The performance of Brazilian reinsurer IRB Brasil Re in Q2 2022 was negatively impacted by the severe drought in the southern part of the country, leading the firm to exceed the limits of its retrocession protection.
Yesterday, the company announced an underwriting loss of R$661.0 million (USD 129.1m) for the second quarter of 2022 on the back of drought losses significantly impacting its agriculture business.
The combined ratio for the quarter rose from 128.7% for Q2 last year to 154.3% this year, driven by a total loss ratio of 124.2%.
For the half-year, IRB Brasil Re’s underwriting loss grew from R$204.6 million (USD 39.4m) to R$757.4 million (USD 146m) on a combined ratio of 137.8%.
“The first half of 2022 was very challenging for the insurance and reinsurance market. The effect of the climate issues on agribusiness disrupted important crop productions, resulting in huge claims for agricultural producers and, consequently, for insurers and reinsurers,” said the firm yesterday.
Following the release of its financials, IRB Brasil Re executives held an earnings call, during which it was confirmed that the crop losses were such that the company has, for the first time since its inception, exceeded the limits of its retro protection.
“As you know, we have protections against such events. So, we went beyond them, and this has never happened in the history of the company, after we opened to the market in 2008,” said management.
According to IRB Brasil Re, it has paid or provisioned approximately R$1.5 billion (USD 289m) for the winter 2021 and summer 2021/2022 crops.
Earlier this week, it was reported that the Brazilian reinsurer is set to announce a new share offering, as it seeks to raise close to USD 300 million.