IRB-Brasil Re, the government-controlled former monopoly holder in Brazil's reinsurance market has maintained a 78.5% share of the market's local reinsurance premiums since the market's opening, but perhaps at a significant cost to its bottom line. Continuing a trend reported earlier this year, the IRB recently reported that its profits are down 58.5% when comparing the first eights month of 2009 to the same period in 2008.
A major contributor to the trend has been the tremendous growth in claims seen by the IRB. Over the first eight months of 2009, IRB's claims totaled R$ 910 million, up 31.4% over the first eight months of 2008. By comparison, IRB's earned premiums grew only 1.9% over the same period.
Despite recent discussions about Banco do Brasil taking a position in IRB, the results heighten concerns that the IRB may not be able to profitably compete in the long run with foreign competitors in the absence of a significant overhaul in its underwriting practices.
Of the other local reinsurers in the Brazilian market, Munich Re Brazil led the way with 9.3% of the local market, followed by J. Malucelli Re (5.7%), XL Re Brazil (3.7%) and Mapfre Re Brazil (2.7%).
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