IRBR3. Institutional Presentation May 2018

Transcription

1 IRBR3 Institutional Presentation May

2 SECTION 1 IRB at a Glance 2

3 History of Market Leadership Monopoly Period Post-Monopoly Period The Only Reinsurer in Brazil for 68 Years Company s new management team 2017 IPO Company initiates operations End of reinsurance monopoly % FIP Barcelona % 15.2% 11.1% 7.4% Shareholder structure after the IPO / Free Float = 39.4% 1930 s 27.4% FIP Barcelona % 20.4% 14.9% 9.9% In October 2013, IRB became a privately owned company 1 Includes PREVI, PETROS, FUNCEF, ECONOMUS and PREVIRB 3 3

4 IRB Brasil Re at a Glance Brazil s undisputed market leader in reinsurance with a strong growth track record Market share increased from 31% in 2014 to 36% in 2017 (~6.0x player #2) Gross written premium increased from R$3.2 bn in 2014 to R$5.8 bn in 2017 (CAGR of 21.7%). In 1Q18 gross written premium achieved R$1.4 bn Underwriting discipline combined ratio improved from 95.5% in 2014 to 86.3% in 2017 (85.3% in 1Q18) and amplified combined ratio improved from 77.7% in 2014 to 71.5% in 2017 (69.8% in 1Q18). Strong efficiency - administrative expenses declined from 10.4% of earned premiums in 2014 to 5.5% in 2017 (5.3% in 1Q18) Investment portfolio of R$6.4 bn in 2017 (1Q18: R$6.6 bn) with average yield of 131% of CDI. Over the past 3 years with an average yield of 125% of CDI (1Q18: 143% of CDI) ROAE of 13% in 2014, 25% in 2015, 26% in 2016 and 27% in 2017 (1Q18: 30%) - makes IRB the world s most profitable reinsurer 4 4

5 IRB Brazil RGA Re Fairfax African Re Hannover Re WR Berkley Beazley Mapfre China Re GIC India Arch Capital Korean Re CCR France Toa Re Everlast Re SCOR Markel Partner Re Navigators ARGO General Reinsurance National Indemnity Hiscox Munich Re Alleghany Swiss Re White Mountains Validus Asia Capital Re Renaissance Re XL Catlin Lancashire Axis Capital Sirius Aspen -1,2% -2,2% -4,7% -5,3% -6,0% -6,3% -7,8% -7,9% 15,5% 12,6% 11,0% 10,4% 8,7% 7,9% 7,2% 7,2% 7,1% 6,2% 6,1% 6,0% 5,7% 4,5% 4,4% 3,9% 3,3% 2,7% 2,7% 1,9% 1,5% 1,3% 1,1% 0,9% 0,0% 22,7% 27,2% Strong Growth and High Return Track Record IRB Brasil Re is the only company capable of delivering strong growth and returns Net Income R$ million ROAE - % % 26% 27% 30% % Q Q Highest ROE among peers 35% 30% 25% 20% 15% * * * * 10% 5% 3,4% 0% -5% -10% * -15% Source: Reinsurance Market Report

6 72,5% 76,5% 76,8% 84,2% 80,0% 81,9% 87,0% 84,4% 92,5% 124,9% 124,3% 124,1% 116,0% 114,1% 113,1% 112,3% 111,5% 108,3% 107,2% 106,6% 106,4% 105,0% 103,8% 103,7% 103,5% 103,2% 96,7% 100,5% 102,5% 99,9% 99,8% 93,7% 99,7% 99,3% 93,6% 99,0% 98,3% 98,3% 98,1% 97,4% 96,7% 94,3% 93,3% 96,5% 91,4% 89,9% 91,0% 88,4% 89,9% 98,1% 95,7% 95,9% 94,0% 93,5% 94,2% 96,2% 92,5% 91,9% 92,0% 95,2% 93,1% 89,0% 107,4% 122,9% 122,6% 137,9% Strong Growth and High Return Track Record Disciplined underwriting approach resulting in highly profitable operations Lowest Combined Ratio among peers 150% 140% 130% FY17 120% FY16 110% FY 2017 INDEX 104,8% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Reinsurance Market Report

7 Capabilities in Place for Positive Momentum to Continue Naturally Hedged Business Model Cycle 2017 Cycle Underwriting Results Investment Income Underwriting Results Investment Income High Interest Rate Investment Income Underwriting Results Modest GDP Growth Investment Income GDP Decrease Underwriting Results Low Interest Rate 2018 Cycle Cycle Underwriting Results Investment Income Underwriting Results Investment Income GDP Growth Underwriting Results GDP Growth Underwriting Results High Interest Rate Investment Income Investment Income Low Interest Rate 7 7

8 Capabilities in Place for Positive Momentum to Continue IRB s business model has a natural hedge for economic cycles Cycle Cycle , Underwriting Result Investment Income CAGR: 22% ,041 Reduction: (22%) Investment Income Underwriting Result CAGR : Growth : 41% 30% 2014 Recurring result of the investment portfolio = R$ 690 mm - R$ 164 mm (non recurring) 8 8

9 Investment Result Investment Portfolio Results R$ million and % of CDI Investment Portfolio Breakdown 1Q18 102% 120% % 1, % % 143% Real Estate 4% BRL Equity 1% USD 13% Assets under Management 1Q18: R$ 6.6 billion BRL Fixed Income 82% Q17 1Q Recurring result of the investment portfolio = R$ 690 mm - R$ 164 mm (non recurring) 9 9

10 Administrative Efficiency Administrative Expenses (R$ million) and Administrative Expenses Ratio (%) 10.4% 8.0% 6.6% 5.5% 7.1% 5.3% Q17 1Q18 Note: Administrative Expenses Ratio = (Administrative Expenses) / (Earned Premiums) 10 10

11 Diversified Premium Portfolio Market Share and Diversification of Written Premium Portfolio 6X Larger than #2 Player (2017*) #1 Player in 9 out of 11 segments (2017*) Highly diversified portfolio 36% 6.0x 1 st 3 rd 1 st 1 st 1 st Property Financial Risks Agriculture Life 11% 42% 42% 58% Special Risk 4% Financial Risk 5% Life 5% Cargo Others 3% 7% International 36% 1 st 1 st 5 th Cargo Casualty Motor 5% 25% 26% Agriculture 18% Property 22% 1 st Special Risks 84% 6% 5% 4% 1 st 1 st Aviation Marine 19% 25% Written premium 2017: R$ 5.8 bn 2 nd 3 rd 4 rd 1 st Mortgage 67% 11 11

12 Unique Competitive Advantages Differentiated capabilities Local authority coupled with a qualified technical team supported by vast data and strong system Regional Presence / Authority Greater proximity to clients. local management empowered and more accessible Faster development of new products. better understanding and focusing on clients needs Higher autonomy and flexibility on claims regulation and payment Team Identify Better Risks Highly qualified technical professionals (more than 50% of the total professionals in the Brazilian reinsurance sector) Average experience of 10 years Customer service with technical content Proven track-record Database Abundant industry data accumulated throughout history. given monopoly period and presence in all segments Strong technical advantages Clear underwriting risk management guidelines Better Pricing Assessment System Innovative technology for quantitative assessment of asset risks Modern IT infrastructure (Full SAP Hana) Integrated system for front. middle and back offices 12 12

13 Unique Competitive Advantages IRB international expansion has been focusing in LatAm s countries through partnership to increase its share in strategic markets and reduce local risk exposure Evolution of Gross Written Premium by Region (R$ mm) 1 IRB has Changed its Strategy Regarding International Markets 3, % 4, % 4,928 5, % 35.8% Strategy Towards International Market In 2015 the company deployed a new approach for the international markets through strategic partnership Branch in Argentina 89.3% 75.9% 75.7% 64.2% Local GWP International GWP Retrocession Policy Exchange portfolio through partnerships in order to reduce risk exposure Leverage our international retrocession programs International Gross Written Premium by Segment (R$ mm) Property 2,073 Target Segments Life Aviation Agriculture ,196 1, Property Life Aviation Agriculture Others Main IRB Partners 13 13

14 Unique Competitive Advantages Fortress balance sheet - Natural Hedging IRB s partnership with international reinsurers is a natural hedge to exchange rate and permits international premiums to be invested at higher rates in Brazil IRB Brasil Re Local Operation Net operations in Brazil Reinsurance Retrocession (+) Reinsurance Generates: Assets in Brazilian Real Liabilities in Brazilian Real Generates: Retrocession Assets in US Dollar (-) Retrocession Generates: (=) Liabilities in Brazilian Real (=) Assets in Brazilian Real (=) Assets in US Dollar IRB Brasil Re International Operation Reinsurance Generates: Liabilities in US Dollar Assets in US Dollar P P Liabilities in US Dollar hedged by assets generated in US Dollar Free to be invested at high rates in Brazil 14 14

15 Experienced Management Team and Strong Shareholder Sponsorship Successful business strategy has been developed and implemented by the current experienced management team with the support of the 3 largest Brazilian banks Management Team Boards and Statutory Committees Ownership Structure Board of Directors (8 members) Fiscal Board (4 members) FIP Barcelona 2 Other Shareholders 1 Audit Committee (5 members) Underwriting Committee (7 members) Corporate Governance Committee (6 members) Risk Committee (4 members) Internal Audit (4 members) Investment Committee (7 members) Compensation Committee (4 members) 11.7% 15.2% 15.2% 11.1% 7.4% 39.4% 10.0% 13.5% 13.5% 10.0% 3.0% 1.7% 1.7% 1.7% 1.1% 4.4% Post Offering 3 Shares tied to Shareholders Agreement Shares not tied to Shareholders Agreement Fernando Passos* CFO and IR VP José Carlos Cardoso* CEO and COO Lucia Silva Valle* Risks and Compliance VP Considerations Shareholders Agreement between the controlling shareholders effective until 2033 Non-compete term up to 2033 in case any of the controlling shareholders sells its stake Free shares: Novo Mercado s Rules Note: * At IRB since Other shareholder Includes treasury shares of 0.42% and free float of 30.1% of IRB s shares 2 Includes PREVI. PETROS. FUNCEF. ECONOMUS and PREVIRB 3 Base offering plus overallotments 15 15

16 Competitive Landscape IRB s competitive advantages set the Company apart from local and admitted reinsurers Local Players GWP Shareholders equity Total Assets Admitted Number of reinsurers 5,784 3,581 14, , Occasional 75 Local , , ,529 Admitted , ,447 Market Share IRB 36% Admitted 23% Occasional 3% Local 38% Source: SUSEP Figures in R$ million 16 16

17 Closing Remarks 1 Brazil s undisputed market leader in reinsurance and one of the few Brazilian companies capable of delivering strong growth with high returns and yield 2 Unmatched leadership and local authority in all reinsurance segments 3 Naturally hedged across economic cycles with capabilities in place for the continuation of the positive momentum 4 Solid financial performance consistently outperforming the market 5 Experienced management team that led the turn-around since privatization ready to take it to the next growth cycle 6 IPO to further strengthen governance standards, including guidance arising from the ownership of the 3 largest Brazilian banks 17 17

18 SECTION 2: APPENDIX Financial Figures Stock Performance 18

19 Historical Financial Figures Annual ANNUAL HISTORICAL FIGURES - BUSINESS VISION R$ Million Change 2016/2017 Written Premium 3,213 4,337 4,928 5, % Local 2,868 3,292 3,732 3, % International 345 1,045 1,196 2, % Retrocession (1,040) (1,346) (1,387) (1,733) 25.0% Retained Premium 2,173 2,991 3,542 4, % Change in Technical Provisions 131 (69) (41) (145) 255.2% Earned Premium 2,304 2,923 3,501 3, % Retained Claim (1,347) (1,866) (2,167) (2,304) 6.3% PSL (1,197) (1,632) (1,934) (1,952) 0.9% IBNR (87) (179) (206) (334) 62.2% Others (63) (55) (27) (18) -32.3% Acquisition Costs (437) (560) (703) (701) -0.4% Other Revenues and Expenses (97) 16 (0) (84) - Underwriting Results % Administrative Expenses (240) (233) (230) (215) -6.7% Tax Expenses 71 (89) (129) (68) -47.2% Financial Income , % Earnings Before Taxes 945 1,074 1,313 1, % Taxes and Contributions (299) (287) (446) (396) -11.2% Profit Share (44) (23) (17) (22) 31.0% Net Income % Retention Ratio 67.6% 69.0% 71.9% 70.0% Retrocession Ratio 32.4% 31.0% 28.1% 30.0% Loss Ratio 58.5% 63.8% 61.9% 59.0% Loss Ratio Measured by PSL 51.9% 55.8% 55.2% 50.0% Loss Ratio Measured by IBNR 3.8% 6.1% 5.9% 8.6% Commission Ratio 19.0% 19.2% 20.1% 17.9% Administrative Expenses Ratio 10.4% 8.0% 6.6% 5.5% Combined Ratio 95.5% 93.5% 92.2% 86.3% Amplified Combined Ratio 77.7% 71.8% 71.1% 71.5% 19 19

20 Historical Financial Figures Quarter HISTORICAL FIGURES - BUSINESS VISION (R$ million) 1Q17 2Q17 3Q17 4Q17 1Q18 Written Premium Local International Retrocession (449) (481) (332) (471) (346) Retained Premium Change in Technical Provisions (13) (148) (193) 210 (110) Earned Premium Retained Claim (474) (542) (759) (530) (467) OCR (401) (568) (512) (472) (461) IBNR (70) 34 (234) (65) 1 Others (4) (8) (13) 7 (7) Acquisition Costs (163) (149) (204) (185) (208) Other Revenues and Expenses (20) (27) (20) (17) (9) Underwriting Results Administrative Expenses (63) (56) (57) (40) (50) Tax Expenses (32) 7 (29) (14) (29) Investment Income Earnings Before Taxes Taxes and Contributions (106) (123) (55) (111) (76) Profit Share (5) 4 0 (21) 0 Net Income Retention Ratio 66.6% 68.2% 80.2% 62.4% 75.3% Retrocession Ratio 33.4% 31.8% 19.8% 37.6% 24.7% Loss Ratio 53.8% 61.3% 66.0% 53.4% 49.6% Commission Ratio 18.5% 16.8% 17.7% 18.6% 22.1% Administrative Expenses Ratio 7.1% 6.3% 4.9% 4.0% 5.3% Combined Ratio 85.4% 86.7% 92.9% 79.3% 81.1% Amplified Combined Ratio 69.2% 68.6% 79.4% 67.3% 69.8% 20 20

21 Profitability Net Income and ROAE Net Income R$ million ROAE - % 27% 30% 25% 29% 30% Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Note: ROAE Return on Average Equity is calculated by: (Net income for the period / business days for the period * business days for 2018) / (Shareholders Equity for beginning of period + Shareholders Equity for end of period / 2) 21 21

22 Written Premium - Brazil and Abroad Written Premiums R$ million Written Premiums Breakdown % 1,673 1,513 1, ,255 1,397 Abroad Local % 1Q17 35% 61% 1Q18 39% Q17 2Q17 3Q17 4Q17 1Q18 Abroad Local 22 22

23 Underwriting Performance Written Premium by Segment: Brazil R$ Million 1,053 1, Q17 2Q17 3Q17 4Q17 1Q18 Property Life Agriculture Special Risk Aviation Others 23 23

24 Underwriting Performance Written Premium by Segment: Abroad R$ Million Q17 2Q17 3Q17 4Q17 1Q18 Property Life Agriculture Special Risk Aviation Others 24 24

25 Retrocession Cost and Retained Premium Retrocession Cost (R$ million) Retained Premium R$ million ,342 1,032 1, Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q

26 Technical Provision and Earned Premiums Technical Provision R$ million Earned Premiums - R$ million 210 1, Q17 2Q17 3Q17 4Q17 1Q Q17 2Q17 3Q17 4Q17 1Q

27 Retained Claims Retained Claims R$ million Loss Ratio - % 759 TOTAL 54% 61% 66% 53% 50% 542 (34) Q17 2Q17 3Q17 4Q17 1Q (1) OCR 45% 64% 45% 48% 49% Q17 2Q17 3Q17 4Q17 1Q18 IBNR 20% 1Q17 2Q17 3Q17 4Q17 1Q18 OCR IBNR Others 8% 7% 0% -4% 1Q17 2Q17 3Q17 4Q17 1Q

28 Underwriting Results Underwriting Results R$ million Q17 2Q17 3Q17 4Q17 1Q

29 Administrative Efficiency Administrative Expenses (R$ million) and Administrative Expenses Ratio (%) 7.1% % 4.9% % 5.3% Q17 2Q17 3Q17 4Q17 1Q18 Note: Administrative Expenses Ratio = (Administrative Expenses) / (Earned Premiums) 29 29

30 Guidance 2018 Guidance 2018 Written Premiums growth vs (%) Amplified Combined Ratio for 2018 (%) Administrative Expenses Ratio for 2018 (%) 9% to 16% 70% to 76% 5.4% to 6.4% 30 30

31 For additional information visit: Disclaimer This presentation was prepared by IRB Brasil RE and shall not be considered as source of data for investments. This presentation may contain certain forward-looking statements and information related to the Company reflecting current views and/or expectations of the Company and its Management concerning its performance, businesses and future events. Forward-looking statements include, without limitation, any statement containing forecast, indication or estimates and projections on future results, performance or objectives, as well as words like w e "believe", "anticipate", "expect", "estimate", "project", amongst other similar expressions. Such forward-looking statements are subject to risks, uncertainties and future events. Investors are cautioned that several relevant factors make actual results to significantly differ from these plans, objectives, expectations, projections and intentions expressed herein. Under no circumstance, neither the Company nor its subsidiaries, board members, officers, agents or employees shall be held liable before third parties (including investors) for any investment decision made based on the information and statements contained herein, or any related or specific damage resulting therefrom. The market and competitive position information, including the market projections mentioned herein w ere obtained from in-house surveys, market researches, public information and business publications.. 31