IRB-Brasil Resseguros (IRBR3) Q2 2022 earnings summary

Executive summary

• Q2 net loss was BRL 273 million, driven primarily by severe drought-related agricultural claims in southern Brazil.

• Excluding atypical weather and COVID effects, Q2 loss ratio was 89%; H1 normalized loss ratio was 79%, with management pointing to improving underlying operations.

• Recovery actions included a formal plan submitted to SUSEP, asset sales under evaluation, structured retrocession and consideration of a capital offering.

Financial highlights

• Q2 net loss totaled BRL 273 million; management estimated results would have been positive BRL 63 million after normalizing identified atypical effects.

• Q2 issued premium was BRL 1.7 billion; property, agriculture and life represented 73% of the total.

• H1 issued premiums in Brazil rose 4.8% YoY and represented nearly 65% of total; Brazil accounted for 68% of Q2 premiums.

• Q2 financial result was positive BRL 104 million, up 17% YoY; H1 financial result was BRL 364 million higher YoY, including gains from two legal suits.

Outlook and guidance

• Management anticipated COVID-related claims stabilization, citing vaccine coverage and declining deaths.

• SUSEP's coverage recovery plan was to be completed within three months, by end-October; management expected both regulatory indices to be addressed within that timeline.

• Management said capital needs did not prevent premium issuance, while acknowledging the position was not advisable; customer confidence and renewals remained intact.