Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 360

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 19
Chunk 360
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 the Traditional Pension,
PGBL and VGBL portfolios as, during the investment phase, the policyholders' return is directly linked to assets held in specified investments
funds.

The simplified Premium Allocation Approach
(PAA) is applicable to contracts with a coverage period of one year or less and contracts for which the Group reasonably expects that
the resulting measurement will not differ materially from that under the General Measurement Model (GMM/BBA). The Group applies the Premium
Allocation Approach (PAA) to the Life Short-Term Risk, Collective Health, Collective Dental Health and Short-Term Non-Life portfolios,
because these portfolios have coverage periods equal to or less than one year or were submitted to a ’similarity test’ carried
out by the Group to confirm if the value of the liabilities of these contracts measured according to the simplified model is equal or
similar to the value of the liabilities of these contracts measured by the General Measurement Model (GMM/BBA).

The Group does not issue reinsurance contracts;
however, it has ceded contracts to reinsurers and applies the Premium Allocation Approach (PAA) to measure the ceded reinsurance contracts,
as they have a duration of one year or less.

The Group measures the liabilities for incurred
claims using an estimate of the cash flows to be fulfilled, discounted to present value.

Discount rate

The Group uses the Bottom-Up rate for all
its portfolios measured under IFRS 17 - Insurance Contracts. The discount rate is the rate used to reflect the time value of
money for future cash flows. In the Bottom-Up methodology, the calculation of the discount rate is based on a risk-free rate. A liquidity
risk is added to the risk-free rate to obtain the final discount rate. The liquidity risk reflects the compensation that an investor would
require for the differences in liquidity between the insurance contracts, considering all surrender options, and the reference bond portfolio.

The Group has chosen to recognize the effect
of changes in discount rates in relation to initial recognition and subsequent measurements in other comprehensive income.

Risk Adjustment (RA)

The Risk Adjustment (RA) is the adjustment
made by the Group to the estimate of the present value of future cash flows to reflect the compensation it would require to bear the
risk of uncertainty in the value and timing of cash flows arising from non-financial risks. The Group opted to use the cost of capital
methodology for the Life, Pension and Dental Health portfolios, and the confidence level methodology for the Health portfolio. For the
Non-Life portfolio, the