IRB: novas regras estimulam mercado de seguros e resseguros

Recent legislation in Brazil aims to stimulate the insurance and reinsurance market, particularly benefiting the IRB company. Two key bills have been approved by the Senate – one specifically addressing agrarian insurance and another modifying tax regulations for local reinsurers. Agrarian insurance, which covers 16% of premiums in the Brazilian market, will now be treated as a mandatory budget expense.

This change comes as agrarian insurance is currently underfunded, with only 3% of cultivated land insured worldwide. The IRB's CEO, Marcos Falcão, highlights the importance of agrarian insurance as a safeguard against crop failures, as it covers around 70% of a crop's value. Meanwhile, the tax reforms will reduce the Combined State, Federal, and Local Levy (CSLL) rate for local reinsurers from 15% to 9% starting in 2027, and eliminate the 10% IR surcharge by 2030.

These measures aim to reduce tax distortions that have been discouraging local reinsurers. Additionally, the CSLL levy's annual compensation limit of 30% will be eliminated starting in 2027, allowing for a more gradual reduction in the combined tax rate. Falcão predicts that these changes could increase the IRB's market value by more than 20%, recommending a "buy" with a target price of R$75 per share.

The IRB's stock currently trades at R$62.12, with a market capitalization of R$5 billion. Falcão expects the reforms to revitalize the local reinsurance hub, attracting more competitive pricing and talent.