IRB Brasil Resseguros SA
BOVESPA:IRBR3
Earnings Call Analysis
Q4-2023 Analysis
IRB Brasil Resseguros SA
The company has undergone a strategic evolution, emphasizing a concentration of business within Brazil and Latin America. By the fourth quarter of 2023, international business had decreased substantially, making up only 10% as opposed to Brazil's 83%. This shift aligns with an overall aim to have 70% of the business in Brazil, 20% in Latin America, and 10% in other international markets. Despite a significant reduction in total premium from Q4 2022 to Q4 2023, the company improved the balance and profitability of its portfolio, declining unprofitable businesses and refining its stake in others. Executives pride themselves on 83% renewal of desired contracts, alongside capturing 25% of new deals prospectively.
Recent renewals in January 2024 have been quite successful, particularly in the agricultural sector, with renewal rates and price increases expected to enhance future premium volumes. The company renewed a large part of its contracts, managing to both escalate prices and increase shares, laying the groundwork for a more variable revenue stream moving forward.
The company has made strides in stabilizing its reserve ratios after several years of reinforcement. The cost of acquisition saw a significant increase year over year in Q4, attributed to advanced commissioning in the Life segment. However, general administrative expenses reflected a modest increase excluding one-off effects, suggestive of shrewd administrative cost containment efforts.
By the end of 2023, the company reported a 46% margin above the minimum capital required, a marked improvement from the previous year. Additionally, a sufficiency buffer of BRL 438 million has been established for critical financial obligations of the year.
In anticipation of 2024, the company is poised to grow while maintaining or enhancing price levels, thus avoiding the margin compression that often accompanies expansion. The goal is to amplify premium growth in conjunction with substantial profit increases, an ambition supported by the solid start in January 2024, evidenced by a net income of BRL 36.8 million and favorable combined index figures. Moreover, the company is undergoing a management structure change by appointing a new head of innovation dedicated to system integration and future efficiency.
Recognizing the potential to expand further, the company has begun to eye opportunities within Europe while still being mindful of the need to manage profitability and risk appropriately. By reallocating its international presence, the company is refining its geographic composition, planning to lead in Latin America while following in Europe to tap into emerging opportunities without committing to significant catastrophic risk exposure.
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Thank you for standing by. Welcome to the video conference to announce IRB RE's Fourth Quarter 2023 results. Those of you who made simultaneous translation, we have this feature available on the platform to access it, click on the globe icon at the bottom of your Zoom screen, and then you will be prompted to choose your preferred language, Portuguese or English. For those listening to the conference in English, there is an option to mute the original audio in Portuguese by clicking on mute original audio. As a reminder, this video conference is being recorded and will be made available on the company's IR website at ir.irbre.com, where the respective slide deck can also be found. [Operator Instructions]
Note that information contained in this presentation and any forward-looking statements made during the conference regarding the company's business prospects, productions and operating and financial targets are based on beliefs and assumptions on the part of the company's management as well as on information currently available.
Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not materialize. Investors should have in mind that general economic conditions, market conditions and other operating factors may affect IRB RE's future performance and thus lead to results that will differ materially from those expressed in these forward-looking statements.
Today, we are joined by company's executives, Mr. Marcos Falcao, CEO and IRO; Mr. Daniel Castillo, VP of Reinsurance; Mr. Rodrigo Botti, VP of Finance, Actuarial and IT; Ms. Thais Peters, Director of Internal Controls, Risk and Compliance; and Mr. Paulo Valle, General Director of IRB Asset.
I now give the floor over to Mr. Falcao, CEO, who will start the presentation. Over to you, sir.
Good morning, everyone. I'd like to start by saying that 2023 started with a solvency ratio of 101% and we are happy to say we have accomplished everything we had planned for when it took on the company at the end of 2023, a new culture and new head offices, new branch and according to the DoJ, the U.S. Department of Justice, we closed the issues we had opened or outstanding in 2020.
We paid debentures in October. We revamped our data to the cloud. We closed Mudança da sede and London offices. And this week, we have concluded the implementation of accounting as per IFRS 17, which will be used to report our numbers to the market as recommended by the Brazilian Securities and Exchange Commission. We now have a few ways to report our figures via IFRS 4, which is model adopted by SUSEP; IFRS 17, which is the model adopted by CVM, the Security Commission and IFRS 4 and the business view is the model we used to manage the company, which we also reported to the market. So that's the way we've been doing it for some time now.
On April 3, our IRB RE turns 85, and we are feeling as an 85-year-old startup, young at hearts. On the next slide, I'll be talking about the different methodologies as per the different IFRS models 4 and 17. For example, the reinsurance revenue, IFRS 4, is reported pro rata time as IFRS 17, it is reported based on actuarial models based on the contract terms, a lot more sophisticated in terms of accounting.
The reinsurance expenses will now be reported based on group contracts as is in IFRS 4. But now they'll also be reported taking into account the current value of each contract. The IFRS 17 also emphasizes the reinsurance financial results, which has nothing to do with the investment results of the portfolio. The financial results from reinsurance is the amount of money and time of operating flows. So you will realize that from here on and IFRS 17 will show a change in the discount rates, which oscillate as per interest rate in the market and the risk rates will affect the company's results because we're talking about operating flows brought to current value.
In terms of administrative expenses, as for IFRS 4, they are separate from the reinsurance business. As per IFRS 17, just as taxes, the administrative expenses will be recognized within the contract scope in a way, we'll now have a closer look at contracts. Actually, IFRS 17, as a lens that allows us to look at the future. We don't know yet what we're going to do, how we're going to read it.
It's going to be very interesting to work with both our 3 models, IFRS 4, IFRS 4 under the business view model and IFRS 17. So we'll have 3 combined views, 3 combined methodologies. The [ feed ] form will be based on IFRS 4, the business view is in our IR website, and IFRS 17 will now be used to report our ATRs, our quarterly results. So as we use them, all those combinations will have a challenging scenario, but are very rich at the same time. And you can imagine the amount of work involved working or doing the accounts using the new methodology. So the whole team of IRB is to be congratulated upon several weekends and long hours, long days to work with that and several consultants that provide a support as we moved to this new methodology. Very soon, we'll have a special session to talk exclusively about those different methodologies. So throughout the year, we want everyone to be on the same page as we are now on that front.
On the next slide, we're going to be talking about some of the numbers comparing IFRS 4 with IFRS 17. I'm not going to drill down too much. Otherwise, I am going to spend the whole video conference talking about the differences in methodology and not the company's results, which is the main objective today, of course. But in any event, if you look at both methodologies, the effect throughout time has improved the numbers for 2022 and worsened the numbers of 2023. But at the end of the day, both numbers were quite similar. For example, we have an effect for IFRS 17, which is the closure of the London offices.
Even though it was positive for us, and in IFRS 4, we have a positive number at the bottom line. As for the IFRS 17, we have an accounting effect which is quite negative, as you can see, Why? Because it's a very large flow, which is brought to present value. And that result will be reverted throughout 2024 as we conclude the transference of the portfolio to the British regulatory agencies. We cannot do both at the same time. We have to wait for the conclusion, took account for. So the accounting effect is -- but one example of the difference is we will need to understand and tackle as we go through this transition.
Now what reassures us is that as we look at the numbers of 2022 and 2023, they are quite similar. In other words, the bottom line is similar. They are just being reported in different times. If you look at the right-hand side in equity, equity has changed little when you compare both methods. It's the same company. So the numbers need to be the same. So equity shouldn't change and it doesn't. As I said, we'll be learning throughout time, how to use both methodologies at the same time as best as we can.
Now moving on to the next slide, if we may, [ annual ] go back to our older ways of speaking. Now we see that net income for fourth quarter, it remained consistent in terms of numbers, and we closed the year at BRL 114 million. Give or take the figure we were waiting for. We were expecting BRL 120 million and we closed at BRL 114 million for the last 12 months. It's important to reemphasize that this is a very volatile business. If you look at a single month or a single quarter, it's very deceiving.
So if a month or a quarter is slightly below, it's a one-off situation. Our trend is usually positive. At the end of the presentation today, I'll report January of this year. And you will see that January is already running at a different level. But for the underwriting number for last year, we saw a positive number at the end of the year, BRL 155 million for the last 12 months. That shows that as we still see positive numbers in the long run.
Now I'll turn the floor over to Castillo who will be talking about our reinsurance strategy.
Thank you, Falcao. Good morning, everyone. In 2022, we decided to refocus on Brazil and Latin America. In our 85-year history, we have come to know Brazil well, its risks, the needs of the market, coverages, exposures, claims, loss ratios. It bears repeating that we have major -- 5 major advantages. We speak the clients' language. We know the country's culture. We know the Brazilian legal system. And we have the authority to make decisions locally. And finally, we have the largest underwriting capacity in the local reinsurance market.
In addition to Brazil, for 2024, we will prioritize Latin America, a market where we have a dedicated team, [indiscernible] in Spanish and with knowledge of the region, its risks and its catastrophic exposures. We have refined our strategy, adopting different practices for countries with different needs and opportunities such as Peru, Paraguay, Uruguay, Colombia, Bolivia and Mexico. I believe Latin America could represent up to 20% of our premiums. Finally, the global market continues to be analyzed and we maintain our strategy of developing non-proportional business without taking on large catastrophic exposures, thus managing our business portfolio. I believe we had good opportunities in Europe from where I have just returned and we were quite well received in Europe. Within our strategy of concentrating business in Brazil, again, you can see on the next slide, in the fourth quarter of the years '21, '22 and '23, a drop in international business from 27% down to 16% and then 10% in the fourth quarter of 2023.
At the same time, we can see in the same period an increase in business in Brazil from 61% to 83%. We have, therefore, changed our strategy to concentrate 70% of our business in Brazil, 20% in Latin America and 10% in other international exposures.
We can see a reduction in the total premium from our Q4 2022 to Q4 2023. This drop in premium is due to the portfolio cleanup, if you will, that was sped up in the business renewed in 2023. As for renewals, although we accepted new businesses, we declined some unprofitable ones. We reduced our stake in others, always with the objective of having a more balanced portfolio with better quality and better profitability. Even so, we renewed 83% of all the deals we wanted to keep in our portfolio. Of the new contracts we prospected, we closed 1 out of every 4 contracts or 25%, which is also an important sign as we open many doors.
On the next slide, we can see the distribution of the breakdown for 2022 and 2023 with an emphasis on equity businesses, which now account for 37% of our portfolio. Our portfolio continues to be diversified across 9 business lines in 3 geographies: Brazil, Latin America and International. We can say that we have in 2023, a smaller portfolio after that cleanup I just mentioned, but also more -- or much more profitable. And now in 2023, I have dedicated to Brazil, and have mapped out opportunities in Latin America. We intend in 2024 to develop those opportunities, which have already been mapped out. We are finalizing the renewal for April and May and June also show promising opportunities for new businesses, always preserving our underwriting discipline.
On the next slide, we have analyzed the history of our loss ratio track record. For the last quarter of '22, we were impacted by the agro catastrophe in Brazil, which I have already mentioned in previous presentations. In addition to that, in 2022, we still had an impact on contracts closed before 2020, which had an effect of almost BRL 1.3 billion on retained claims. In 2023, these contracts closed before 2020 represented BRL 713 million, which is still relevant, but accounts for about 1/4 of the total claims. That's why in years before 2022, that number has been going down. Undoubtedly, in our business, loss ratio rate is a major factor in achieving expected results.
In this slide, we can see the reduction in claims from 104% in 2022 to 70% in 2023 which is the lowest rate in the series being analyzed. It's worth remembering that an insurance loss ratio is driven by contracts signed in previous periods. It depends fundamentally on the risk assessment processes at the time they are presented as well as on appropriate pricing.
At the top right-hand side of the slide, you can see a quarter-on-quarter comparison. The claims ratio is gradually reducing, has reached in Q4 [ 2023 ] a level of 55%, which is also the lowest ratio in the series. And the table below, we showed the breakdown of claims by geography, where we can see that both claims in Brazil and abroad fell in 2023. We believe that the actions we have taken to adjust prices reduce exposures by canceling all reducing stakes in various contracts in addition to aligning commercial conditions and technical changes in the renewed business have driven an improvement -- gradual improvement in the financial year. On this slide, I would like to talk about our renewals. A large part of our contracts renew in January and January 2024 was very good for our renewals. We managed to increase prices and increase our shares which should create a greater volume of premiums in the future, agro -- our agro deals renew in January and April, and this was very good as well, including an increase in our share in very good conditions. Latin-America renews its deals in June and July, the retrocession deals renew in October. The optional business developed gradually. This calendar allows us to better use our resources.
I'll now turn the floor to Rodrigo Botti.
Thank you, Castillo. Good morning to all. It's a pleasure to be here today and share information relating to Q4 2023. On this slide, we present the provisions for claims IBNER and OCR and the ratios with the earned premiums. You will see that the ratio of reserves in view of our revenue is becoming more stable after what we did in the last few years to strengthen the provisions and to recover this ratio. This attests to our commitment to maintain provisions at adequate levels in view of the risks undertaken.
On the next slide, we demonstrate the evolution of the cost of acquisition, which in Q4 2023 was BRL 374 million as compared with BRL 249 million in Q4 2022. This increase has to do with technical accounts, which are specific to the Life segment in Brazil, which were underwritten in previous years and are connected with the advancement on commissions. And you can see the values in gray here. For 2023 as a whole, the cost of acquisition was BRL 1.047 billion, a 5% reduction relative to the same period in the previous year in line with the strategy to improve the underwriting and control costs.
On the lower part of the slide, you see our general and administrative expenses. In Q4, those expenses amounted to BRL 104 million. In 2023, we saw an increase by 7.4% in administrative expenses and this was mainly because of the agreement signed with the [ GLJ ] in the first quarter of the year for BRL 25 million and expenses with voluntary termination plans in Q2 and 4Q, which amounted to BRL 13 million. If we exclude these one-off effects, administrative expenses totaled BRL 317 million vis-a-vis BRL 330 million in the previous year, are reduced by 3.9%.
On the next slide, you see the quarterly evolution of the combined index excluding the effects of the operations of LPT and the one-off effects. You can see the evolution of the non-life segment. The loss ratio, the most significant component of the combined index has been improving despite the nature of our business, which always has a certain volatility. Loss ratio went from 94% in Q4 2022 to 55% in Q4 2023, a 39 percentage point drop which attests to the effects of the portfolio overhaul.
When we analyze the relationship between the cost of acquisition and the earned periods, we see that the commissioning index went from 18% in Q4 2022 to 35% in Q4 2023. But as I said, this increase had to do with advancement on commissions of the Life segment. And when we look at the acquisition in the Non-life segment, the commissioning ratio is 23%. The general expenses, which includes administrative and taxes, has remained relatively stable vis-a-vis previous quarters. The combined index was 104% in Q4 2023 vis-a-vis 118% relative to Q4 2022. When we look only at the non-life business lines, the combined ratio is below 100% and was 96% in Q4 2023. This is a major milestone as it shows the improvement in our operations.
On the next slide, we present the combined index for the year as a whole. In 2023, the combined index was 109% vis-a-vis 137% in the previous year, a 28 percentage points improvement. If we exclude the operations of LPT, the combined index is 106% in 2023 vis-a-vis 133% in the previous year. This result is below our expectations, but attests to a significant improvement relative to the same period in the previous year.
On the next slide, we show the evolution of the operating cash flow, which has improved in line with our expectations. The numbers in the last few quarters show an improvement relative to the same quarters in the previous year. In Q4, specifically, we see a seasonality in the operation, which makes the flow positive. Additionally, we had developed many actions to improve our collection such as a change in culture, an improvement in processes and a greater use of technology, and we have improved many indicators very significantly. Relative to the previous quarter, operational credits overdue decreased by 11%. The net ones decreased by 47% and deposits by third parties decreased by 33% (sic) [ 36%. ]
I'll now turn the floor over to Mr. Paulo Valle.
Good morning to all. We are talking about the financial assets. And at the end of 2023, we had BRL 8.3 billion in investments. The allocation of these funds have to be done so that we can cover the technical provisions and we hold approximately 60% in Brazil and 40% abroad. The financial and equity result at the end of Q4 2023 was BRL 125 million, a total of BRL 549 million in 2023. In comparison with the same quarter in 2022, and if we consider the nonrecurring effects having to do with favorable court decisions, the financial result of 2023 is above 2022 despite the assets under management being a bit lower, BRL 9 billion, as you can see in orange.
On the next slide, we see the breakdown of onshore and offshore assets. In December, the onshore assets accounted for 59% of the total for BRL 4.9 billion. The main assets are post fixed bonds, 59%; then IPCA-linked bonds, 27%; and private credit indexed to the CDI plus spread with 12%. As of -- as for the onshore assets, they account for 41% of the total and are basically Brazilian sovereign bonds, 43%; American and Canadian T bonds, 32% in dollars and private credit, time deposits and deposit certificates in different currencies, 22%.
In this graph, we can see the gradual migration of offshore assets to onshore in view of our underwriting strategy to concentrate on the local market. Onshore assets went from 58% to 59% and offshore from 42% to 41% between December 2022 and December 2023. We will continue to see this happen in the next few years. We can also see an increase in the position of IPCA-linked bonds and also a gradual increase in private credit in long and in offshore and onshore.
I'll now turn the floor over to Thais Peters.
Good morning. It's a pleasure to be here today with us, and we are going to talk about the regulatory ratios and capital management. First of all, we are going to talk about this efficiency of adjusted net equity in relation to the minimum capital required. On the left-hand side, you see that gradually the indicator recovered throughout the year of 2023, and we went from BRL 18 million in December 2022 to BRL 534 million in December 2023.
This result represents a margin of 46% above the minimum capital required. This reflects our capital management in the year of 2023. As you can see on the lower right-hand side, in December 2022, the capital required was BRL 1.56 billion, and it dropped to reach BRL 1.16 billion in December 2023 -- BRL 1.167 billion in 2023. That is our capital requirement drop in a year. IRB have focused on risks that brought greater profitability and less cash burn. It's -- we also have to highlight the effect of the reduction in loss ratio and the effect it has for the risk of underwriting.
On the next slide, you see the second regulatory indicator, which reflects the amount of assets that qualify by SUSEP to meet our actuarial commitments. The indicator for coverage of technical provisions had a sufficiency at the end of 2023 of BRL 438 million. The company has built a buffer to face the main financial commitment of the year, the payment of the debenture for BRL 487 million, which happened in the 16th of October. And of course, the margin was reduced, but the indicator still had sufficiency above what we saw in 2022. The company has been implementing measures to improve the sufficiency margin given the volatility of our business.
I'll now turn the floor over to Falcao for his final remarks.
Thank you, Thais. Let's talk about 2024. In this year, we expect to grow without reducing prices. If this has to happen, we are not going to grow as much. We believe that the market is going to be hard and the interest rate is still high, which allows us to get -- to have good returns for our reserves without having to run more risks. We are going to improve our risk management and our capital usage, just as we did in 2023.
We intend to allocate capital per business line, and we have to get return on capital in each deal we make. We want to end 2024 with a growth in premiums aligned with the market plus an increase in profit, which should be substantial. We are moving to a new level, and I would also like to report something on January 2024.
In January 2024, in terms of IFRS 4, we improved in terms of business outlook. In January 2024, we reported a net income of BRL 36.8 million and you can see that this is a new level for us in terms of underwriting, BRL 45 million with a growth in premiums as well.
The combined index was 97%. In non-life, 95.3 and in Life, it was even greater. Before we move to the questions, I would like to say that we are changing our management structure. And I asked Rodrigo Botti to take on the challenge to head innovation in the company. So Botti is no longer going to be the CFO as of tomorrow. I'm going to take on this position for at least 6 months. And Botti is going to focus not only on innovation but also on system integration. We prefer to focus on the future and on the efficiency in system integration.
With this, we finished this presentation, and we open for questions. Thank you very much.
[Operator Instructions] Our first question comes from Mr. Guilherme Grespan from sellside JPMorgan.
I have a question looking more at 2024 and going forward. From the release, I got the feeling that you're going to focus on growth. And I would like to see what you talk about in the opportunities abroad. You have been giving a guidance that you would have 10% exposure to international markets. But you have been clearer now and this market would probably be Europe. That's what you said. So could you give us a little bit more color about the opportunities ahead of you? And if it's because of the risk swap with the retrocession is or if it's something you're doing more actively in the market? And what type of segment are you thinking about in Europe? Is it going to be Life, Non-Life? Do you have appetite for catastrophic risk? So tell us a little bit more about the international expansion you expect in 2024.
This is Daniel Castillo. Thank you for your question, Guilherme. A year ago, when we started the portfolio cleanup, we talked about concentrating our business in Brazil, 80% in Brazil, 15% in Latin America and 5% international, that is outside Latin America. What happened last year is that we focused on Brazil in the portfolio overhaul and we took the opportunity during 2023 to map out our opportunities in Latin America, and this is what we did. We studied, we traveled abroad and we saw that the opportunities in Latin-America that are open to us even bigger than we saw initially.
On the other hand, in the recent trip to Europe, I met people I used to know from other positions I held from other markets, we saw that there is plenty of opportunity in Europe. We believe, therefore, -- but it's not only Latin-America that is going to present us with opportunities. But by the way, we have mapped out. But in Europe, we are going to have opportunities as well. In Europe, we are going to be followers whereas in Brazil and Latin-America, we are going to follow our strategy, and we are going to be the leaders in the market. So we have seen these opportunities. So instead of 80% Brazil, 20% internationally, we are thinking about 70% Brazil, 20% Latin-America and 10% international.
And we expect to grow in those areas, in those segments where we feel comfortable, where we can assess our exposure and establish the right price, all is ensuring profitability. We don't want to do anything far fetched or crazy.
Our next question comes from Gabriel Gusan from sellside of Citibank. And his question is, in Q1 2024, we have heard many worrisome news about losses in the rural business because of El Nino. Now the quarter is over. Can you give us an idea about these concerns? Have they materialized? Have that been pressures on the results of the quarter?
This is Daniel Castillo again. As regards agro, and this goes for all the business lines that have catastrophic exposure, we have first to understand the exposure. We have to be able to price it and when we price an exposure, we should be able to include profitability as well. So in this case, in agro, in rural, we studied it very much in the last few years. We were able to understand the exposure, we were able to price it accordingly given our models, and we include profitability. What we see in rural today converge with our pricing. The exposure to El Nino is moderate so far. We think we have priced an exposure, and we are not concerned about that.
Let's move on to the next question from [ Eduardo Nishio ] from sell-side analyst from [ Genial Investments. ]
I have two questions. First, about the commission -- or commissions. I'd like to know the reason why -- the reason behind this advancement and commissions because that sort of affects your float level. And also if we can -- we could look ahead and see that number going down at a more significant way. And given I have already mentioned that perhaps stay below the historical level of 20% that you had in terms of commissions.
And my second question about the schedule of the tax credits. We have reduced the time line for that significantly. I'd like to know why you're doing that? That has an impact on your implicit profit, correct? So what were the underlying reasons for you to do that, changing the schedule.
Eduardo, this is Falcao speaking. Well, the commission -- as for the commission's question, when we have that distorted number, it comes from the Life portfolio. We have been revisiting our Life portfolio and we have a contract line, which, as you said, implied an advancement, that's an older contract format, and it sort of distorts the final number. So throughout time, as those contracts lose significance, the commission levels should resume normal levels.
But for the Non-life portfolio, it's all within track, no oscillations. As for the tax credit schedule, -- and I'll ask [ Natasha ] from our RI team to send you the explanatory note about that. I think you used a word which was a significant change. That's not how we see it. As we see it from one year to another, there were minor changes. And if you look again for the whole period, it's about the same level, a bit of a change in terms of use from the beginning to the end, but a slight variations. Those tax credits, once again, they affect cash generation and not the result itself, okay? But I'll ask Natasha in any event to send you the respective explanatory note. Thank you for your questions.
The next question comes from Kaio Prato, sell-side analyst from UBS.
I have a question about the underwriting figure. Linking back to the agribusiness question, what can we expect for 2024 for the full year? You may have priced the agro business exposure. Well, we may expect some negative exposure. And at the same time, underwriting has improved. So I'd like to understand a bit better what kind of scenario, what kind of outlook you see going forward for 2024? In terms of growing that line as you have already gotten to a combined ratio of 95%, how close can we get to that this year?
This is Falcao. Thank you for your question. When we look ahead, as we've been saying, we have been pricing the combined ratio at 95%. So there's going to be a growth in premium this year. We are estimating that growth at around 10% at least, as I mentioned earlier in the presentation. So I'd say we're going to be getting close to a higher number in BRLs. But again, we are pricing 95% because this is a sort of a tail effect. So we expect to reach slightly higher numbers than that. We can go into more detail, if you want, but that's -- and overall numbers, that's what I can tell you now.
Next question from [ Fabio Oliveira, ] buy-side analyst from BNP assets.
What's the forecast for the sale of the London office? And when should we expect it to be concluded?
Fabio, thank you for your question. I think it's worth mentioning both Lisbon, London, and Buenos Aires. They have not sold their branches. What we did in London, London and Buenos Aires. What we did with London, we closed an operation we had that for 4 years had been managing the runoff of a portfolio, basically only that.
So we found a buyer for that risk to manage that runoff. And we had a positive result, which was accounted for in December. The reserves we had for that runoff provision here in-house were higher than what the buyer of that risk requested to take on that risk. So that balancing reserves led to a positive result.
We also transferred the employees based in London to the buyer of that portfolio. The way they purchased -- the transaction happened is slightly slower than we would have wanted. So we started transferring risk by an LTP contract, and it will only be concluded throughout the year of 2024 as we transfer the portfolio along with the British authorities.
So there's several phases that have to happen. So we hope to conclude the sale of the portfolio effectively speaking, throughout 2024 actually. But the effect of that risk has already been excluded from our portfolio in December '23. As for Buenos Aires, that's a slightly different situation. We have a subsidiary down there, that subsidiary office had local employees.
We have maintained two offices working from home to manage the runoff of that local portfolio. And we have Argentina operating reinsurance through IRB Brazil. There was no sale per se. We only had a portfolio being operated by a local reinsurance, now on the runoff being managed by those 2 employees working from home and from our team based in Rio.
I would like to turn the floor over to Mr. Falcao to answer the questions that arrived on the chat.
There are some questions we received via chat, and I will try to go through them. There are some questions about loss ratio. We prefer to look at the combined ratio rather than specifically loss ratio. Willy Jordan, I was asked about Willy Jordan. He is fighting against a very, very nasty disease. He has been very brave. We don't know what the end of his treatment is looking like, really he is very dear to us. We are in constant touch with them -- with him.
There is a question about the retrocession in January. When we -- you look at the result of a month, it can be misleading. The retrocession in January was [ one track ] property contract, for which we had a greater retro. But it's a one-off thing. It's not a trend. It's important for us when we look at the profit monthly at the risk, we cannot mistake a one-off thing with the trend. We are now going to report on the months, for example, going from one month to the next.
We are going to look at 3 months, 6 months, 1 year. It's a better way to look at the company rather than on a monthly basis. We are not going to provide guidance. All we can say is that we believe we are going to grow by 10% and the combined ratio is going to be in the region of 95%. This is what we can say at this point. In terms of commissioning, in January, we got a question about that. And I have just answered it. It's distortion -- one-off distortion on the Life portfolio, the precatory are going to be received shortly. The government has now a schedule.
There are procedures in court for us to receive this precatory bonds. We believe this is going to take place in April. And as regards to the payment of dividends, we draw your attention to the fact that we have accumulated losses, and we hope this will come to an end so that we can start paying dividends again.
At the end of 2024, we should have finished to accumulate losses, and we might begin to pay dividends.
Just one more minute, let me check the other questions. I think I have answered the questions that came through the chat. I would like to thank you all for attending this call for participating. And I would like to leave you with two messages. We are very excited with 2024, we are confident that we are going to take the company to a new level so that in 2025, we can stop looking backwards. Very shortly, we are going to run a session, maybe May, maybe in July, maybe in June, and we can discuss these new ways of doing our accounts, the financial standards, and we can talk about the future of IRB RE. Good morning to all, and have a great week.
The video conference to discuss the results of Q4 2023 of IRB RE is now ended. The company's Investor Relations department remains available to take any questions you might have. Thank you very much. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]