Brazilian reinsurance company IRB Brasil RE has recorded a first-quarter of 2023 net profit of R$8.6 million, and an underwriting profit of R$3.7 million, the first positive one following seven quarters of losses.
In 1Q 2022, IRB reported underwriting losses of R$96.4 million, a -103.9% difference compared to this year’s first quarter.
The reinsurer also noted that the reported net income for 1Q 2023 took in consideration the settlement with the US Department of Justice (DOJ) of R$5.0 million.
“On April 20, we reached a settlement with the US Department of Justice (DOJ) – considering the disclosure of the untrue information that Berkshire Hathaway would be one of the Company’s shareholders – to provide US$5 million in damages,” IRB explained.
“Such amount, according to the current legislation, was reported in the 1Q23, with non-recurring impact on the company’s result, which reported net income of R$8.6 million. Normalised, the net income would reach R$34.0 million for this quarter.”
The company’s loss ratio went down by 4 percentage points (p.p.) and stood at 77.3%, as well as its combined ratio, which went down by 7.7 percentage points (p.p.) to 110.9%.
Written premiums fell 21% compared to 1Q22, reaching R$1.6 billion. In 1Q23, businesses made in Brazil accounted for 64% of the portfolio and were down by 19% from the 1Q22, to R$1.0 billion.
“We continued to work towards the target of 80% for the Brazil share of our portfolio, reinforcing our competitive differentials, complemented by a share of 15% for the premiums written in Latin America and the other 5% in other markets,” said IRB.
“In 1Q23, we renewed 88% of the contracts we wanted to retain, continuing with the risk dilution strategy and concentration in Brazil – our priority market where we see opportunities in key sectors, such as infrastructure.
“The adjustments to the portfolio allowed us to generate, after seven quarters, underwriting profit of R$ 3.7 million for the 1Q23, whereas we reported a loss of R$ 96.4 million for the 1Q22. It is worth noting that in this quarter there was a reversal of underwriting in Brazil, which changed from a loss of R$ 113.0 million for the 1Q22 to a profit of R$ 15.8 million. Abroad, there was a change in the opposite direction, underwriting reported losses of R$ 12.1 million for the 1Q23, whereas it reported a profit of R$ 16.5 million for the 1Q22.”
The insurer added: “The IRB of the future prioritises profitability and values the knowledge of its professionals. With the opening of our new head office, in the centre of Rio de Janeiro, in June, we have started to write a new chapter of the Company’s history of 84 years, encouraging integration, knowledge exchange among the areas and close relationship with customers and business partners.”
