Brazil
Q&A

IRB upbeat on 2016 despite Brazil crisis

Bnamericas Published: Friday, March 18, 2016
IRB upbeat on 2016 despite Brazil crisis

José Carlos Cardoso, president of Brazil's largest reinsurer, IRB Re, talked to BNamericas about how the company is handling the country's economic and political crises, its expansion to other parts of Latin America and whether or not its IPO is still on the table.

BNamericas: How is the economic situation in Brazil affecting your business?

Cardoso: The economic situation is worrisome for the entire market. However, I think IRB – I like to call it the new IRB – is a company that rediscovered itself. Since I started here, we've implemented a series of operations – structural, employee-oriented, etc. – that focus on clients and results. And we started to explore this in a way that's much more effective.

IRB has some advantages that some of our competitors don't have. We, for example, work in all business sectors. So if a certain client has some difficulties, has bad results in a specific sector, I can absorb this loss from this sector and compensate for it with results in other sectors. This alone gives me a differentiated relationship with my client. I can bring them a complete solution, from life insurance to insurance for oil platforms.

So to answer your question, the Brazilian market is difficult, it's competitive, but I think there's still space for IRB to win over some business in areas where we've not yet participated. And this has created a virtuous cycle for us. Clients have been speaking well of this new attitude and we've been asked to present solutions – new products and new ideas – for clients we previously could not access.

So this combination [of factors] makes us optimistic that, despite the delicate situation Brazil is in, we're still estimating 20% growth [for IRB] this year. And that's just in Brazil, not taking into consideration our business outside the country.

BNamericas: So are you planning on expanding more abroad now or will you focus on your business in Brazil?

Cardoso: Last year we saw our [international] premiums increase four times from 300mn reais [about US$75mn] to 1.2bn reais. Obviously we don't expect to continue [to grow] at this same rate, but will continue focusing on Latin America as our priority, with the main countries being Mexico, Colombia, Peru and Argentina, where we already have an office. In terms of the international market, those are our priorities. And another thing that we've implemented that has contributed greatly to our international growth is some strategic international partnerships.

The IRB brand is a strong brand. Brazil has a natural influence on Latin American countries. Brazilians are well regarded in Latin America. I think there's a certain mix, a certain affinity between Brazil and IRB. It's a natural association. And this really helped us enter into areas in Latin America that we like and know well. It happened very quickly. I thought it would take longer, but no. The market responded very positively and very quickly to our arrival.

BNamericas: You said that IRB's image is naturally linked to Brazil. Do you think the changes in government that are currently happening will affect your business?

Cardoso: Something that you need to operate in the international market that's very important is your rating. We are very proud to say we just had our rating confirmed [by AM Best] at 'A -' with a stable outlook. In other words, at a time when the majority of all other major insurance companies, not to mention the country itself, have suffered downgrades, IRB's numbers enable it to maintain its rating.

These are very positive actions in various aspects [of the company], both internal and external. We have also been able to make substantial cuts in our expenses.

All of these actions that we've taken are very well structured and very well planned. We definitely know where we want to go and how to get there. I think the ratings agency noticed this, which is why it maintained our rating despite the very troubling current situation [in Brazil]. Obviously, it's not easy to sell Brazil today. Brazil today is very complicated. But the financial soundness of IRB is very much appreciated.

BNamericas: IRB canceled its IPO earlier this year. Will that decision be revisited?

Cardoso: We suspended the IPO based on international market conditions. We, as a company, continue to work as if the IPO were to happen tomorrow. If tomorrow the conditions are better, the company is ready.

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