IRBR3 Institutional Presentation May 2018 1
SECTION 1 IRB at a Glance 2
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 2007 2013 2014 11.7% FIP Barcelona 1 15.2% 15.2% 11.1% 7.4% Shareholder structure after the IPO / Free Float = 39.4% 1930 s 27.4% FIP Barcelona 1 20.4% 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
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 14-17 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$6.6 bn) with average yield of 131% of CDI. Over the past 3 years with an average yield of 125% of CDI (1Q18: 143% of CDI) ROAE of 13% in 2014, 25% in 2015, 26% in 2016 and 27% in 2017 (1Q18: 30%) - makes IRB the world s most profitable reinsurer 4 4
IRB Brazil RGA Re Fairfax African Re Hannover Re WR Berkley Beazley Mapfre China Re GIC India Arch Capital Korean Re CCR France Toa Re Everlast Re SCOR Markel Partner Re Navigators ARGO General Reinsurance National Indemnity Hiscox Munich Re Alleghany Swiss Re White Mountains Validus Asia Capital Re Renaissance Re XL Catlin Lancashire Axis Capital Sirius Aspen -1,2% -2,2% -4,7% -5,3% -6,0% -6,3% -7,8% -7,9% 15,5% 12,6% 11,0% 10,4% 8,7% 7,9% 7,2% 7,2% 7,1% 6,2% 6,1% 6,0% 5,7% 4,5% 4,4% 3,9% 3,3% 2,7% 2,7% 1,9% 1,5% 1,3% 1,1% 0,9% 0,0% 22,7% 27,2% Strong Growth and High Return Track Record IRB Brasil Re is the only company capable of delivering strong growth and returns Net Income R$ million ROAE - % 764 850 925 25% 26% 27% 30% 388 254 13% 2014 2015 206 2017 1Q18 2014 2015 2016 2017 1Q18 2017 Highest ROE among peers 35% 30% 25% 20% 15% * * * * 10% 5% 3,4% 0% -5% -10% * -15% Source: Reinsurance Market Report 2017 5 5
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 2017 6 6
Capabilities in Place for Positive Momentum to Continue Naturally Hedged Business Model 2015-2016 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 2019-2020 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
Capabilities in Place for Positive Momentum to Continue IRB s business model has a natural hedge for economic cycles 2014-2016 Cycle 2016-2017 Cycle 423 512 630 1,041 809 2014 2015 2016 2016 2017 Underwriting Result 630 817 Investment Income CAGR: 22% 526 884 1,041 Reduction: (22%) 2014 2015 2016 Investment Income 2016 2017 Underwriting Result CAGR 2014-2016: Growth 2017-2016: 41% 30% 2014 Recurring result of the investment portfolio = R$ 690 mm - R$ 164 mm (non recurring) 8 8
Investment Result Investment Portfolio Results R$ million and % of CDI Investment Portfolio Breakdown 1Q18 102% 120% 884 129% 1,041 131% 809 127% 143% Real Estate 4% BRL Equity 1% USD 13% 526 205 152 Assets under Management 1Q18: R$ 6.6 billion BRL Fixed Income 82% 2014 2015 2016 2017 1Q17 1Q18 2014 Recurring result of the investment portfolio = R$ 690 mm - R$ 164 mm (non recurring) 9 9
300 250 200 150 100 50 0 Administrative Efficiency Administrative Expenses (R$ million) and Administrative Expenses Ratio (%) 10.4% 8.0% 6.6% 5.5% 7.1% 5.3% 240 233 230 215 63 50 2014 2015 2016 2017 1Q17 1Q18 Note: Administrative Expenses Ratio = (Administrative Expenses) / (Earned Premiums) 10 10
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
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
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 3,213 10.7% 4,337 24.1% 4,928 5,784 24.3% 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% 2014 2015 2016 2017 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 211 432 Agriculture 345 89 62 122 33 38 1,196 1,045 202 203 134 103 70 140 224 290 444 430 162 729 539 2014 2015 2016 2017 Property Life Aviation Agriculture Others Main IRB Partners 13 13
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
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 2014 1 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
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 14,294 714 256 1,584 579 282 996 Occasional 75 Local 16 568 447 2,063 448 253 1,320 380 604 1,529 Admitted 39 363 386 1,378 349 239 1,447 Market Share 330 103 383 219 176 847 IRB 36% Admitted 23% 211 137 695 184 314 745 Occasional 3% 157 104 344 148 100 668 Local 38% 81 289 515 62 82 210 Source: SUSEP. 2017. Figures in R$ million 16 16
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
SECTION 2: APPENDIX Financial Figures Stock Performance 18
Historical Financial Figures Annual ANNUAL HISTORICAL FIGURES - BUSINESS VISION R$ Million 2014 2015 2016 2017 Change 2016/2017 Written Premium 3,213 4,337 4,928 5,784 17.4% Local 2,868 3,292 3,732 3,710-0.6% International 345 1,045 1,196 2,073 73.3% Retrocession (1,040) (1,346) (1,387) (1,733) 25.0% Retained Premium 2,173 2,991 3,542 4,051 14.4% Change in Technical Provisions 131 (69) (41) (145) 255.2% Earned Premium 2,304 2,923 3,501 3,906 11.6% 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 423 512 630 817 29.6% Administrative Expenses (240) (233) (230) (215) -6.7% Tax Expenses 71 (89) (129) (68) -47.2% Financial Income 690 884 1,041 809-22.3% Earnings Before Taxes 945 1,074 1,313 1,343 2.3% Taxes and Contributions (299) (287) (446) (396) -11.2% Profit Share (44) (23) (17) (22) 31.0% Net Income 602 764 850 925 8.9% 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
Historical Financial Figures Quarter HISTORICAL FIGURES - BUSINESS VISION (R$ million) 1Q17 2Q17 3Q17 4Q17 1Q18 Written Premium 1.342 1.513 1.674 1.255 1.397 Local 876 1.053 1.072 709 849 International 466 460 601 545 548 Retrocession (449) (481) (332) (471) (346) Retained Premium 894 1.032 1.342 783 1.052 Change in Technical Provisions (13) (148) (193) 210 (110) Earned Premium 881 884 1.149 993 941 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 223 167 167 260 257 Administrative Expenses (63) (56) (57) (40) (50) Tax Expenses (32) 7 (29) (14) (29) Investment Income 205 233 195 176 152 Earnings Before Taxes 334 351 277 382 330 Taxes and Contributions (106) (123) (55) (111) (76) Profit Share (5) 4 0 (21) 0 Net Income 223 232 222 249 254 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
Profitability Net Income and ROAE Net Income R$ million ROAE - % 27% 30% 25% 29% 30% 223 232 221 249 254 1Q17 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
Written Premium - Brazil and Abroad Written Premiums R$ million Written Premiums Breakdown % 1,673 1,513 1,342 460 601 1,255 1,397 Abroad Local 466 546 548 65% 1Q17 35% 61% 1Q18 39% 876 1.053 1.072 709 849 1Q17 2Q17 3Q17 4Q17 1Q18 Abroad Local 22 22
Underwriting Performance Written Premium by Segment: Brazil R$ Million 1,053 1,072 876 184 179 173 34 99 709 849 170 52 215 270 86 401 159 64 166 53 357 458 63 327 171 91 222 142 70 276 1Q17 2Q17 3Q17 4Q17 1Q18 Property Life Agriculture Special Risk Aviation Others 23 23
Underwriting Performance Written Premium by Segment: Abroad R$ Million 601 37 27 545 548 38 52 466 460 43 40 35 39 62 30 194 98 115 59 80 174 136 214 204 170 125 158 124 132 165 1Q17 2Q17 3Q17 4Q17 1Q18 Property Life Agriculture Special Risk Aviation Others 24 24
Retrocession Cost and Retained Premium Retrocession Cost (R$ million) Retained Premium R$ million 449 481 471 1,342 1,032 1,052 332 346 894 783 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 25 25
Technical Provision and Earned Premiums Technical Provision R$ million Earned Premiums - R$ million 210 1,149 881 884 993 941-13 1Q17 2Q17 3Q17 4Q17 1Q18-148 -110-193 1Q17 2Q17 3Q17 4Q17 1Q18 26 26
Retained Claims Retained Claims R$ million Loss Ratio - % 759 TOTAL 54% 61% 66% 53% 50% 542 (34) 234 530 1Q17 2Q17 3Q17 4Q17 1Q18 474 70 65 467 (1) OCR 45% 64% 45% 48% 49% 401 568 512 472 462 1Q17 2Q17 3Q17 4Q17 1Q18 IBNR 20% 1Q17 2Q17 3Q17 4Q17 1Q18 OCR IBNR Others 8% 7% 0% -4% 1Q17 2Q17 3Q17 4Q17 1Q18 27 27
Underwriting Results Underwriting Results R$ million 260 257 223 167 167 1Q17 2Q17 3Q17 4Q17 1Q18 28 28
70 60 50 40 30 20 10 0 Administrative Efficiency Administrative Expenses (R$ million) and Administrative Expenses Ratio (%) 7.1% 63 6.3% 4.9% 56 57 4.0% 5.3% 50 40 1Q17 2Q17 3Q17 4Q17 1Q18 Note: Administrative Expenses Ratio = (Administrative Expenses) / (Earned Premiums) 29 29
Guidance 2018 Guidance 2018 Written Premiums growth vs. 2017 (%) Amplified Combined Ratio for 2018 (%) Administrative Expenses Ratio for 2018 (%) 9% to 16% 70% to 76% 5.4% to 6.4% 30 30
For additional information visit: www.irbbrasilre.com 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