IRB-Brasil Resseguros (IRBR3) Q2 2024 earnings summary

Executive summary

• Net income for 2Q24 reached R$65 million under IFRS 4, up from R$20 million in 2Q23, and R$194 million under IFRS 17, reversing a prior-year loss; 1H24 net income was R$144 million (IFRS 4) and R$431 million (IFRS 17), both showing strong year-over-year improvement.

• Results were driven by disciplined underwriting, internal improvements, and a strategic focus on the Brazilian market, despite significant catastrophe losses from Rio Grande do Sul floods in Q2 2024.

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

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

• The company released its first sustainability report and was recognized as a Great Place to Work in 2024.

Financial highlights

• Q2 2024 net profit was R$65 million (IFRS 4), with only R$5 million in June due to flood impacts; H1 2024 net profit reached R$144 million (IFRS 4) and R$431 million (IFRS 17).

• Underwriting result for H1 2024 was R$156 million, with Q2 at R$34 million.

• Financial and equity result in Q2 2024 was R$166 million, up 73% YoY, mainly due to exchange rate gains.

• Total assets under management reached R$9.1 billion as of June 2024, or R$8.7 billion excluding a temporary contract-related inflow.

• Float reached R$7.3 billion in June 2024, up from R$6.7 billion in 2023.

Outlook and guidance

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

• Premium growth expected to accelerate as market adapts to new pricing, but profitability remains 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.

• Portfolio adjustments are expected to continue improving underwriting results as older contracts mature and loss ratios decline.