IRB-Brasil Resseguros (IRBR3) Q2 2024 earnings summary

Executive summary

• Net income for 2Q24 was R$65 million, up from R$20 million in 2Q23; 1H24 net income reached R$144 million, a fivefold increase YoY, with IFRS 17 net income at R$194 million for 2Q24 and R$431 million for 1H24.

• Underwriting profit for 2Q24 was R$34 million; 1H24 underwriting profit totaled R$156 million, up R$117 million YoY.

• 82% of written premiums in 2Q24 originated from Brazil, reflecting a strategic focus on domestic market leadership and reduced international exposure.

• Catastrophic flooding in Rio Grande do Sul led to R$257 million in claims provisions, but retrocession arrangements limited net impact.

• Management is confident in current provisioning and expects most of the loss impact is already accounted for.

Financial highlights

• Written premiums in 2Q24 totaled R$1,434 million, up 3% YoY; Brazil up 18.4%, abroad down 35.9%.

• Retained premiums for 2Q24 were R$990 million, down 4.2% YoY; 1H24 retained premiums reached R$2,114 million, down 7.4% YoY.

• Earned premiums in 2Q24 were R$1,039 million, up 1.8% YoY; 1H24 earned premiums were R$1,949 million, down 12.6% YoY.

• Financial and equity result in 2Q24 was R$166 million, up 73% YoY, aided by a positive USD position.

• Total assets under management reached R$9.1 billion as of June 2024, with float at R$7.3 billion, up from R$6.7 billion in 2023.

Outlook and guidance

• Portfolio adjustments and market adaptation to new pricing are expected to improve underwriting results and premium growth, with profitability as the priority.

• Combined ratio target is 95%; normalized loss ratio expected around 60% for sustainable profitability.

• Dividend payments not expected before mid-2025 due to accumulated losses under IFRS 4.

• Lower capital requirements expected due to improved risk profile.

• Expect better visibility on flood impacts in Q3 and will reassess reserves as needed.