IRB Brasil RE reported net book income of BRL 50.8 million in the first quarter of 2021, a result 44.9% higher than the BRL 35.1 million recorded in the same period in 2020. When excluding non-recurring effects, the company had recurring net income of BRL 80.5 million, compared to losses of BRL 75.2 million in March 2020. The performance was disclosed by the company to shareholders and the market in general on Thursday night (May 13).
The positive numbers are attributed mainly to the improvement in the loss ratio, as a result of the re-underwriting strategy implemented since July 2020. In 1Q21, the loss ratio decreased by 4.4 p.p., compared to the same quarter of the previous year, from 76.5% to 72.1%. Excluding the effects of discontinued businesses, the loss ratio in 1Q21 would be 69.6%, a decrease of 6.9 p.p.
The company recorded, in 1Q21, a positive underwriting result of BRL 74.2 million, 57% higher than that verified in the same period of 2020. It bears emphasizing that the positive performance, both abroad and in Brazil, has not occurred since the beginning of the adjustments promoted by the current management. Excluding the effect of discontinued businesses in the period, the company would have presented a positive subscription result of BRL 93.3 million in 1Q21.
“We kept reviewing our portfolio and our strategic objectives. In this context, we favor local businesses over foreign ones, where we were more selective and restrictive. In addition to net income and improved underwriting results, it is important to highlight the end of Susep’s special inspection and compliance with the regulatory liquidity plan”, says Wilson Toneto, CEO and Technical and Operations VP.
Finance and Investor Relations VP, Werner Süffert, stresses the improvement in cash flow: “The company had a positive operating cash generation of BRL 551 million for the third consecutive quarter. Disregarding the receipt of the reimbursement agreement with Eletronorte of BRL 358 million, cash generation in the quarter was BRL 176 million”.
Check out other highlights of the first quarter of 2021:
:: Regulatory solvency – On March 31st, 2021, IRB Brasil RE had an excess of regulatory capital of BRL 1.4 billion, which is equivalent to a regulatory solvency index of 181% (adjusted shareholders’ equity/ total risk capital), at the same time that the company’s total solvency ratio reaches 254% (shareholders’ equity/ total risk capital). Both indicators have better positions than in the last quarter of 2020.
:: Sufficiency of regulatory liquidity – On March 31st, 2021, the company had a sufficiency in regulatory liquidity of BRL 160.4 million, very close to the level found on December 31st, 2020. Excluding the additional margin of 20% on risk capital, the company recorded on March 31st, 2021 sufficiency of assets eligible to guarantee technical provisions of BRL 505.2 million. The indexes remained positive in the quarter and showed a reversal of the insufficiency observed throughout 2020.
:: Total issued premium – In the first quarter of 2021, the total volume of premiums issued by IRB Brasil RE totaled BRL 1.9 billion. Issuance in Brazil totaled BRL 1 billion, which represented an increase of 18.6% compared to 1Q20. Abroad, revenues totaled BRL 886.1 million, a 20.6% reduction compared to 1Q20, in line with the re-underwriting strategy. In total, the premium was 3.3% lower compared to the same period in 2020.
The complete Performance Analysis is available on the company’s Investor Relations website (ri.irbre.com).
