n September 2015 Terra Reportterrabrasis.com.br/Content/pdf/Terra Report 201509_Eng_v5...September 2015 Terra Report Terra Brasis Resseguros 4 As would be expected, IRB is leading

Risks from Abroad is the second largest line of business

Reinsurance volume (net of commission), 2015 up to September

Source: SUSEP, Terra Brasis Re, *group 12, adjusted according to internal methodology

September 2015

Index:

Introduction ........................ 2

Brazil Exporter of

Reinsurance ........................ 3

Brazilian General Insurance

Market ................................ 5

Brazilian Reinsurance Market 7

Results of Local Reinsurers . 12

Results by Lines of Business 21

Group: Property ................. 22

Group: Financial Risks ........ 23

Group: Rural ..................... 24

Group: Liability .................. 25

Group: Marine ................... 26

Exhibit 1: Brazilian Insurance

Segments per Susep’s Classes27

Exhibit 2: List of Technical

Terms ............................... 28

Exhibit 3: Main Indexes of

Local Reinsurers ................ 29

Acknowledgements ............ 30

In this edition, we studied the evolution of Local Reinsurers’ expansion abroad. The results are impressive. In 2015 up to September the reinsurance

premium volume related to Risks from Abroad is already the second largest

line of business, according to Susep’s classification, falling behind only of Property (see chart below).

In 2015 to September, Local Reinsurers brought to the country BRL 911mm

in reinsurance gross of commission (BRL 797 million net of commission). An

expressive volume, which represents 18% of the reinsurance premium volume ceded to Local Reinsurers by Brazilian Insurers over the same period.

The growth rate also impresses, as this percent stood at 9% in the same period of 2014.

Lead by IRB, at least 5 of the current 16 Local Reinsurers are actively

operating abroad.

In our usual analysis, the Volume of the Brazilian Reinsurance Market (gross

of commission) stood at BRL 9.87 billion for the 12 months aggregate ending in September 2015, an annual rate growth of 6.8%, close to that of the

General Insurance market.

In the first three quarters of 2015, the Local Reinsurers produced a net profit

of BRL 696 million, in contrast to a net profit of BRL 386 million registered in the same period of 2014. In this period, IRB had a profit of BRL 549 million,

while the other local reinsurance reported a positive result of BRL 147 million.

However, we remain concerned regarding market’s yearend expected results.

The loss ratio (gross of retrocession) in the year to September stands at 80% against 75% registered over the same period of the previous year and there

are news of sizeable losses on the last trimester, Mariana disaster in particular.

Ratings: A.M. Best

B++ Global (Investment Grade)

Positive Outlook

Standard & Poor’s

brA+ Local Stable Outlook

Shareholders: :

Terra Report Report on the Brazilian Reinsurance Market

Issu

e

nu

mb

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17

Publication Date: January 11th, 2016

September 2015 Terra Report Terra Brasis Resseguros

2

Introduction

Dear Reader,

Brazil is becoming a Regional Reinsurance Hub, attracting reinsurance premium from abroad to its local market in an already significant amount.

This is our conclusion after conducting a detailed study regarding the geographical expansion of the Brazilian Local Reinsurers. It was not a trivial work, considering the young nature of this movement and the natural limitation of the available data. We apologize in advance for any unintended inaccuracy. However, the results displayed in this edition of Terra Report are impressive.

Currently, reinsurance volume related to Risks from Abroad is already the second largest line of business, according to Susep´s classification, behind only of Property. For the group of Brazilian Local Reinsurers, the reinsurance volume from abroad (BRL 911 million) represents today 18% of the reinsurance volume from Brazilian Insurers (BRL 5,071 million). In 2014 this percent represented 9%. Naturally the movement is led by the IRB, the market leader, but it also includes at least other 4 of the 16 local reinsurers (AIG, Austral, SCOR and Terra Brasis).

For Brazil, the development of a market capable of exporting reinsurance, which would bring to the country premium and resources, is unquestionably very positive, especially in a moment of great need for investments. It is a very attractive value proposition for Latin America, as it promotes the development of a regional hub, leads to more interaction among the countries in the region, with greater exchange of knowledge and experiences, strengthening not only the Brazilian Market, but also the domestic market of our neighboring countries. Throughout history, the development of a nation invariably walks hand in hand with the development of its insurance market, a key pillar of internal savings and a key pillar for social protection

All indications we see are promising and we believe that, with the continuous support of Government Agencies, Regulators, Class Entities and of market participants, this movement has a good chance of continuing to grow. It is, without doubt, something to look forward to in this year of 2016 that starts.

On the other hand, despite the improvement of Local Reinsurer´s bottom line, which remains positive and higher than that of the same period in 2014, we continue to be concerned about year-end results. For 2015 up to September, the loss ratio of Local Reinsurers (gross of retrocession) stood at 80% and we believe this figure could increase at year end. Among other events of the last quarter of 2015, Brazil suffered an enormous environmental tragedy with the breach of a dam in Rio Doce and we believe that the insured losses will be accounted for, at least in part, by the closing of the 2015 fiscal year. It remains to be seen over 2016 renewals how the market reacts to the expected deterioration of the results.

Lastly, we take the opportunity to wish all our friend readers an excellent start of 2016, full of accomplishments, plenty of health and peace.

Happy reading, Rodrigo Botti, ARe General Director and Chief Financial & Operational Officer Terra Brasis Resseguros


3

Brazil Exporter of Reinsurance

For this edition of Terra Report, we went through a significant effort to better understand how the data available regarding acceptance by Brazilian Local Reinsurance of risk from abroad are expressed.

It was not a simple work, as it may seem at first sight. In our point of view, the industry’s current accounting chart does not appear to be yet fully adapted to the new reality of the local reinsurers

accepting risks from abroad. We also talked directly with other local reinsurers that operate outside of

Brazil, seeking to check that our understanding regarding the figures is coherent. In this way, we had to complement our work with some internal assumptions, changing some aspects of our methodology and

altering some historical series.

In general, although we believe it is not possible to observe exactly the volume of reinsurance related to

risks from abroad, we are satisfied with results of our work. We believe that now, as result of the

modifications implemented, we have a view regarding the internationalization of Brazilians local reinsurers closer to reality. In any case, we take the chance to apologize in advance for any unintended error

incurred during this analysis.

The result is impressive and we can observe that the internationalization process of reinsurers based in

Brazil is following an accelerated growth path. In terms of premium volume, in 2015 up to September,

Risks from Abroad already constitutes the second largest “group of classes” in the Brazilian reinsurance market, behind only of Property.

Risks from Abroad is the second largest line of business

Reinsurance volume (net of commission), 2015 up to September

Source: SUSEP, Terra Brasis Re * Group 12, adjustments as internal methodology


4

As would be expected, IRB is leading the movement of geographic expansion. However, IRB is far from been the only local reinsurance to follow this strategy. Of the 16 local reinsurers, at least 5 are actively

accepting overseas risks (AIG, Austral, IRB, Austral and Terra Brasis) and other 3 have marginal numbers

(Markel, Munich and XL).

In 2015 up to September, for local reinsurers the volume of reinsurance related to risks from abroad

(BRL911mm) represents 18% of the volume ceded by Brazilian insurers (BRL 5.071 bi). In 2014 this percentage stood at 9%.

Reinsurance Flow in the Brazilian Market January to September 2015 and 2014 (Gross of Commission, BRL mm)

Fonte: SUSEP, Terra Brasis Re,

For the 12 months aggregate ending in September 2015 the results are similar. We estimate that Brazilian

Locals reinsurers accepted BRL 984 million in reinsurance (gross of commission) from abroad, equivalent to 14% of the BRL7.0bi received from Brazilian cedants. The graph below illustrates and points to ample

space for this growth to continue.

Reinsurance (Gross of Commission) written by Local Reinsurers

Source: SUSEP, Terra Brasis Re, 12-month aggregate


5

Brazilian General Insurance Market

The General Insurance Market, defined as per methodology presented on Exhibit 1, maintain a stable

pace of growth in the first nine months of 2015, after a period of significant decline.

For the 12 months aggregate ending in September 2015, Brazilian Market generated BRL 86.5bn in

insurance premium, compared to BRL 82.6bn in the same period of previous year, representing an annual

growth of 4.7% versus 9.3% of the same period in 2014.

Evolution of Insurance Written Premiums (BRL bn) Growth of Insurance Written Premiums

Source: SUSEP, Terra Brasis Re, 12-month aggregate Source: SUSEP, Terra Brasis Re, 12-month aggregate

The Loss Ratio, obtained as a result of occurred losses over earned premium from the Income

Statement of all the insurers from the Brazilian market, showed an improvement in the third quarter of

2015. In the 12 months aggregate ending in September 2015, the loss ratio stood at 48.5% against

49.1% in the same period of the previous year.

Loss / Earned Premium Commercial Expense / Earned Premium


Note: Percentage Values Referring to the Official Insurance Market



The Commercial Expense Ratio, in the 12 months aggregate ending in September 2015, stood relative

stable in 23.8% against 23.4% in the 12 months aggregate ending in September 2014.


6

(Administrative, Tax and Other Expenses)

/Earned Premium

Reinsurance Result / Earned Premium





In the 12 months aggregate ending in September 2015, the Administrative Expense Ratio

(including taxes and other expenses) reached 16.4% against 12.6% showed in the 12 months

aggregate ending in September 2014. We reiterated that the drop in this index at the end of 2013 was

most likely caused by non-recurring events, and reversed in the end of 2014.

In the same period, the Reinsurance Result Ratio, defined as reinsurance result divided by earned

premium, stood in 1.0% against 2.2% in the same period of 2014. It means that during the 12 months

ending in September 2015, Insurance Companies incurred in lower expenses with reinsurance when

compared with the same period of 2014.

The Combined Ratio, including the reinsurance result ratio, showed a slight worsening, closing the 12

months aggregate ending in September 2015 in 89.8% compared to 87.3% registered in the same period

of 2014, as a result of a deterioration in the set of indexes mentioned above.

Combined Ratio, including reinsurance result ratio



7

Brazilian Reinsurance Market

The Volume of the Brazilian Reinsurance Market (gross of commission) returned to grow above the pace

of the General Insurance premium growth. In the 12 months aggregate ending in September 2015, the

Volume of the Brazilian Reinsurance Market (gross of commission), here defined as business

ceded by Brazilian Insurers, stood at BRL 9.87bn against BRL 9.25bn registered in the same period of

2014, an annual rate growth of 6.8%.

12-Month Aggregate Reinsurance Premium Ceded (Gross of Commission, BRL bn)


The proportion of Reinsurance ceded over Insurance premium stood at 11.4% versus 11.2% registered in

the same period of 2014, higher level than the 9% to 10% interval, which was present at least since the

opening of the market in 2008. This might indicate that the interval might have been broken.

Growth of Reinsurance Premium Ceded and General

Insurance Premium

Reinsurance Premium / General Insurance Premium



8

The 12 months aggregate Coinsurance Premium Volume ending in September 2015 stood at BRL

2.23bn, a drop of 7.2% compared to BRL 2.41bn recorded in the same period of the previous year.

12-Month Aggregate Coinsurance Premium Ceded (BRL bn)


The Coinsurance Premium Volume in the 12 months aggregate ending in September 2015 represented

2.6% of the general Insurance premium volume compared to 2.9% registered in the same period of

2014.

Growth of Coinsurance Premium Ceded Coinsurance Premium / General Insurance Premium


For the 12 months aggregate ending in September 2015, the Reinsurance Volume (gross of

commission) written by local reinsurers reached from Brazilian Insurers stood at BRL 7.0bn,

corresponding to a 21.5% increase when compared to the BRL 5.8bn registered in September 2014. In

the same period, the volume coming from offshore cedants reached BRL 984mm, representing an

increase of 82.4% in relation to the previous year. For local reinsurers the premium received from

offshore cedants (BRL 984mm) already represents 14% of the volume received from Brazilian cedants

(BRL 7.0bn), in 2014 it represented 9% (BRL 540mm / BRL 5.8bi).

Reinsurance (Gross of Commission) written by Local Reinsurers



9

The local Market closed the 12 months aggregate ending in September 2015 detaining 70.8% of the

volume ceded by Brazilian Insurers, 8.5 percentage points above the 62.3% recorded in the same period

of 2014.

Growth in Reinsurance Premium Ceded to Local Reinsurers by Brazilian Insurers

Gross Reinsurance Premium Ceded to Local Reinsurers as Percentage of Total Reinsurance Premium Ceded


Looking now at the first three quarters of 2015, Brazilian Insurers generated BRL 7.60bn in ceded

reinsurance, corresponding to an increasing of 11.1% in relation to the same period of 2014, when they

generated BRL 6.84bn. The reinsurance written (gross of commission) by local reinsurers during this first

nine months of 2015 stood at BRL 5.1bn, corresponding to an increase of 21% compared to the same

period of 2014.

During this period, the volume of reinsurance (gross of commission) written by IRB was 24% higher than

the same period of the previous year, and other local reinsurers showed a growth of 18%. In the period,

the reinsurance written by offshore reinsurer dropped 4%.

Premium Ceded by Brazilian Insurers and Premium Received by Local Reinsurers from January to September (BRL mm)

Source: SUSEP, Terra Brasis Re

It is also noted a strong growth coming from Offshore Insurance Companies to Brazilian Local Reinsurers.

In the aggregate of 2015 this volume of reinsurance totalized BRL 911 million against BRL 377 million of

the previous year, a growth of 142%.


10

The following flowcharts show the volume of reinsurance premiums and retrocession, gross of

commission, in the Brazilian market in the first nine months of 2015 and 2014.

Reinsurance Flow in the Brazilian Market January to September 2015 and 2014 (Gross of Commission, BRL mm)

Source: SUSEP, Terra Brasis Re, BRL millions, reinsurance gross of commission figures

IRB ended the first nine months of 2015 with a market participation of 31%, while the other reinsurers

closed the period with 36% and the offshore reinsurers 33%. Inside the local market, IRB retained 45%

of the whole market, while the other locals share the rest of the remainder part.

Reinsurance Market Share (gross of commission ) generated by Brazilian Insurers


Gross Reinsurance Premium Ceded by Brazilian Insurers (BRL bn)

Participation in the Gross Reinsurance Premium Ceded by Brazilian Insurers

Source: SUSEP, Terra Brasis Re, BRL billions, 12-month aggregate Source: SUSEP, Terra Brasis Re, BRL billions, 12-month aggregate


11

The following flowcharts show the volume of reinsurance premiums since 2007, the last year of the

monopolistic reinsurance regime.

Reinsurance Annual Flow in the Brazilian Market since 2007 (Gross of Commission, BRL mm)

Source: SUSEP, Terra Brasis Re, BRL millions, reinsurance gross of commission figures. Figures altered according to new methodology


12

Results of Local Reinsurers

In the first nine months of 2015, the increase in the reinsurance volume received countered with a slight

worsening in the loss ratio, expense ratio and retrocession expenditure, resulting in a Combined Ratio

hovering above 100%. In spite of slight technical result deterioration, the improvement in the net profit

was driven by the excellent Investment Result presented by the local reinsurers in the first nine months of

2015.

In the 12 months aggregate ending in September 2015, the Loss Ratio experienced by the local

reinsurance market reached 81%, a growth of 4 percentage points relative to the level of 77% registered

in the same period of 2014. It is worth emphasizing that this is the Gross Loss Ratio, calculated from the

gross occurred losses divided by the gross earned premium (i.e. gross of retrocession, net of commission.)

Loss Ratio: Occurred Losses/ Earned Premium Commercial Expenses/ Earned Premium

Source SUSEP, Terra Brasis Re, 12-month aggregate Source: SUSEP, Terra Brasis Re, 12-month aggregate

The Commercial Expense Ratio, in the 12 months aggregate ending in September 2015, showed a

slight worsening, closing the period in 2.5% compared to 1.3% registered in the same period of the

previous year.

In the same period, the Administrative Expense Ratio (including taxes and other expenses) stood

in 11.3% against 10.9% recorded in the same period of 2014, showing also a slight deterioration.

Administrative Expense Ratio (including taxes and other expenses)

Retrocession Result / Earned Premium


The Retrocession Result Ratio, for the 12 months aggregate ending in September 2015, reached 5.6%

against 9.9% registered in the same period of 2014, demonstrating a greater equilibrium in Local

Reinsurer’s retrocession operations.


13

In the 12 months aggregate ending in September 2015, Combined Ratio (including retrocession

result index) reached 100.5% against 99.2% showed in the same period of 2014.

Combined Ratio, with Retrocession Result Ratio


Combined Ratio Local Reinsurance Market Combined Ratio IRB and Others Locals

Source: SUSEP, Terra Brasis Re Source: SUSEP, Terra Brasis Re

We showed below the summary of results for local reinsurance Market in the first nine months of 2015

and 2014.

Summary of Results and Main Indexes for Local Reinsurers for January to September 2015 and 2014

Source: SUSEP, Terra Brasis Re, numbers in BRL Million


14

In the first three quarters of 2015, the local reinsurers produced a net profit of BRL 696 million, in

contrast to a net profit of BRL 386 million registered in the same period of 2014. In this period, IRB

profited BRL 549 million, while the other local reinsurance reported a positive result of BRL 147 million.

Net Profits January to September (BRL mm)

Total Local Reinsurers

Net Profits January to September (BRL mm)

IRB and Others Locals

Source: SUSEP, Terra Brasis Re Source: SUSEP, Terra Brasis Re

As mentioned in previous issues, the current group of Other Local Reinsurers is not homogeneous and,

therefore, their analysis becomes more complex. This way, we continue the analysis of reinsurers based on

their operation start, which we called “Class”.

Comparing the first nine months of 2015 with the same period of 2014 it is possible to see an improvement

in the net profit of all class, outcome mainly influenced by the excellent financial performance presented by

the local reinsurers.

During this period, there was a general worsening in the loss ratio. The only exception was IRB, which

showed an improvement of 16 percentage points in this ratio on the annual comparison and an

enhancement in the administrative ratio, in contrast to an increase in the expenses with the retrocession

operations.

Summary of Results and Main Indexes for Local Reinsurers for January to September 2015 and 2014 by Class


The class of 2010 and 2012 are, once more, showing a higher recovering in losses than in what was paid in

premium on its retrocession operations, contributing to an improvement in the Combined Ratio liquid of

retrocession operations. Situation that should not be supported in the long term, as commented previously.


15

In the table below we show the main metrics of local reinsurers, divided into "class". In red we indicate a

decrease in volume of the premium, or a worsening in the metric. We added in this table a new column,

which make possible the comparison between Combined Ratio before and after the effects of the

retrocession operations.

Main Index for Local Reinsurers classified by Class

Source: SUSEP, Terra Brasis Re. Figures in red represent an deterioration in relation to the previous period

The Combined Ratio pre-retrocession operation show the company technical result before the effects of the

protection contracted. In other words, it demonstrates the reinsurer underwriting’s development in a specific

period.

For example, based on available data, the technical result of IRB pre-retrocession operation from January to

September stood at 72%, which means that for each BRL 1.0 in premium, IRB had BRL 0.72 in claims and

expenses, showing a positive technical result of BRL 0.28. After accounted the retrocession effects,

Combined Ratio changed to 94%, indicating that the Company paid more in protection than recovered in

claims, a normal market situation. Even so, Combined Ratio stood below 100%, representing a company’s

underwritten positive result.


16

The table below represents the summary of results of Local Reinsurers in the first nine months of 2015

and 2014.

Summary of Results – Local Reinsurers for January to September 2015 and 2014 (BRL mm)

Total Local Market, IRB and Other Locals

Source: SUSEP, Terra Brasis Re (1) R.O.E. Defined herein as annual net income divided by the shareholders equity of the end of the period.


17


JM, Munich, Mapfre and XL

Source: SUSEP, Terra Brasis Re (1) R.O.E. Defined herein as annual net income divided by the shareholders equity of the end of the period.


18

Summary of Results – Local Reinsurers for January to Setember 2015 and 2014 (BRL mm)

ACE, Austral, AIG and Zurich

Source: SUSEP, Terra Brasis Re, (1) R.O.E. Defined herein as annual net income divided by the shareholders equity of the end of the period.


19


Markel, Swiss, Terra Brasis and Allianz



20


BTG, Scor and AXA


09/2015 09/2014 09/2015 09/2015

Authorization Date

Assets 817 664 222 142

Shareholders Equity 358 379 99 85

Gross Reinsurance Premium 221 89 38 34

Commission -38 -24 -13 -1

Non-Issued Risks in force -22 22 20 5

International Operations 0 0 51 0

Written Retrocession 0 0 0 2

Written Premium 161 87 96 39

Change in Reserves -122 -73 -39 -25

Earned Premium 39 15 57 14

Losses Incurred -1 -1 -56 -7

Commercial Expenses 0 0 0 -1

Other Operational Expenses -5 -1 0 0

Administrative Expenses -12 -7 -11 -17

Tax Expenses -3 -1 -3 -1

Industrial Result Pre Retro 19 5 -13 -12

Retrocession Result -24 -12 0 -4

Industrial Result -6 -7 -13 -16

Financial Result 45 33 10 8

Equity Pickup 0 0 0 0

Operating Result 39 27 -3 -8

Non-recurring Gains 0 0 0 0

EBT 39 27 -3 -8

Income Tax -10 -7 1 2

Social Tax -6 -4 0 1

Profit Sharing 0 0 0 0

Net Income 23 16 -2 -5

Loss Ratio 3% 8% 98% 49%

Comm. Exp/Earned Premium 0% 0% 0% 9%

Adm. Exp / Earned Premium 31% 48% 19% 124%

Tax Exp / Earned Premium 7% 5% 5% 8%

Other Exp / Earned Premium 12% 6% 0% 0%

Expense Ratio 50% 58% 25% 140%

Combined Ratio Pre Retro 52% 66% 123% 189%

Retro Result/Earned Premium 62% 81% 0% 28%

Combined Ratio 114% 147% 123% 217%

(Non-Rec.+ Fin.+ Equity) /Earned Prem -114% -229% -17% -57%

(Income tax+Social tax+Profit share) 40% 73% -2% -23%

R.O.E.(1) 8,7% 5,6% -2,5% -7,8%

Annualised Earned Premium/SE 15% 5% 76% 21%

Scor

Feb 26, 2013 Aug 06, 2014

AXA

Aug 25, 2014

BTG


21

Results by Lines of Business

In this section we analyzed the different lines of business in the Brazilian Market. In contrast with the

previous sessions of this report, which are based on data of the Income Statement (I/S) from insurance

and reinsurance companies, in this section we used the information of the Table of Operations (TO) from

SUSEP’s databank.

General Insurance and Reinsurance Premiums for January to September 2015 and 2014 (BRL mm)

Source: SUSEP, Terra Brasis Re, data obtained from the Table of Operations (TO)

After additional studies, we understand that there was a change in the definition of the data presented in

the Table of Operations. By mid-2012, the Table of Operations contained raw Reinsurance Commission

data. From this moment on, after a transitional period, the Operations Table seems to present data for

Reinsurance Premiums Liquid of Commission. The graph below illustrates that

Ceded Reinsurance from different data sources



22

Group: Property

Insurance Premium Growth of Insurance Premium

Source: SUSEP, Terra Brasis Re, BRL billions, 12-month aggregate Source: SUSEP, Terra Brasis Re, 12-month aggregate

Reinsurance Premium Growth of Reinsurance Premium


Reinsurance Premium / Insurance Premium Split of Reinsurance Premium by Type of Company

Source: SUSEP, Terra Brasis Re, 12-month aggregate Source: SUSEP, Terra Brasis Re, BRL billions 12-month aggregate

Loss Ratio: Insurers Loss Ratio: Local Reinsurers



23

Group: Financial Risks






Source: SUSEP, Terra Brasis Re, 12-month aggregate Source: SUSEP, Terra Brasis Re, BRL billions, 12-month aggregate




24

Group: Rural

Group: Rural Growth of Insurance Premium









25

Group: Liability








Fonte: SUSEP, Terra Brasis Re, acumulado 12 meses Fonte: SUSEP, Terra Brasis Re, acumulado 12 meses


26

Group: Marine










27

Exhibit 1: Brazilian Insurance Segments per Susep’s Classes

In the table below are definitions by Terra Brasis, of the segments referring to different lines of business supervised by SUSEP. The lines in grey denote lines of business that are deactivated or in rundown. In this report, for the definition of General Insurance, the classes related to DPVAT were excluded, since we believe that such classes should be an independent category. Other classes related to VGBL, which Terra Brasis believes should be presented together with other Retirement Plan modalities, were also excluded.

Segmentation of the Brazilian Insurance Market Under SUSEP Supervision



28

Exhibit 2: List of Technical Terms

Here follows an initial dictionary with the definitions that we used in this report for certain reinsurance

terms. We intend to add to the list as the work progresses and believe that this would be worthwhile

since several reinsurance terms have been used with different meanings.

Brazilian General Insurance Market: It is the market comprising insurance operations in accordance

with official regulation by SUSEP, except for those classified in the DPVAT and VGBL modality.

Brazilian Reinsurance Market: It is formed by operations comprising cessions of reinsurance ceded by

Brazilian insurers and assumed by reinsurers that are authorized to operate in Brazil and classified as

local, admitted, or occasional.

Local Reinsurance Market: It is formed by operations comprising reinsurance business assumed by

local reinsurers.

Written Premium or Gross Written Premium: It is the value of the premium written by Insurers or

Reinsurers, before reinsurance or retrocession deductions. In the case of reinsurers, as of May 2011, it is

net of commissions paid to Cedants.

Commission: It is the value that the reinsurer or retrocessionaire pays to the cedant, with the objective

of covering part of the expenses incurred in the administration and production of the business.

Brokerage: It is the value paid to the broker (“broker”) in compensation for the intermediation of the

insurance, reinsurance, or retrocession.

Overriding: It is the part of the commission paid to cedants in addition to their incurred commercial

expenses.


29

Exhibit 3: Main Indexes of Local Reinsurers

Main

Ratios

Fro

m L

oca

l Rein

sure

rs f

rom

January

to S

epte

mber

of 2

015 a

nd 2

014

Fonte

: SU

SEP, Terr

a B

rasi

s R

e


30

Acknowledgements

It is with enthusiasm that we continue to publish our market report, Terra Report, a research piece covering the Brazilian Reinsurance Market, which we share with our clients, partners, and colleagues.

We are immensely grateful to SUSEP for making its databank available to the public. We also thank ANS and CNSeg for information used herein. The report also contains analyses and adjustments made internally by Terra Brasis and in this way, we apologize in advance for possible inaccuracies contained in this publication.

We hope our readers appreciate this work as much as we appreciate developing it. Without a doubt, it is extremely gratifying to be involved in the Brazilian reinsurance market at such an important moment of its development. Any criticism, comment, or suggestion for this work is very welcome.


31

Contacts

Name Title Telephone Email

Paulo Eduardo de Freitas Botti Chief Executive Officer +55 11 3320 5056 [email protected]

Carlos Roberto De Zoppa Technical Executive Vice President +55 11 3320 5058 [email protected]

Bernardo Nolasco Chief Investment Officer +55 11 3320 5165 [email protected]

Rodrigo Botti, ARe General Manager, CFO & COO +55 11 3320 5050 [email protected]

Paulo Hayakawa Chief Underwriting Officer +55 11 3320 5053 [email protected]

Beatriz Americano Chief Administrative Officer +55 11 3320 5051 [email protected]

Priscila Grossi Risk Analyst +55 11 3320 5080 [email protected]

Bianca Traszi Intern +55 11 3320 5066 [email protected]

Gustavo Palheiro Trainee +55 11 3320 5078 [email protected]

Awards and Certificates

This document was prepared by Terra Brasis Re S.A. ("Terra Brasis Re") for informational purposes only.

Terra Brasis Re, its partners, companies under common control, its directors, employees and agents do not express any opinion, do not guarantee, nor assume any responsibility for the adequacy, consistency, or completeness of any information contained herein or any omission regarding this report. This publication is also not designed to be a complete statement or summary of markets or strategies discussed in this document. None of the people mentioned in this paragraph shall be liable for any loss or damage of any kind arising from the use of the information contained herein, or which may be obtained by third parties by any other means. Terra Brasis Re should not be construed as providing financial, tax, or legal advice.

The information contained herein was obtained from public sources, and Terra Brasis Re has not conducted an independent verification of this information. Any projections or forecasts contained in this report are based on subjective estimates and assumptions about events and circumstances that have not yet occurred and are subject to significant variations. Thus, it is not possible to ensure that results from any projections or forecasts

contained in this document will be effectively verified.

This publication is only valid on the date hereof, and future events could undermine its conclusions. Terra Brasis Re assumes no responsibility to update, revise, amend or cancel this publication due to any future event, unless previously requested.

It is not the obligation of Terra Brasis Re to implement the procedures in this document, nor is Terra Brasis Re responsible for any inaccuracies in any negotiations or transactions relating to this report. No investment or financial decision should be based solely on the information presented here.

All information contained in this report should be kept strictly confidential and can only be released, quoted, or reproduced in whole or in part, with the prior written consent of Terra Brasis Re for people who have agreed to treat such information as confidential

Office

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Documents

n September 2015 Terra Reportterrabrasis.com.br/Content/pdf/Terra Report 201509_Eng_v5...September 2015 Terra Report Terra Brasis Resseguros 4 As would be expected, IRB is leading