IRB-Brasil Resseguros S.A. (IRBR3) Earnings Call Transcript

Thanks for waiting. Welcome to the IRB Second Quarter 2026 Results Call. [Operator Instructions] This video conference is being recorded and will be made available on the website of the company, rb.re.com, where the full materials of our results call will be available. You can download the presentation that the information contained in this presentation and any statements made during the call about the business perspectives, projections and operational and financial goals of IRBRE are beliefs and assumptions of the Board of the company. Future considerations are not guaranteed performance. They involve risks, uncertainties and assumptions because they're about future events, and therefore, they depend on circumstances that may occur or not. Investors must understand that general economic conditions, market conditions and other operational factors may affect the future performance of IRBRE and lead to results that will differ materially from those expressed in such future considerations. Today, with us, we have the executives, Marcus Falcon, the CEO and Director of Investor Relations; Daniel Vo, the Underwriting Technical Director. Paulo Valle, General Director of IRB Asset; Paris Vargas, Finance Director; and Debora Tavares, Director of Internal Controls of Risks and Compliance. Now I'll give the floor to Marcos Falcao, the President of IRBRE, who will start the presentation.

Good morning, everybody. Thank you for your time. Thank you for your attention. We keep on progressing and dealing with the challenges. But fortunately, we are having growth in profit and profitability, creating value for our shareholders. The challenges and the need to grow have led us to create the initiatives that we already announced. But while the growth of the revenue does not occur, we keep on delivering a company that's increasingly better with better professionals and high-end technology. In the second quarter, we reached a solvency index of 316%, which represents a surplus of BRL 1.9 million vis-a-vis the minimum regulatory capital. Additionally, we reported a recurring net profit of BRL 157 million, where 85 million are comparable profit. The deferred asset is noncash assets, a growth of 29% vis-a-vis the second quarter of '25. We reached a return on tangible assets of 23%, and we're happy to go back to paying our shareholders. In addition to the caring for our shareholders, we're increasingly building a happy and joyful environment to work. We are happy with the advancement of 20 positions in the ranking of the best companies to work for in Rio de Janeiro in the midsized company category. The next slide shows a few important events. Two of them are related to the closure of projects that I took over as soon as I took office. The first one was to negotiate a non-prosecution agreement with the DOJ. When we closed the deal, we committed to taking several remediation actions such as improving internal controls and also disseminating a compliance culture mapping out processes. And after 3 years, we concluded our obligations to report to the DOJ. And therefore, we inserted IRB in the high standards of governance and compliance of the market. Another project that I took over when I came to the company was the London operations, which was in a runoff unbelievably for 40 years. And finally, in this quarter, we completed all of the necessary actions, and we completed the transfer of assets and liabilities related to this portfolio. We're excited about several initiatives to build IRB's future. We structured 2 local insurance companies, one of major risks and another one for life, and they're at the final stage of approval by SUSEP. But since only part of the premium of the global reinsurance market is in Brazil, we also asked for authorization in Switzerland and Malta and no one better than Daniel Castillo to lead this initiative, which will lead to the growth of our profitability in the international business. Castillo is listening in from Switzerland. And therefore, Daniel our retrocession Technical Director, will talk about results. Castillo's position was chaired among 3 directors, Pai, who is responsible for the work related to retrocession and pricing our underwriting activities. Ricardo Sierre, who's responsible for reconstructing all of our life portfolio and has been bringing his international knowledge to develop products and services with our cedents, Daniel Zelman, who is our underwriting Director, known as the Serf of combined ratio, who's taking care of the P&C lines. Castillo is still monitoring and being the curator of our underwriting collegiates as well as our culture and methodology related to this subject. In the next slide, we see the long-term perspective that we're building for IBRE. After concluding the turnaround of the company, it's now the time for us to take the next step forward, moving from a local reinsurance company towards a full ecosystem of risk protection, reinsurance, insurance, asset management, access to capital and technology integrated to protect the future of society. We are restless about the low penetration of insurance in our market and with the protection gap. At the center of this ecosystem is RBRE, our main underwriting platform, risk management and results generation. Around it, we're building businesses that are supplemental and we have IRB asset that takes care of asset management. We have RRB SSP for risk securitization for insurance that may attract investors from the capital market. We inspired -- we got inspired from the global groups and we're going to verticalize our businesses, always preserving the partnerships we have with our cedents. Our goal is to come close to insurance premiums that do not come to us, but while still preserving our valuable clients being in Switzerland and Malta will give us access to markets and insurances that we will make available to our clients and to the Brazilian market. Brazil and Latin America will continue to be at the center of our focus. And when we have competitive advantage with access to risk diversification, that's offered by the international market. We have the mission to be a platform that's a reference in protection, and we are working on building this platform and completing it by the end of 2026. We also have IRB R&D, which is the research and development area applied to our business. And now the IRB Institute, which will be responsible for connecting the company with society, especially in terms of education, we want and we need to foster the creation of highly trained professionals, not only for IRB, but for the entire insurance and reinsurance market. In the next slides, I'll go over the highlights of our results in the second quarter compared to the second quarter of 2025. Our challenge is still the growth of the retain price that the retain premium that fell by 5%, 4% in P&C and 1% in Life. In P&C, we had a growth of 21% in the asset line in the second quarter of 2026 compared to the second quarter of 2025. This increase in the P&C was offset by the decrease in rural that dropped by 58% in the same period. The life line, as we highlighted in previous presentation, is being remodeled. And I believe that we'll see an inflection in the premium line in the beginning of the next year. We are happy with the business that we have, which is reflected in the growth in the underwriting premium. we see a recurring profit comparable to BRL 185 million in the second quarter and net results in the quarter that reached BRL 157 million. In the next slide, we're going to see an overview of the last 12 months ending in June 2026 compared to the same period ending in June 2025. This is the vision that I like. in terms of how we manage the company. We still see a drop in the retained premium. But with the re-underwriting efforts, the results in underwriting went up by 34%. Our net profit comparable in 12 months reaches COP 592 billion, an increment of 20%. Even if we take into account this achievement, the profit grows 2% for COP 501 million. So even though the long-term perspective is positive for our line of expenses with taxes because with the tax reform, our CBS becomes 0 for the next year. Right now, we keep on facing a turbulent phase. Therefore, the best way to analyze this result is by excluding the nonrecurring effects of the tax reform, which is in orange. Now I'll give the floor to Volpe, who will talk about underwriting.

Thank you, Falcao, and good morning, everybody. Thanks for being with us in another results presentation. We ended the last 12 months with BRL 13.4 billion in retained premiums compared to BRL 13.7 billion for the same period of last year. In the asset segment, we had a growth of BRL 242 million taking into account the Brazilian and foreign operations. As I said in the previous presentations, the reduction in the rural premiums reflects the challenging environment in the agribusiness of Brazil with more restricted subsidies, lower availability of credit and high interest rates. The life portfolio demonstrates the strategy of discipline and underwriting that led us to discontinue contracts with good profitability. When we analyze the distribution for the segment, we see a relevant change in the portfolio profile. The asset segment expanded its share from 48% to 60% of the retained premiums, reflecting our strategy to redirect capital to the short tail capital lines where we identified in the current context of the market, the best opportunities to generate results. In spite of the increase of the share in this segment, we maintain a broad geographic diversification in the risks underwritten in Brazil and abroad. We maintain a predominantly Brazilian portfolio, accounting for 61% of the retained premiums. At the same time, we maintain a relevant international operation that's responsible for around BRL 1.4 billion in retained premiums. In the last 12 months, the international portfolio had a growth of 6%. Our plan is to renew this portfolio in the Swiss operations, which will be led by Daniel Castillo, who has a broad knowledge of the international market with a focus and discipline of underwriting, we believe that we will make this portfolio profitable. In the next 3 slides, I'm going to talk about the results, just considering the effects of the drop in the deferred PIS and COFINS assets that will be discussed by Thais Vargas. Concerning the Life segment in the first graph on the left-hand side, we see the reduction in the retained premium, which is expected due to our strategy of sanitizing and repositioning the portfolio. When we analyze the results in underwriting, we see that the results in the portfolio in force was positive by BRL 4 million in the quarter, demonstrating the quality of our businesses and the portfolio. In underwriting, we had an impact of BRL 45.8 million due to the constitution of provisions for the recovery of the recoverable value of contracts that are related to legacy that started being discussed judicially in this quarter. We believe that life will resume its growth trajectory in the next few quarters under Ricardo's management. On the next chart, we see the evolution of our P&C portfolio by geography with the segregation between domestic and international. On the upper left, we see that retained premiums remain practically flat at BRL 3.13 billion, with a slight reduction due to retraction of the agro portfolio, as we mentioned before. Despite this movement, results continue to present a consistent growth trajectory with underwriting results of BRL 874 million and net income of BRL 595 million in the past 12 months. In quarter 2, the loss ratio of domestic was benefited by reversion of the VNR. This was due to enhancement of our methodology and recognition of the B&R retrocession portion, which accounts for less than 5% of this reserve. In international P&C, we have not yet reached the return level that we expect. However, we believe that through our new operation in Switzerland, we will be able to increase focus and profitability of this operation. On the next chart, we see our consolidated results broken down between P&C and Life. In the consolidated results, our underwriting results have a consistency evolution trajectory. In the past 12 months, we reached BRL 839 million, a 34% increase compared to the BRL 628 million in the same period last year. As a direct consequence of this operational evolution, our net income also maintained its growth trajectory, and this performance reflects in the stability of our combined consolidated index, which is at about 92%. On the next chart, we have our loss ratio. The P&C indicator reached 52% in the last 12 months, impacted by the atypically low loss ratio of the second quarter. The green dotted line shows the positive impact of our active management on provisions for loss -- for claims before 2020. As a result, we reached a 62% decrease in quarter 2, totaling BRL 85 million in the first half of '26. On the next chart, we have the evolution of our commission payments corresponding to commissions paid to cedents and brokers. with a segregation between P&C and Life. These indicators remain flat and well controlled. On the next chart, we see the consolidated view of our loss ratio and commission payments, considering P&C and Life combined. This indicator allows us to see the underwriting margin between -- before the incidents of administrative expenses and taxes. As you can see, we're able to capture margin through the selection of risks and discipline in underwriting. -- despite the tax reduction scenario observed in the global market. This chart shows the effects of the optimizations implemented in our retrocession for portfolio protection as of 2025. These changes bring about recurring results, which will be more pronounced starting in 2027. In the past few years, we have done consistent work to enhance our underwriting discipline, strengthen our risk management processes and increase the solvency levels. As a consequence, we now have more confidence in the quality of our portfolio and our capacity to retain risks. And this allows for more efficient management of the procurement of protection. Today, we are more selective in the acquisition of retrocession, and we seek to retain a larger portion of the risks that have adequate relationship between expected return and capital consumption. As a result of this strategy, our protective retransaction expenses totaled BRL 274 million in the past 12 months, a 43% decrease compared with the BRL 480 million posted in the same period last year. It's important to note that this decrease does not represent a material increase of the risks taken on by the company. We continue to be protected against higher severity events through structured programs, retrocession programs with high credit quality. What we are doing is reduce the transfer of low severity risks, capturing the results that were being transferred on to the retrocession market. In addition to this higher retention strategy in June 2026, we started unifying our international catastrophe protection program. Until then, protections were contracted segregatedly by region. With this program, we now rely on a more optimized coverage structure that reduces potential losses in events that may affect multiple regions, such as Mexico and the United States simultaneously. Besides reducing risk due to the broader coverage, this initiative generates savings of approximately BRL 20 million for the next 12 months if compared with the former contracting modality. As we expand our international presence, we believe that efficiency gains resulting from this unified structure will become more and more relevant over time. And I would like to close with the renewals in July and also I will talk about El Nino and the earthquake in Colombia. As for renewals in June, we completed a relevant cycle of renewals in Latin America. Although the market still has decreasing rates, we believe that the margin levels keep healthy. The result from these renewals was positive with more than 90% of contracts renewed for another period. We also captured new clients, which will boost the growth of our premiums and strengthen our presence in the region. Now as for El Nino, metrological institutes are pointing to a high probability of high-intensity events occurring in the next few months. If this is confirmed, we expect to see an increase in rainfall in the south and part of the Southeast whereas the North and Northeast should record low -- historic low levels of rainfall. The main impact for IRP will be concentrated in rural and property. Rural accounts for 12% of retained premiums and our highest exposure is concentrated in the South, Southeast and Midwest of the country, particularly in soybean cultures and summer corn cultures. Initially, the increased rainfall may bring benefits to farmers. However, excessive volumes during critical periods, particularly close to harvest may affect productivity and the quality of the harvest. In addition to rural, that intense El Nino event can lead to floods, storms, and strong wins, particularly in the South and Southeast with potential impacts to our property portfolio. In the past few years, we expanded our diversification by business line and geography. And we also have robust retrocession programs and protection programs, both for rural and property. We will keep monitoring the evolution of El Nino events, and we are confident in the resilience of our portfolio and the company's capacity to absorb any volatility preserving its capital and profitability. Now about the earthquake in Colombia, we would like to express our solidarity to all the victims, their families and the communities affected by the strong earthquake that in August 10. 7.4 degrees in the Richter scale with a depth of approximately 96 kilometers. The most severe effects we're seeing in the Midwest of Colombia, major cities such as Pedro Cali recorded structural collapse, damage to buildings, interruption of essential services and fatal victims. The earthquake was also felt in other relevant cities, including Bogota and Medline, however, with minor impact. We are in constant contact with our clients in that region so that their claims and indemnities can reach the families and communities that were affected as fast as possible. Colombia is a strategic market for IRP in Latin America and our retro session program limits the net losses of the company to approximately BRL 17.5 million for this event. Now I'd like to hand the conference over to Falcao.

On the next few charts, we talk about our G&A expenses. As a target this year, we want to reduce BRL 2 million in our legacy expenses and BRL 23 million of our in-force expenses. We work with the logic of if we have an expense, we need to generate at least 10x the same amount in revenue. We have mapped about BRL 16 million in expenses to be cut, and we already started executing in the second half of the year. And we will report every quarter. Of course, the critical point here is the rigidity of our structure. -- which is an obstacle until we can grow the volume of premiums to avoid losing competitiveness. But this is extremely scalable when we go back to growing. This will be challenging, however, interesting times. On the next chart, we talk about the float which is 1 of the structural strength of our business model. Our capacity to transform our reserves into financial results. The float represents the volume of financial investments of our reinsurance business which reflects the capital portion sustained by the operation itself compared to the volume of retained premiums. This indicator allows us to monitor not just the growth of our operation but particularly our capacity to transform our reinsurance activity into a solid financial pace sustainable over time. In the past few periods, we see the float is maintaining with consistent robust stability. Now we're going to hear from Paulo Valle, the details on our financial investments.

Thank you, Falcao. Good morning, everyone. We ended quarter 2026 with BRL 8.3 billion under management compared with BRL 8.6 billion in quarter 1 -- of this total, 62% were invested in reals and the offshore market and 38% in dollars and other currencies in the offshore market. The BRL 218 million decrease in our assets under management this quarter can be explained particularly by the completion of the transfer of our reinsurance portfolio and the consequent discontinuation of our operations of the London office, which were under runoff. With this transfer completed, the company realized below offshore assets BRL 160 million and the respective liabilities related to our operations. despite the reduction of our assets under management as well as the standard interest rate in the period. The financial result of our investment portfolio is still increasing. In the past 12 months, we reached BRL 708 million above the BRL 673 million recorded in the last 12 months. . This performance was driven particularly by the still high interest rate and the reinvestment process of our legacy portfolio, which allows for reallocation of our resources with more attractive interest rates. Of the total recorded in the period, BRL 128 million came from our onshore portfolio and BRL 590 million from our offshore portfolio. In the other lines, we have the foreign exchange rate with a negative impact of BRL 42 million due to depreciation of the dollar. The financial result in other accounts and other equity had a positive impact of BRL 58 million, resulting particularly from the transfer of the management fee and financial expenses of BRL 47 million with highlight to costs with the ventures. On the second chart, we see the performance of our investments by asset class in the past 12 months. In the onshore portfolio, the positive performance was driven particularly by the higher profitability of the floating bonds and private bonds, 13.9%. And as well as the contribution of variable income with good performance and the accumulated results of the past 12 months, 24.4%. Also the positions indexed by inflation, both in the active portfolio and the legacy portfolio had an inferior performance in the period yielding 11.6% and 7.9%, respectively. This performance reflects an environment of more controlled inflation. At the same time that the standard interest rate remained high. The situation shall not significantly improve in the short term since we're going to have a worse carryover in the third quarter due to the low inflation. However, on August 15, we're going to see the maturity of the legacy and TBN from 2026. In addition, to BRL 338 million in addition to the payment of coupons for the other maturities of [ BRL 32 billion ], totaling [ BRL 370 million ], which will reduce our exposure to the class. In the prefixed sector, the inclination -- the negative inclination of the curve leads to a somewhat negative impact in the short term. This effect, however, tends to dissipate gradually as the market advances towards a scenario where the monetary policy will become normalized. At the same time, from the perspective of the composition of the portfolio, the prefixed assets already contracted at higher rates will continue to contribute towards sustaining a high level of financial results for the company in the next few years. In the offshore portfolio, the asset management kept on contributing positively, both in sovereign bonds and private bonds. So with the performance that was quite high. In the last 12 months, disposition yielded 6.2% and 4.8%, respectively. And the passive bonds reflected the remuneration of the American bonds used as collaterals. In the next slide, we have the profitability of the portfolios in the last 12 months. The onshore active portfolio yielded or yielded 14.1% and the passive 7.3%, totaling 12.9%, representing the equivalent to 87.3% of the CD and the active offshore, the active offshore portfolio, 5.8% and the passive 3%, totaling 4.9%. And the accumulated profitability for the onshore asset -- active portfolio they yielded as seen on screen totaling 96.8%. And the offshore asset portfolio valued 155.1% and the pass of 78.1%, totaling BRL 129.8 million. Therefore, the total results of the investment folio yielded in the 12 months preceding June 30, disconsidering the FX variation. Now I'll give the floor to Director, Debora Tavares.

Thank you, Paulo, and good morning, everybody. from the perspective of risk management. In the first slide, on the left, we have the evolution of the regulatory solvency ratio, where we see that in June 2026. This ratio reached 316%, representing a growth of 79 percentage points when compared to the second quarter of 2025, reaching the highest historical ratio since 2024. In the upper right-hand side, you can see that this was due especially to the increase of the adjusted assets of the company, reaching BRL 2.7 billion in June 2026. It's also worth mentioning that out of these values, we're already the amounts related to dividends and interest on our own capital -- on the lower right-hand side, we have the evolution of the efficiency of adjusted assets reaching BRL 1.9 billion in this quarter. This consistent growth of the indicator is a reflex of the positive results that we reached over the course of the last few years in line with the operational discipline of the company. In the next slide, concerning the regulatory liquidity ratio. We ended June 2026 with the level of sufficiency of 10.1%. This movement is due mainly to the reduction in the volume of collateral assets recorded in June coming from the disconnection of BRL 280 million for the payment of debentures this year. On the right-hand side, you can see the historical evolution of this efficiency of coverage of technical provisions reaching BRL 640 million this quarter. Now I'll give the floor to Thays Vargas.

Thank you, Debora, and good morning, everybody. To keep our commitment to update you on the initial effects of the tax reform in the second quarter of 2026, we had a disbursement of BRL 38 million for PIS and COFINS compared to BRL 37 million in the same period of the last year. In the quarter -- in the in the first 6 months of the period, it was BRL 65 million. And the insurance and rec recession will be subject to a 0 rate in substitution to the current of to 65% for scopes. This change brought about the need for us to reassess the recoverability of our deferred taxes. And as a reminder, these assets come from this mismatch between the accounting recognition of the claims provision and its deduction in the taxes. And therefore, it's an accounting asset, and it is not a tax credit and it has no direct impact on the cash flow. With the transition to a 0 fee, we keep on reassessing this balance as we pay the claims and the definition applied to the transition period. In the next slide, even though the standards related to CBS have been published. There are aspects to clarify, especially when it comes to the tax treatment of the deductibility of the claims of the already underwritten contracts and the contracts that will be underwritten by December 2026. In this context, we key point working on the write-offs initiated in December 2025 based on recoverability studies that we did back then. The impact on the results was BRL 46 million, leading to the accumulated effects in the first half to BRL 80 million. With that, we end June with the remaining balance of BRL 148 million, which will be reassessed as we pay the claims and the legal definition about the transition period. We keep on monitoring this subject up close, and we will also inform you on a timely basis. And now I'll talk about how the events of the period reflected in the results of the company according to IFRS 17. In compliance with the standard, the company had a loss of BRL 3 million in the quarter compared to the net profit of BRL 107 million in the same period of last year. In the year-to-date in 2026, we had BRL 90 million compared to BRL 241 million in the same period of last year. The result of service provision totaled an expense of BRL 116 million in the quarter, representing a significant reduction vis-a-vis the same period of 2025 when it reached BRL 196 million in revenue. This reduction is mainly due to the revision of the estimates of future cash flows found in rural and also in the drop in the future expectation of premiums in specific contracts of the Life segment in line with the effects already mentioned by Volpe in the beginning of the presentation. The lower amortization of CSM in the second quarter of 2026 is explained mainly by a proportional relevant contracts in the assets segments. This contract had a relevant amortization of CSM, along 2025, in line with the coverage defined for this portfolio. Since it was not renewed during 2025, the amortization in 2026 was naturally lower. The renewal of this contract only occurred in the beginning of 2026, but it did not produce yet the CSM effects at the same levels observed in 2025. Concerning the expenses related to service provisions, we had no significant impact. And now talking about the financial results of the contract, we had an improvement in this quarter. The expenses related to the discount rates dropped from BRL 177 million to BRL 122 million. This improvement is the result of the current rates. As we can see in the curve, we had a separation of the curves, which reduced the present value of our liabilities, In the same period of last year, the expense was BRL 152 million. At the same time, we have the locked in, which represents the contracts as defined in the moment of its recognition. Here we had an expense of BRL 136 million, relatively close to the BRL 125 million recorded last year. So when we combine these 2 factors, reach an expensive BRL 12 million in the quarter, BRL 55 million lower than in the second quarter of 2025. Now I'll give the floor back to Falcao for the final remarks.

Thank you, Thays. And now in the last slide, even though -- we still have the second half of the year ahead. I want to talk about our perspective for 2027. I see a company that is advancing in several different fronts with initiatives that will contribute both for the growth of the revenue and the expansion of profitability. Starting with premiums, we keep focused on the execution of our restructuring initiatives. The work we did in the previous years allowed us to build the basis of the business. And now we go into a phase where we want to accelerate the growth in a way that selectable and sustainable capturing opportunities, not only in the local but also in the international market. In retrocession, we expect to keep on reaping the benefits of the improved portfolio profile, which shall translate into a gradual reduction in the protection costs contributing to technical profitability and greater efficiency in the use of capital. In terms of administrative expenses, we keep on advancing by simplifying structures and processes. We have a continuous agenda of productivity, digitalization and greater rationality and internal workflows seeking agility and operational efficiency. Another important aspect is the tax reform. According to the currently established rules, the reinsurance activity, as I said previously, is still subject to a 0% IBS and CBS rate, reducing the impact on the cost of the company. In financial results, we will have the debentures that will be paid in the fourth quarter of 2026 and the maturity of the NTNB legacy in August 2026. And this contributes to reduce our financial expenses in 2027 and to increase our profitability when reinvesting these resources. In a nutshell, we see 2027 as a year where we're going to consolidate the initiatives that we built over the course of 2026 towards a simpler, more efficient company with a stronger team with a profitable growth capacity, strong cash generation, prepared to capture opportunities both in Brazil, in Latin America, and the rest of the world. And now we're going to start the Q&A session.

[Operator Instructions] We'll now take the first question from Daniel Vaz from Safra.

Congratulations on the results and on the execution. The company seems to be very well prepared for the years ahead. We wrote the second half of the decade as a very interesting story. And now going back to something that you mentioned in your opening remarks, Falcao, you said that you have sufficiency of BRL 1.9 billion in regulatory capital, the company is in a very strong efficiency position. And at the same time, you're restructuring new insurance company and reinsurance companies outside of Brazil in Malta and Switzerland. So maybe you could break it down into 4 boxes as it were. How much of this BRL 1.9 billion is already committed to the [Foreign Language] and how much of this additional solvency you could distribute to your shareholders. And the fourth box would be how much will this resupply the growth of your premium considering lower retrocession and that your retained premium should accelerate looking forward. So if you could break it down into 4 categories, 4 boxes for us to better understand how you see this regulatory solvency and your prospects looking forward?

Thank you for your question. Thank you for your optimism because you're asking such a difficult question, and you think I'll have a quick answer. Well, I'm sure you will. Well, first, the solvency, the surplus of BRL 1.9 billion that I mentioned in my initial remarks, I talked about the minimum required capital from SSE. Our internal risk model uses a great portion of the solvency to increase our risk retention. We have an internal model here that takes into account the different aspects additionally to the minimum capital required. When we built this internal model, we -- of course, we use Suze as a reference, but also the solvency tool, we use it as a benchmark and also the rating agencies, particularly in Best, which is the one that covers our field. And we also have our internal model. So our internal model is supported by the data that I mentioned. So this surplus that I mentioned, I think it's less than half of this number and this surplus is more than sufficient for all of these initiatives that we talked about. These initiatives, they have a growth curve that is expected and we have cash generation and future profits that we account for in our plan that will be executed in the coming years. So this is a dynamic process. And we can reassure all of you that our solvency is more than enough to -- for all our initiatives. And if we look at the cash generation expected for the company looking forward, I think our dividend payout, it will not take long before it reaches 50%. We are at 25% this year, maybe in '27 depends on how our initiatives take place and the speed of our work. Of course, we have to be prudent in the decision-making. But what we will propose is to increase the dividend yield to 50%. I don't know if I answered your question, I don't have a specific answer. We can talk about this offline at a later moment. So I don't know if you're happy with my answer.

No, of course, I'm happy with your answer. And this was my -- I only have 1 follow-up question. The 50% dividend payout, is this already contemplated in your cash or could there be any extraordinary payment considering that you have less than half in sufficiency?

No, I don't think we'll have any extraordinary payments right now, we need to have visibility. We need to have -- we need to discuss all these new initiatives and the speed that regulators will be able to meet our findings -- so we are generating cash, but it depends on when we start. It depends on the ramp-up of our operations. We need to have a war chest short in the future. So I don't think shareholders or the Board will agree to distribute more than we than planned right now, considering all these uncertainties that we have in terms of the speed and the ramp-up of several initiatives simultaneously. This is criticism that we always get that we try to do a lot of things at the same time. So we've been very prudent here, but we reassure you that we will be able to do these things over time. And we have to keep our diligence in our payout. And I believe that in 2025, we will be able to reach the 50%. But 25% is what we guarantee for 2026

Our next question is from Eduardo Rosman with BTG.

Congratulations on your turnaround Well, the turnaround was last year. So looking forward, I believe you'll generate even more value. I have 2 questions. First, about the bill or 0 approved yesterday by our representatives. Just to put everyone on the same page, I want you to talk about the next steps and also potentially what will be the benefits for IRB? And my second question is about human resources. You talked about different initiatives, operational initiatives that are being rolled out in the company. But can you tell us about the cultural change inside the company. You had a lot of turn over a lot of new people. You have the matching program. So how do you believe this could create value to the IRP and enhance your alignment.

Thank you for your questions. Yes, we have some very valuable initiatives taking place, not just in -- with the regulators but they all aim to strengthen the local reinsurance market and decrease reduce the comparative gap that we have in relation to other countries. This is a very volatile activity. We have to pay a lot of claims. And it's strange not being able to compensate 1 year's result with the next year's results. So we may have a brilliant year and then a difficult year. So it's just expected that this compensation could take place. But I believe this is all part of a regulatory framework that's being built by Susep and the Congress. They are focusing on how the insurance and reinsurance activity in Brazil can be more comparable to the numbers of the rest of the world. So I think this is a great step, and we're very excited. This bill was voted in the Chamber of representatives. Now it has to go to the Senate. But we are very optimistic awaiting this moment that will help us. This will be really helpful. But we are at a very delicate political moment. Right now, we'll have the election soon, but we're very excited. And I believe that we will see a decrease in the tax rate shortly in the future from CLL, and we can also use our tax credits In a way that is more consistent with our activities. So we're very positive, and we are cautiously waiting for the outcome. And we really like about your second question, we really like talking about our people. I think our team today is a spectacular team. Everybody works very integratedly the matching program that you touched on was inspired by the Itau program, which is a very successful human resources program that we implemented here this year. And we already see the people here talking about what the company will look like in 5 years, 10 years, people that want to build a career here, build their equity here. So this certainly increases our attractiveness as an employer and we are exercising this. We are bringing new people on to our team. We have a great life team right now with very talented people. Our agriculture team also I always say that we are value investors because we hire people for agri business in the worst time in history, but we're still building our team. We are bringing new people in several areas. We have a P&D program here, very talented people, very knowledgeable people, we have access to great talent. And now we want to get involved in training and development. We have some initiatives that we will roll out in the second half. So if you ask me, what is our differential, I'll always say it is our people. Our greatest competitive edge is to have the talented people that we have, just like you and BTG have a very talented team. We are at a similar position in this sense. But we're very excited and positive. As I said, it's been a pleasure to work with this team. The work environment is brilliant here. We feel a lot of excitement in the air despite as being a small group, over 350 people. The new companies, we have a new team in Switzerland. We are interviewing a lot of people there with different skills, different cultures. So we will see an expansion of our team and the interaction with these new people is already a motivating factor that we have in our workplace to get to know these new people, competent people that raise a lot of admiration -- so this is something great about our culture, which makes us very positive about the future. Thank you for your great questions.

Our next question is from Arnon Shiraz with Citi.