AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of IRB-Brasil Resseguros S.A. (IRB) (Rio de Janeiro, Brazil).

The Credit Ratings (ratings) reflect IRB’s balance sheet strength, which AM Best assesses at the strongest level, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

AM Best’s concerns with the company’s capital adequacy have been mitigated to some degree following the completion of its capitalization offer and improvement in its risk-adjusted capitalization levels, as measured by Best’s Capital Adequacy Ratio (BCAR). The stable outlooks are underpinned by AM Best’s expectation that the company’s balance sheet strength will remain at the strongest level, supported by a sustained improving trend in its operating performance and the benefits from initiatives implemented by its management.

IRB’s surplus has grown over the past five to six years and its BCAR scores are in the top category for a company at its rating level. The company’s balance sheet also benefits from protection via a retrocession program with highly rated reinsurers that limits IRB's net exposures to manageable levels.

AM Best assesses IRB’s operating performance as adequate due to the changes in its results. Throughout 2024, the company has improved its operating performance through refining its portfolio, which aided in the recovery from its performance in prior years supported by a change in the company’s culture.

IRB is the dominant reinsurance market participant in Brazil. As of December 2023, IRB had an almost 33% share of Brazil’s domestic reinsurance market. IRB ranked in the mid-range of AM Best’s most recent Global Reinsurance Top 50 ranking at No. 11 (based on IFRS 17).

AM Best acknowledges that IRB has taken many steps to reinforce its ERM and governance structure, and these improvements helped stabilize its operations. AM Best recognizes that the changes continued to show a trend of improvement in the company’s underwriting performance.

A factor that could lead to negative rating action are Brazil’s macroeconomic conditions, which could contribute further to a deterioration of IRB’s operating performance and become an obstacle to its ability to raise capital if needed. While no positive rating actions are foreseen in the short term, a positive impact could take place if the company continues to show improvements in its operating performance by implementing its transformation strategy.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Aug. 29, 2024), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Evaluating Country Risk (June 6, 2024)
• Understanding Global BCAR (Aug. 1, 2024)
• Catastrophe Analysis in AM Best Ratings (Feb. 8, 2024)
• Available Capital and Insurance Holding Company Analysis (Aug. 15, 2024)
• Scoring and Assessing Innovation (Feb. 27, 2023)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.

• Previous Rating Date: Nov. 9, 2023
• Initial Rating Date: Dec. 13, 2011
• Date Range of Financial Data Used: Dec. 31, 2019-June 31, 2024

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