Brazilian reinsurer IRB Brasil Re has sold off the building where its headquarters are currently located as part of its ongoing efforts to raise capital levels to a regulatory minimum.
Last week, the reinsurer confirmed a new share offering as part of its capital drive following drought losses that resulted in a large underwriting loss in the second quarter.
And now, IRB Brasil Re says it has signed a final public deed for the sale and purchase of its headquarters with the Serviço de Apoio às Micro e Pequenas Empresas do Estado do Rio de Janeiro – SEBRAE/RJ.
The headquarters at Avenida Marechal Câmara in Rio de Janeiro were purchased by SEBRAE/RJ for R$85.3 million (US $14.3 million) and will be jointly occupied by both companies until the end of the year.
“The conclusion of the sale process of said property is part of the strategy of improving the Company’s capital structure, the continuous improvement of its administrative and operating expenses, as well as in the adaptation of its offices to the current hybrid work model,” IRB Brasil Re explained in a statement.
The company added that it is now evaluating possible properties/addresses for the installation of its new headquarters in the City of Rio de Janeiro.
Concurrently, IRB Brasil Re announced in a separate statement that it has signed an extrajudicial agreement with the companies that own and control the Casashopping enterprise, also located in Rio de Janeiro.
Under this agreement, these companies undertook to pay R$ 100 million (US $16.8 million) to the IRB Brasil Re with the objective of ending the lawsuits between the parties that have been processed for almost 20 years, as well as selling the participation of IRB Brasil RE in the shopping centre real estate project.
Again, the reinsurer confirmed that these negotiations formed part of its plans to optimise its capital structure and the regulatory indicator of technical provisions coverage.
The steep underwriting loss reported by the IRB Brasil Re in Q2 saw its combined ratio weaken to 154.3% as the loss ratio hit 124.2%. At the same time, net income 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.
Following the release of its results, executives at the firm noted the significant impact of the severe drought in the southern part of Brazil, which actually led the firm to exceed the limits of its retrocession protection – the first time this has happened since its inception.
