IRB (IRBR3) recorded a loss of R$113.8 million in November; Analysts see weak data, stocks close 5% down

IRB (IRBR3) recorded a net loss of R$113.8 million in November 2021, down 15.5% from losses of R$134.8 million in November 2020.

To date, the result was negative by 510.4 million Brazilian riyals, compared to losses in the same period of 2020 of 1.006 billion Brazilian riyals, a loss of 49.3%.

Total issued premiums amounted to R$706.0 million in November 2021, in line with the amount presented in November 2020, of R$709.8 million, of which R$432.4 million is in Brazil (+8.3%) and R$273.5 million is abroad (-11.9% ).

In the year, the issued premium amounted to R$ 7.947 billion, a decrease of 10.9% compared to the cumulative period of 2020, of which R$ 4.856 billion (+ 5.0%) and R$ 3.090 billion were abroad (-28.0%).

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According to the IRB, the reduction in premiums originating offshore is in line with the company’s widely publicized underwriting strategy.

Loss expense in November was R$413.3 million, up 13.5% from R$364.0 million reported in November 2020. The Portfolio Loss Transfer Process (LPT) has positively contributed to expenses with claims in November 2021 as in November 2020.

The November 2021 loss ratio for the remaining companies, excluding the impact of LPT, was 99.5%.

Claims expense in the eleven months of 2021 was R$5.154 billion, a decrease of 9.3% compared to R$5.686 billion reported in the same period in 2020.

The cumulative loss ratio in 2021 was 98.1%, an improvement of 4.4 percentage points compared to the same period in 2020, when the loss ratio was 102.5%. The loss ratio for the remaining companies in the eleven months of 2021, excluding the impact of LPT, was 87.5%.

Analytics

Both Citi and Credit Suisse highlighted the numbers released as negative.

Citi repeated its recommendation to sell to the share of IRB Brasil, noting that the net loss in the month was lower, reaching 113.8 million Brazilian reais (adjusted 73 million Brazilian reais), compared to 134.8 million Brazilian reais in October, but claims expenses grew 13.5%.

The analysis reads: “Lack of visibility and continued delivery of low levels of profitability support our negative view of the IRB at the moment.” The target price is 3.70 Brazilian Real.

The shares closed down 5.39% at 3.16 Brazilian Real.

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