IRB Brasil RE presented, on this Friday (28), the company’s results regarding the second quarter of this year. The reinsurer also concluded the final auction for subscription of remaining shares, within the capitalization announced on July 08. The final figures on the subscription will be disclosed by IRB after ratification by B3. Up to August 24, 97.47% of the shares offered for capitalization had been subscribed, summing up a value of BRL2.2 billion. During the process, the reinsurer also witnessed a wide spread of the shareholders’ profile acquiring the securities, what discarded the need for additional investments by the institutional shareholders, the so-called “anchors”, such as Bradesco and Itaú.
“The result of the subscription is a clear signal of trust by the market on IRB’s current management, and it grants the company undisputable ground for keep growing while generating long-term sustainable value”, says Antônio Cássio dos Santos, CEO and chairperson of the reinsurer’s Board of Administration.
For the CEO, the subscribed value reinforces the margin of the company’s regulatory liquidity, “which had been substantially affected by the depreciation of the real against the dollar and the acceleration of claims, especially by international insurers, with the pandemic. In addition, it gives room to our business strategy in the following years, as it strengthens the capital structure and improves the cash position” in a relevant way, says he.
“We shall keep our long-term strategy, not in a hurry but nonstop as well, focused on our risk subscription capacity in Brazil, which places us as leader in Market Share around 37%”, says Cassio. “Besides, we shall continue to strengthen our activity abroad, so as to use our almost one-hundred-year knowledge and our operating efficiency for building solid bases of an equally respected reinsurer with recurring positive margins. We are excited about the new moment of IRB Brasil RE”, he adds.
2Q20 Results
With the negative results already indicated in the monthly periodical report sent to Susep, regarding April-May, and in a market notice on August 03, IRB recorded a net loss in the second quarter of 2020 summing up BRL685.1 million, in comparison with a net profit of BRL13.9 million in 1Q20 and BRL397.5 million in 2Q19. In the semester, the net loss was BRL671.2 million.
The result is due to the retained claims in the period: BRL2,339.3 million in comparison with BRL1,147.5 million in 1Q; and BRL798.7 million in the same quarter of 2019. “The main factors responsible for the result in the period were expenses with claims higher than the normal and the effect of the exchange depreciation”, explains Werner Romera Süffert, IRB Brasil RE’s financial and investor relations executive officer. “There was acceleration in the claims in comparison with 2Q19, mainly abroad, in life and property business lines, and, in Brazil, in property and rural lines.”
IRB informs it “has timely complied with its obligations and has not postponed records and/or payments of claims, among other activities, supporting our assignors during such uncertain times.” The loss ratio for the period was 135.3% in comparison with 76.5% in 1Q and 58% in 2Q19.
In the second quarter of 2020, IRB Brasil RE reported the total volume of premiums issued increased 8% in comparison with the same period last year, summing up BRL2,543.6 million.
The premiums issued in Brazil summed up BRL1,164.4 million in 2Q20, a drop of 15.6% in comparison with 2Q19. The company informs this drop is due mainly to a lower volume of premiums issued in special risks (-90.3%) and rural (-19.9%) lines.
On the other hand, the premiums issued abroad summed up BRL1,379.1 million in 2Q20, increase of 41.4% in comparison with 2Q19. The positive effect of the exchange rate in the period brought the higher contribution to the premiums issued abroad, in addition to the performance in Property business lines, with an increase of 69.3% in 2Q20 in comparison with the same period of 2019, with highlights for the increase in the renewal rates and the new accounts. Another line benefited by the favorable exchange conditions was rural reinsurance.
In the first quarter of 2020, the total volume of the premiums issued increased 10.2% in comparison with the same period in 2019, summing up BRL4,539.8 million.
The expenses with retrocession were kept almost stable in the first semester, presenting a slight increase of 1.8% in comparison with the same period of 2019. Then, the retrocession rate for 2Q20 increased from 28.7% in 2Q19 to 32.8% in 2Q20; and dropped from 26.7% in the first semester last year to 24.7% in the first semester this year.
Portfolio
Regarding the period, the CEO, Antonio Cassio, also highlighted IRB’s capability to renewal all the contracts deemed relevant that were due in this semester, “an effect of our focus on assuring the efficiency and quality of the services provided to the clients”, he evaluates. “At the end of the first semester, we also started the wide clearing of the portfolio, aiming at eliminating business repeatedly presenting negative margins or sectors whose risks taken are realizably higher than the premiums received”, he adds.
