institutional presentation - infoinvest institutional...4 4 irb brasil re at a glance brazil’s...
TRANSCRIPT
1
IRBR3
Institutional PresentationMar 2019
2
SECTION 1
IRB at a Glance
33
Company initiates
operations
End of reinsurance
monopoly
Company’s new
management team
Monopoly Period
FIP Barcelona1
20.4% 20.4% 14.9% 9.9%27.4%
In October 2013, IRB became a privately owned company
2007
1930’s
Post-Monopoly Period
The Only Reinsurer in Brazil
for 68 Years
FIP Barcelona1
15.2% 15.2% 11.1% 3.0%11.7%
Current Shareholder structure / Free Float = 43.7%
2013
2017
IPO
History of Market Leadership
1 Includes PREVI, PETROS, FUNCEF, ECONOMUS and PREVIRB
2014
Mar-19
FGEDUC participated with
8.9%,
which is included in the
Free Float
44
IRB Brasil Re at a GlanceBrazil’s undisputed market leader in reinsurance with a strong growth track record
Market share increased from 31% in 2014 to 37% in 2018(~6.0x player #2).
Gross written premium increased from R$4.9 bn in 2016 to R$7.0 bn in 2018 (CAGR 16-18 of 18.9%).
Underwriting discipline – combined ratio improved from 92.2% in 2016 to 83.2% in 2018 and amplified combined was 72.5% in 2018.
Strong efficiency - administrative expenses declined from 6.6% of earned premium in 2016 to 4.8% in 2018.
Investment portfolio of R$6.5 bn in 2018 (2017: R$6.3 bn) with profitability of 141% of CDI. (2017: 131% of CDI)
ROAE of 26% in 2016, 27% in 2017 and 32% in 2018 - makes IRB the world’s most profitable reinsurer
55
330 103 383
Local
PlayersGWP Shareholders’
equityTotal
AssetsAdmitted
Number of reinsurers
✓
Source: SUSEP, 2017. Figures in R$ million
Competitive LandscapeIRB’s competitive advantages set the Company apart from local and admitted reinsurers
2018 Market Share
Admitted22%
Occasional3%
Local38%
IRB37%
Admitted39
Occasional75
Local16
5,784 3,581 14,294
✓714 256 1,584
✓568 447 2,063
579 282 996
349 239 1,447
380 604 1,529
448 253 1,320
✓219 176 847
363 386 1,378
✓
211 137 695
184 314 745
148 100 668
157 104 344
81 289 515
62 82 210
✓
✓
✓
66
Capabilities in Place for Positive Momentum to ContinueNaturally Hedged Business Model
2017 Cycle
Underwriting Results Investment Income Underwriting Results Investment Income
Low Interest
Rate
Investment
Income
2018 Cycle
2019 Cycle 2020 Cycle
Underwriting
Results
Low Interest
Rate
Investment
Income
GDP
GrowthUnderwriting
Results
Underwriting Results Investment Income Underwriting Results Investment Income
GDP
Growth Underwriting
Results
Investment
Income
High Interest
Rate
Modest GDP
Growth
Investment
Income
Average
Interest Rate
GDP
Growth Underwriting
Results
77
The New Disruptive Model
Future of Insurance & Reinsurance
❑ Lean Structure
➢ Centralized Workforce
➢ Low Cost
➢ Connectivity – H2H
➢ Fast Decision-Making on accepting risk and paying claims
❑ Creative and customized product development process
➢ Assessment of new risks
➢ Parametric Insurance Products; autonomous car, cyber risks, drones
➢ Aggregate Coverages – 360º Client View
❑ Encouraging the Innovation
➢ AI, Big Data, Machine Learning, Blockchain
❑ Culture Disruption
➢ Financial & Underwriting sharing decisions
88
Unique Competitive Advantages
Local authority coupled with a qualified technical team supported by vast data and strong system
Better Pricing Assessment
Identify Better Risks
Differentiated capabilities
Team
▪ 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
System
▪ Innovative technology for quantitative assessment of asset risks
▪ Modern IT infrastructure (Full SAP Hana)
▪ Integrated system for front. middle and back offices
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
99
430 539 646
290
729
1.251
140
162
166
134
432
417
202
211
264
2016 2017 2018
Property Life Aviation Rural Others
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)
International Gross Written Premium by Segment (R$ mm)
IRB has Changed its Strategy Regarding International Markets
► In 2015 the company deployed a new approach for
the international markets through strategic
partnership
► Branch in Argentina
Strategy
Towards
International
Market
► Exchange portfolio through partnerships in order to
reduce risk exposure
► Leverage our international retrocession programs
Retrocession
Policy
► Property
► Life
► Aviation
► Agriculture
Target
Segments
Main IRB
Partners
Unique Competitive Advantages
2016 2017 2018
Local International
75.7% 64.2% 60.6%
35.8%
39.4%4,928
5,784
6,964
24.3%
1,196
2,073
2,744
1010
Diversified Premium Portfolio
Market Share and Diversification of Written Premium Portfolio
6X Larger than
#2 Player (2018)
#1 Player in
9 out of 11 segments (2018)Highly diversified portfolio
2018 Written Premium:
R$7.0 billion
Property 19.7%
Life4.4%
Rural14.4%
Special Risks8.9%Aviation
1.1%
Others11.8%
International39.7%
6.0x
2nd
3rd
4th
1st
37%
6%4% 3%
1st
69%
50%
25%
6%
23%
40%
81%
26%
61%
12%
36%
Mortgage
Marine
Aviation
Motor
Casualty
Life
Special Risks
Cargo
Agriculture
Financial Risks
Property
1st
1st
1st
1st
5th
1st
1st
1st
1st
2nd
1111
Historical Financial Figures – Annual
a)
b)
c)d)
e)
f)
Historical Figures - Business Vision (R$ Million) 2016 2017 2018 2017/2016 (%) 2018/2017 (%)
Written Premium 4.928,4 5.783,6 6.963,9 17,4% 20,4%
Local 3.732,2 3.710,5 4.219,7 -0,6% 13,7%
International 1.196,1 2.073,1 2.744,1 73,3% 32,4%
Retrocession (1.386,6) (1.732,6) (1.870,0) 25,0% 7,9%
Retained Premium 3.541,8 4.050,9 5.093,9 14,4% 25,7%
Change in Technical Provisions (40,8) (145,0) (296,8) 255,2% 104,7%
Earned Premium 3.501,0 3.905,9 4.797,1 11,6% 22,8%
Retained Claim (2.166,9) (2.304,3) (2.682,7) 6,3% 16,4%
OCR (1.934,2) (1.952,1) (2.284,0) 0,9% 17,0%
IBNR (206,0) (334,1) (422,7) 62,2% 26,5%
Others (26,7) (18,1) 23,9 -32,2% -232,1%
Acquisition Cost (703,2) (700,8) (906,6) -0,3% 29,4%
Other Operating Revenues and Expenses (0,5) (83,9) (38,1) n.m. -54,5%
Underwriting Results 630,3 817,0 1.169,6 29,6% 43,2%
Administrative Expenses (230,2) (214,8) (228,2) -6,7% 6,2%
Tax Expenses (128,7) (67,9) (133,8) -47,2% 97,1%
Investment Income 1.041,2 808,7 706,0 -22,3% -12,7%
Income before taxes 1.312,6 1.343,0 1.513,6 2,3% 12,7%
Income tax and social contribution tax (462,8) (417,9) (294,8) -9,7% -29,5%
Net income 849,8 925,1 1.218,8 8,9% 31,8%
p.p. p.p.
Retention Ratio 71,9% 70,0% 73,1% -1,9 3,1
Retrocession Ratio 28,1% 30,0% 26,9% 1,9 -3,1
Loss Ratio 61,9% 59,0% 55,9% -2,9 -3,1
Loss Ratio measured by OCR 55,2% 50,0% 47,6% -5,3 -2,4
Loss Ratio measured by IBNR 5,9% 8,6% 8,8% 2,7 0,3
Commission Ratio 20,1% 17,9% 18,9% -2,2 1,0
Administrative Expenses Ratio 6,6% 5,5% 4,8% -1,1 -0,7
Combined Ratio 92,2% 86,3% 83,2% -5,9 -3,1
Amplified Combined Ratio 71,1% 71,5% 72,5% 0,4 1,0
1212
Historical Financial Figures – Quarter
a)
b)
c)
d)
e)
f)
Historical Figures - Business Vision (R$ Million) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Written Premium 1.342,4 1.513,2 1.673,6 1.254,5 1.397,3 1.934,4 1.951,1 1.681,2
Local 876,1 1.053,1 1.072,3 709,0 849,3 1.213,1 1.179,2 978,2
International 466,3 460,1 601,3 545,4 548,0 721,3 771,9 703,0
Retrocession (448,7) (481,1) (331,6) (471,3) (345,7) (516,6) (403,5) (604,3)
Retained Premium 893,7 1.032,1 1.342,0 783,2 1.051,6 1.417,8 1.547,6 1.076,9
Change in Technical Provisions (13,0) (148,3) (193,1) 209,5 (110,4) (239,6) (297,9) 351,1
Earned Premium 880,6 883,8 1.148,8 992,7 941,2 1.178,2 1.249,7 1.428,1
Retained Claim (473,8) (541,5) (758,7) (530,2) (467,3) (666,5) (730,6) (818,4)
OCR (400,5) (567,7) (512,1) (471,8) (461,5) (627,6) (541,4) (653,6)
IBNR (69,7) 34,4 (233,8) (65,0) 1,0 (44,1) (183,6) (196,0)
Others (3,6) (8,2) (12,8) 6,5 (6,8) 5,3 (5,7) 31,1
Acquisition Cost (163,1) (148,9) (203,7) (185,1) (208,3) (199,7) (247,8) (250,8)
Other Operating Revenues and Expenses (20,3) (26,7) (19,6) (17,2) (9,1) (15,7) (12,1) (1,3)
Underwriting Results 223,4 166,7 166,8 260,2 256,6 296,3 259,2 357,6
Administrative Expenses (62,7) (55,9) (56,5) (39,8) (49,9) (64,0) (55,5) (58,7)
Tax Expenses (32,1) 7,0 (28,5) (14,4) (28,9) (41,0) (25,4) (38,5)
Investment Income 205,4 232,9 194,7 175,7 151,9 208,6 200,5 144,9
Income before taxes 334,1 350,7 276,5 381,7 329,6 399,8 378,8 405,3
Income tax and social contribution tax (111,4) (119,0) (55,0) (132,6) (75,6) (112,5) (74,3) (32,4)
Net income 222,7 231,7 221,5 249,1 254,0 287,3 304,5 372,9
Retention Ratio 66,6% 68,2% 80,2% 62,4% 75,3% 73,3% 79,3% 64,1%
Retrocession Ratio 33,4% 31,8% 19,8% 37,6% 24,7% 26,7% 20,7% 35,9%
Loss Ratio 53,8% 61,3% 66,0% 53,4% 49,6% 56,6% 58,5% 57,3%
Loss Ratio measured by OCR 45,5% 64,2% 44,6% 47,5% 49,0% 53,3% 43,3% 45,8%
Loss Ratio measured by IBNR 7,9% -3,9% 20,4% 6,5% -0,1% 3,7% 14,7% 13,7%
Commission Ratio 18,5% 16,8% 17,7% 18,6% 22,1% 17,0% 19,8% 17,6%
Administrative Expenses Ratio 7,1% 6,3% 4,9% 4,0% 5,3% 5,4% 4,4% 4,1%
Combined Ratio 85,3% 86,7% 92,9% 79,3% 81,1% 83,8% 85,7% 81,8%
Amplified Combined Ratio 69,2% 68,6% 79,4% 67,3% 69,8% 71,2% 73,9% 74,2%
1313
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
Successful business strategy has been developed and implemented by the current experienced
management team with the support of the 3 largest Brazilian banks
Experienced Management Team and Strong Shareholder Sponsorship
Ownership Structure
Considerations
Note:
* At IRB since 2014
1 Other shareholder Includes treasury shares of 0.5% and free float of 43.2% of IRB’s shares
2 Includes PREVI, PETROS, FUNCEF, ECONOMUS and PREVIRB
3 As of Dec 28, 2018
✓
✓
✓
Current position3
11.7% 3.0%15.2% 15.2% 43.7%11.1%
FIP
Barcelona2
Other
Shareholders1
1.7% 0.0%1.7% 1.7% 1.1%
Shares tied to Shareholders
Agreement
10.0% 3.0%13.5% 13.5% 10.0%
Shares not tied to Shareholders
Agreement
FGEDUC participated
with 8.9%,
which is included in the
Free Float
Management Team, Board and Committees
José Carlos Cardoso*
CEO and COO
Lucia Silva Valle*
Risk and Compliance VP
Fernando Passos*
Deputy CEO, CFO and
IRO
Internal Audit
(4 members)
Audit Committee
(4 members)
Investment Committee
(7 members)
Underwriting Committee
(7 members)
Human Resources
Committee
(5 members)
Corporate Governance
(6 members)
Board of Directors
(8 members)
(3 independent)
Fiscal Board
(3 members)
Risk Committee
(7 members)
14
SECTION 2: APPENDIX
• Financial Figures
• Stock Performance
1515
Profitability – Net Income and ROAE
Net Income (R$ million) and ROAE (%)
Quarter
Net Income (R$ million) and ROAE (%)
Fiscal Year
850
925
1,219
26%27%
32%
2016 2017 2018
249 254
287
305
373
29%30%
33% 33%
40%
4Q17 1Q18 2Q18 3Q18 4Q18
1616
Written Premium – Brazil and Abroad
Written Premium Breakdown (R$ million)
Quarter
Written Premium Breakdown (R$ million)
Fiscal Year
3,732 3,7114,220
1,196
2,073
2,744
2016 2017 2018
Abroad Brazil
5,784
6,964
4,928
709849
1,213 1,179978
545
548
721 772
703
4Q17 1Q18 2Q18 3Q18 4Q18
Abroad Brazil
1,254
1,397
1,934
1,681
1,951
1717
Retrocession Cost
Retrocession Cost (R$ million)
Quarter
Retrocession Cost (R$ million)
Fiscal Year
1,387
1,733
1,870
2016 2017 2018
471
346
517
404
604
4Q17 1Q18 2Q18 3Q18 4Q18
1818
Retained Premium
Retained Premium (R$ million)
Quarter
Retained Premium (R$ million)
Fiscal Year
3,542
4,051
5,094
2016 2017 2018
783
1,052
1,418
1,548
1,077
4Q17 1Q18 2Q18 3Q18 4Q18
1919
(248)
9M15(307)
9M16
(354)
9M17
(648)
9M18
Changes in the Technical Provision
Changes in the Technical Provision (R$ million)
(50) (42)
(157)
179
(13)
(70)
(223)
266
(13)
(148)
(193)
210
(110)
(240)
(298)
351
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
2020
Earned Premium
993941
1,178
1,250
1,428
4Q17 1Q18 2Q18 3Q18 4Q18
Earned Premium (R$ million)
Quarter
Earned Premium (R$ million)
Fiscal Year
3,501
3,906
4,797
2016 2017 2018
2121
472 462628
541654
65
-1
44 184
196
-7
7
-5
6
4Q17 1Q18 2Q18 3Q18 4Q18
OCR IBNR Other
-31
48% 49% 53%43% 46%
4Q17 1Q18 2Q18 3Q18 4Q18
7%
0%4%
15% 14%
4Q17 1Q18 2Q18 3Q18 4Q18
53% 50%57% 58% 57%
4Q17 1Q18 2Q18 3Q18 4Q18
Retained Claim
Retained Claims (R$ million) – Quarter Loss Ratio (%) – Quarter
530 467667
731
1,934 1,9522,284
206 334
423
27 18
24
2016 2017 2018
OCR IBNR Other
Retained Claims (R$ million) – Fiscal Year
2,1672,304
2,683
Loss Ratio (%) – Fiscal Year
62% 59% 56%
2016 2017 2018
TOTAL
OCR
55% 50% 48%
2016 2017 2018
6%
9% 9%
2016 2017 2018
IBNR
TOTAL
OCR
IBNR
818
2222
Underwriting Result
Underwriting Result (R$ million)
Quarter
Underwriting Result (R$ million)
Fiscal Year
260 257
296
259
358
4Q17 1Q18 2Q18 3Q18 4Q18
630
817
1,170
2016 2017 2018
2323
Administrative Efficiency
Administrative Expense (R$ million) and AE Ratio (%)
Quarter
Administrative Expense (R$ million) and AE Ratio (%)
Fiscal Year
40
50
6456 59
0
20
40
60
80
100
4Q17 1Q18 2Q18 3Q18 4Q18
4.0%
5.3% 5.4%
4.4% 4.1%
230215
228
-
50,0
100,0
150,0
200,0
250,0
2016 2017 2018
6.6% 5.5% 4.8%
2424
Financial Result
Investment Portfolio Breakdown – FY18
Investment Portfolio Result (R$ million) and % of CDI
Assets under management:
R$6.5 billionFY
18
Qu
art
er
Fixed Income86%
Equities2%
Real Estate5%
Subsidiaries/ Branches
3%
USD (Hedge)4%
Investment Portfolio Result (R$ million) and % of CDI
*Calculated as the financial investments result divided by financial assets; does not include real estate investments/assets.
176152
209 200145
1,041
809706
*
*
155139
177 178
135
21
13
32 22
10
128%
143% 139%147%
139%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
50
100
150
200
250
300
4Q17 1Q18 2Q18 3Q18 4Q18
Financial Equity % CDI (Brazilian interest rate)
979
755629
63
54
77
129% 131%
141%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
200
400
600
800
1000
1200
1400
1600
2016 2017 2018
Financial Equity % CDI (Brazilian interest rate)
25
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.
.
For additional information visit:
www.irbre.com