Brazilian reinsurer IRB Brasil Re has fallen to an underwriting loss of R$677.8 million (USD 125mn) for the third quarter of 2021, alongside a 12.4% decline in gross written premium (GWP) to R$2.6 billion (USD 479mn).
IRB Brasil Re is in the process of a re-underwriting strategy, which is a driver of the reduction in premiums for the period.
The company notes that by excluding the effect of discontinued business contracts of the period, which are in run-off, of R$329.5 million (USD 61mn), then it’s underwriting would have still been negative for Q3 2021, but at an improved R$348.3 million (USD 64mn).
The reinsurer announced in its fourth quarter 2020 results that the potential impact of its portfolio clean-up will lead to a gradual improvement in its underwriting result over the coming years.
The overall loss ratio deteriorated, year-on-year, from 96.2% to 119.3%, contributing to a combined ratio of 141.8% for the third quarter of 2021, compared with a combined ratio of 129.9% for the prior year period.
All in all, IRB Brasil Re has recorded a net loss of R$155.7 million (USD 29mn) for the third quarter of 2021, reflecting an improvement on the net loss of R$215.6 million (USD 40mn) for the same period last year.
Alongside the dip in GWP, retained premium increased, year-on-year, to R$1.7 billion (USD 314mn) in Q3 2021 from R$1.5 billion (USD 277mn) in Q3 2020.
Earned premium also grew, from R$1.6 billion (USD 295mn) in Q3 2020 to R$1.7 billion (USD 314mn) in Q3 2021.
Commenting on its third quarter results, IRB Brasil Re said: “IRB has worked hard to have well-structured processes, strong governance and long-term strategy, and has reviewed its entire underwriting portfolio to make it profitable and sustainable. The year 2021 has been challenging and we have not yet been able to translate into results the improvements we are implementing.
“However, we believe that some vectors will positively influence performance for 2022, such as higher interest rates, infrastructure projects, privatizations and concessions. This scenario may be conducive to reaffirming our leadership position, resuming the role of leading role we have always had and occupying new spaces.”