IRB-Brasil Resseguros (IRBR3) Q1 2024 earnings summary

Executive summary

• Q1 net income was BRL 79m under IFRS 4, with a 58% loss ratio and 99% combined ratio; all three indicators improved YoY.

• Under IFRS 17, Q1 net income was BRL 237m versus a BRL 25m loss in Q1 2023.

• Management described 2024 as a turnaround year and expects no impact from legacy contracts in 2025; Rio Grande do Sul catastrophe losses remain uncertain.

Financial highlights

• IFRS 17 net income rose to BRL 237m from a BRL 25m loss YoY, driven by lower loss ratios and higher reinsurance financial results, partly offset by lower reinsurance revenue.

• Q1 financial result exceeded BRL 125m in Q4 2023 but was slightly below Q1 2023, despite lower CDI rates and a smaller asset base.

• Administrative expenses excluding depreciation were BRL 64m in Q1 2024 versus BRL 77m in Q1 2023; discretionary expenses fell BRL 13m.

• Cash and financial investments were BRL 6.3bn at March 2024, down from BRL 7bn YoY, in line with lower retained premiums.

Outlook and guidance

• Management called 2024 the turnaround year; it expects no legacy-contract impacts in 2025 and expects to discuss normalized 2025 results after reviewing H1 in August.

• Budgeting for 2025 is scheduled to begin in July; management expects to update Rio Grande do Sul loss estimates as claims information develops.

• Asset allocation is expected to shift gradually from 60% onshore to 70%, aligned with the Brazil-focused business mix and contract renewals.

• Dividend payments are not expected in 2024; management said distributions may be possible in 2025 or 2026, after building profit reserves.