including dividends.
The bank expects fourth-quarter recurring profit of approximately R$600 million, a 28% annual decline, reflecting weaker investment returns, higher credit provisions and increased healthcare costs. However, analysts said these pressures were largely temporary rather than evidence of structural deterioration in Porto Seguro’s businesses.
The recovery in 2027 is expected to come primarily from a normalization of financial results and continued growth in insurance. Porto Seguro holds approximately 27% of Brazil’s auto insurance market, while its healthcare division is expected to benefit from easing oncology-related claims costs following disruptions involving healthcare provider Oncoclínicas.
Porto Bank remains a source of concern. Following Brazil’s presidential election, the banking division reduced its assumption for 2027 GDP growth from 1.5% to zero, prompting tighter lending standards and higher provisions for potential credit losses. BTG expects loan growth to slow to 5% next year, with a more meaningful reduction in credit costs only in 2028.
Investment losses have also weighed on performance. BTG estimated that Porto Seguro’s exposure to healthcare company Hapvida resulted in a R$90 million negative impact in the third quarter, with a further R$50 million potential hit in the fourth quarter, assuming its position remains unchanged.
Despite the weaker near-term outlook, BTG said Porto Seguro’s valuation remained attractive at 7.8 times projected 2027 earnings, with an expected dividend yield of 6.4% and return on equity of 22.2%. The bank reduced its price target from R$61 to R$60 but maintained its view that the insurer could outperform in 2027.
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