IRB improves results in 2021 and expects return to profit

Publicado em: 25/02/2022

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IRB Brasil RE released, this Thursday (24/02), the results for 2021. The accounting result, which incorporates the impacts of business and non-recurring expenses, shows that there was a 54% reduction in net loss, which was BRL 683 million last year against BRL 1.482 billion in 2020.

“Once again, the results indicate the company’s recovery, even considering that we face a more adverse scenario than planned in 2021, with the pandemic still affecting business and, internally, with claims for contracts signed before June 2020, the date from the beginning of the resubscription process, still significantly impacting the numbers”, evaluates the CEO of IRB Brasil RE, Raphael de Carvalho.

In relation to the fourth quarter of last year (4Q21), the IRB recorded a loss of R$ 371 million in the accounting view, 42.4% lower than the one verified in the same quarter of 2020. The company’s net accounting result in 4Q21 was negatively impacted, primarily, by the higher frequency of claims, which was 53.7% higher than in the previous year. The main responsible parties were the rural, aviation and life segments, notably in the portfolios abroad.

“We work hard on our long-term strategy, with a permanent review of the portfolio, focusing on growth with profitability. We are diluting the risk, seeking a greater number of businesses with less exposure per contract. In other words, underwriting improvement, claims reduction, greater efficiency and a new customer centric culture. 2022 is the year of maturing of this strategy, with inflection in results. In addition to the rate increase expected by the global reinsurance market, we also expect a positive impact on our profitability, with the rise in interest rates in Brazil and the gradual reduction of the effects of contracts prior to 2020”, says Raphael de Carvalho.

Premiums issued

In 2021, the total volume of issued premiums decreased by 8.7% compared to 2020, totaling R$8.76 billion. Premiums issued in Brazil totaled R$5.329 billion, which represented an increase of 9.3%, reflecting the new strategy and the resilience of the business in a pandemic year, with a higher volume of premiums issued in life (+43.7 %) and rural (+23%). Premiums issued abroad were R$3.431 billion, down 27.3% from 2020, also in line with the company’s strategy.

“The new strategy starts by reaffirming our leading role in Brazil, which should represent at least two thirds of our portfolio, leveraging the clear competitive

advantages that IRB has in the domestic market. Our presence in the international market has Latin American countries as a priority, as an extension of our competitive advantages and our potential for profitability. The focus on other international markets is complementary, aiming at risk diversification and serving strategic customers. “In 4Q21, 61% of the premiums issued were in Brazil”, reinforces the CEO of IRB Brasil RE.

Expenses with retrocession, in 2021, showed a reduction of 24.1%, reflecting adjustments in the portfolio that allowed a decrease in the costs of protecting the portfolio, notably in businesses originating abroad, where there was a decrease in exposure and improvement in results in 2021. Thus, total retained premiums amounted to R$5.556 billion, an increase of 3.3% in relation to the previous year, as a result of the reduction in retrocession expenses. Finally, total premiums earned in the 12 months of the year amounted to R$5.9 billion, an increase of 3.8% compared to 2020 due to the positive effect on the variation of technical provisions.

Regulatory indices

IRB Brasil RE observes two relevant regulatory indicators, one of them in relation to the sufficiency of coverage of technical provisions and the other referring to the minimum capital required. On 12/31/2021, the company had a sufficiency of R$236 million in technical provisions and 106% sufficiency in relation to the minimum capital required, rates above regulatory requirements. Despite recording an accounting loss for the year, the Company’s total solvency indicator remained at robust levels of 232%.

“It is the duty of administrators to optimize IRB’s capital structure, therefore, on a routine basis, we monitor and study several alternatives to strengthen our regulatory indicators. Among them, structured operations that reduce provisions, transfer of run-off portfolios, reductions in real estate investments, capital optimization in subsidiaries, subordinated debt issuance and share subscription. If the management eventually deems it necessary to implement any of these measures, we will inform the market in a timely manner”, explains Willy Jordan, the company’s Vice President of Finance and Investor Relations.

Loss Ratio

In 2021, retained claims totaled BRL 5.988 billion. The loss ratio fell compared to 2020, standing at 101.5%.

“The 2021 loss ratio can be explained by two factors. The first concerns contracts signed in periods prior to 06/30/20, the date on which we started the resubscription process, whose claims represented 75% of the total volume registered last year. The second is related to some large contracts that presented a frequency and severity of claims above the expected as a result of its operation. We cannot fail to note that the Company has already recorded BRL 168 million in retained claims arising from Covid-19, of which BRL 146 million in 2021”, says Raphael de Carvalho.

The financial and equity result of IRB Brasil RE was R$618 million in 2021, higher than the R$125 million presented in 2020, due to the greater stock of assets, the increase in the Selic rate and non-recurring effects.

The complete Performance Analysis is available on the company’s Investor Relations website (

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