Brazilian reinsurance company IRB Brasil Re has reported an underwriting loss of R$661.0 million (US $129.1 million) for the second quarter of 2022 as drought losses hit its agriculture business.
The announcement comes just ones day after reports suggested the company is looking to raise close to $300 million via a new share offering.
The underwriting loss compares with a less severe loss of R$337.2 million for the same period in the previous year, with COVID-19 also continuing to impact IRB Brasil Re on the life side of its business.
The reinsurer’s combined ratio accordingly rose from 128.7% for Q2 last year to 154.3% in the most recent quarter, on a total loss ratio of 124.2%.
Net income likewise fell from a loss of R$206.9 million to a loss of R$373.3 million, while written premiums also reduced from R$2,160.0 million to R$1,685.0 million, including a huge 42% decrease in premiums written outside of Brazil.
Looking at the first six months of the year, the picture is much the same, with IRB Brasil Re’s underwriting loss growing fromR$204.6 million to R$757.4 million on a combined ratio of 137.8%.
“The first half of 2022 was very challenging for the insurance and reinsurance market,” the reinsurers stated alongside its results. “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.
“This relevant effect, combined with the pandemic impact on life insurance, raised the loss ratio to levels not anticipated by the Company, which already expected to reap the initial results of the re-underwriting strategy implemented in 2022,” it explained.
Going forward, the company assures that the impact of the portfolio adjustments will provide a “gradual improvement” in its underwriting result, as the latest contracts mature, with expected lower loss ratio and the claims for the oldest contracts becoming less relevant to its profit or loss.
