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Brazilian reinsurer IRB mulls new share offering


(Reuters) — IRB Brasil Resseguros SA said Monday it is considering a new capital increase to reinforce its financial structure, after market participants raised multiple alerts on the Brazilian reinsurer’s capital sufficiency.

The move would most likely be a fresh follow-on share offering, the company said in a securities filing, adding that it has not yet reached a final decision or approved the potential funding or its terms.

Shares in IRB fell 9.5% to 2.09 reais after the announcement, making it the worst performer on Brazil's Bovespa stock index, which dropped 1.4%.

Local financial website Brazil Journal reported Friday, citing sources, that the reinsurer was expected to announce a new offering to raise up to 1.5 billion reais ($292 million) at around 1 real per stock. 

That would represent a 56.7% discount over Friday's closing price of 2.31 reais per share.

Recently, IRB's successive monthly losses led analysts to raise alerts on its capital sufficiency, with Citi and Genial Investimentos saying the company would likely need a capital increase.

Shares in the company are down roughly 47% so far this year, whereas the Bovespa index is up 6%.

IRB entered a downward spiral in 2020, when Rio de Janeiro's Squadra Investimentos uncovered accounting irregularities at the company, forcing a management overhaul.

Earlier this year, a former senior executive was charged with fraudulently planting a false story that Warren Buffett's Berkshire Hathaway Inc. had made a significant investment in the company.