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

Good morning and welcome to IRB Brasil RE's Conference Call and Webcast. Here with us today are Pedro Duarte Guimarães, Interim Chairman; and Werner Romera Süffert, CFO and Interim CEO. This conference call is being recorded. [Operator Instructions] Mr. Pedro Guimarães, IRB Brasil RE's Interim Chairman, will now begin the presentation.

Good morning. Thanks a lot. We welcome you. It is really important, this call. We have had some points in terms of the last 2 or 3 weeks. So I'm here. I have been as the Chairman since Monday. I was, last week, in New York and Boston as the CEO of Caixa Econômica Federal, the largest bank in Brazil, and have received some feedbacks regarding IRB. So now prior to pass to Werner, I will say a few things. First, we at the Board do not have any doubt regarding the balance sheet. In fact, we have 2 independent auditors, both of them top 4, and none of them have any issue at all related with the balance sheet, not now, not never. So this is something clear. We also do not have any issue with the regulator, SUSEP. So we do not have with the auditor, we do not have with the regulator. And I can tell you, when I assumed as the CEO of Caixa Econômica Federal on January 2, 2019, the bank could not have a balance sheet audit -- fully audit since 2016. And until today, we have 6 months to change that by making a lot of change. And this is clear, a special clear commitment, we only do correct things. We promise and deliver, promise and deliver, promise and deliver. So this is a very important point. We at the Board do not have any unsecured with the balance sheet. Why? Not only we trust but -- management, but also 2 independent auditors, top 4, and the regulator never said anything issue anyone. So this is important to state. A second important point is regarding the former Chairman, a friend of mine, Ivan Monteiro. I met him at the time of Banco do Brasil when I was -- this investment bank. We did several deals together, especially the IPO of BB Seguridade, and we are very good friends. And what I can ensure you is that he left for personal reasons. And this is -- those reasons really are his reasons. And he left also the Board of Light. So he not only left the Board of IRB but also left the Board of Light, both for personal reasons. But the key point is that he only left after signing the balance sheet. And every decision we made at the Board was unanimous. We never ever had any discussion in the Board or outside the Board regarding any discomfort of Ivan Monteiro. Zero. So the reason why he left was a personal reason that has nothing to do with any problem here. Otherwise, he would not sign the balance sheet. This is obvious. Third point is the news that we got on Tuesday night regarding Berkshire when they stated that they were never a shareholder of IRB. And then we acted because, clearly, this Board act when we have a problem. So we have a problem. We knew that on Tuesday night, we had a full discussion. Yesterday, the Board was, all the time, in fact, since Tuesday night, and the former CEO and the former CFO asked to leave. That was their decision, but of course, linked with these news of Berkshire. And at the same day, we made an invitation to Werner. Werner was the former CFO of BB Seguridade. It's important to know that Werner was our first and only choice because we understand that he is by far, by very far, the best person to be the CFO of IRB, not only because he is the CFO by the largest insurance company in Brazil that, in fact, is even listed as ADR-Level I, so it is also listed in New York. And he has had 29 quarterly results, so he's someone that is extremely important for this time in IRB, in which we will give much more information, and then it's an important point. In terms of Berkshire, the Board will launch -- we already started to discuss an internal investigation. We will hire a company because we want to understand what happened. But when we have these further comments, we will tell the market. But right now, we just -- we have started to discuss this, yes. The fourth point is we think that the relation with the market was not good. So what we intend, what we will want, I have spoke with Werner, is to improve a lot the quality -- or the type of information that we will provide to the market, both in terms of MD&A, also discussing what is recurrent and what is nonrecurrent, so this is clear. We, and I personally last week, received 3 feedbacks related with the quality, especially of this discussion of what is recurrent and what is not, and we agree. And this is important. Whenever we have any demand that we need to improve, we will improve. And whenever we have a demand that we don't agree, we will talk and discuss always because this is also very important. So I will now pass to Werner. We know each other for a long time. He was in BB Seguridade. Since prior to the IPO, he was a key guy into department of financial since 2013 and started as the CFO since January 2014. So this shows and emphasize the one that has, in our opinion of the Board, the best name in this point that, of course, we need to recover the confidence -- the financial confidence in IRB. Last point that was also a question last week, Caixa Econômica, Bradesco, Itaú, Banco do Brasil, every major bank in Brazil by far considers IRB as the key reinsurance, which with much better quality in terms of management of persons, technical guys, balance sheet. So I can talk about Caixa. We have had, and we will have, IRB as our core partner in reinsurance. We don't even think in a second because the difference between IRB and the second one, international or domestic, is huge. So IRB has 80 years of history. It has acquired a lot of goodwill. The information they have by far the best understanding of the risks in Brazil. So all of those things are important to explain to you something that I can tell as a client. IRB is by far the best one in terms of providing operational services for reinsurance in Brazil. Now I pass to Werner. And I thank you guys a lot for being here in our conference call.

Thank you, Pedro. First of all, I would like to talk a little bit about my -- I will talk a little bit about my background, but I think that it's important to start with some other things, some other issues. First of all, I was in the Board of IRB in the last year. I was in the Audit Committee in 2018. And one of the reasons why when I received yesterday the call from the Board, from Pedro, to be here as CFO of IRB, the main reason was that I'm completely confident that there's no problem. We don't have any issue regarding the balance sheet and the financial statements of the company. So of course, as Pedro mentioned, we can always improve the quality of it, improve and increase the level of disclosure to the market. We are in a moment that we need to increase this level of disclosure to the market, then we will do that. Pedro always mentioned and the Board that we need to deliver all the targets that we have with the market. So we will revise the guidance in a short period of time to know if they are adjusted to the market conditions now. But the guidance is in place, and it will continue to be in place by the company. But, of course, when I start -- I will be -- I was appointed yesterday. And just -- we have some legal issues -- small issues regarding the fact that they are moving from a state-owned structure to the private sector. So after this, I will be here signing as BB Seguridade -- sorry, IRB CFO and also as the CEO -- interim CEO of IRB. And I don't have any kind of concern regarding the financial statements of the company. As Pedro mentioned, when they called me, I very -- my decision, it was very fast because I know the company and know the quality of the employees that they have -- IRB, they have, the team that they made here, all the effort after the IPO and before the IPO to improve the quality of the service that they provide to the market. So I'm completely confident with the financial statements of the company. Of course, we will improve the level of disclosure to the market and continue to deliver our targets. So this is the first thing that I would like to mention. And I will talk a little bit about my background. In the last 7 years, I was in BB Seguridade. The first year, I was the executive responsible for financial, for accounting and the investor relations. So this 2000 -- it was during the IPO that Pedro mentioned. After that, from 2014 on until yesterday, I was the CFO of BB Seguridade. We did -- we are -- all the people that are here in this call, they know me in BB Seguridade as CFO, knows that the level of disclosure that we have there in our MD&As, in BB Seguridade MD&As, and our goal here, that's something that the Board of Directors, they ask of me is to put -- to increase the quality of this financial statement and the MD&A of the company. Of course, this is important in a moment like the ones that we are facing now. But I want to make it clear that I will use this background as CFO of BB Seguridade to help IRB in this field. I would like also to emphasize some other backgrounds that I have in the Brasilprev, the leader in Brazilian pension plan market. I was, until yesterday, the President of the Financial Committee. It's such a committee that is a very important one in a company with BRL 300 billion in AUM. And I was the President during 6 years. I was part of the Financial Committee as well on the Brasilseg. That's our partnership -- the first company, Brasilprev, is our partnership with Principal Financial -- the partnership with BB Seguridade with Principal Financial Group. And Brasilseg is our partnership with MAPFRE Insurance in Spain, a very strong Spanish insurance company. I was part of the Financial Committee as well. And in Brasilcap, the President of the Financial Committee from 2014 until yesterday. So in IRB, as I told you, and that I was part of the Audit Committee in 2018, the Board of Directors in 2019, from 2014 and to 2018, part of the Financial Committee as well. So I know this business and all IRB, and I'm ready to help the Board, company employees, and of course, our clients in this moment to assure that we will be ready to answer all questions that you have and all the stakeholders they have to continue in this change of the level of disclosure that we have now. Other point that's important to emphasize is that BB Seguridade is a company with 84% of our -- of their free float linked to international foreign investors. And this, I would say, is very close to the level of the international investors from IRB. So I know a lot of you guys, and I will be ready to answer all the questions when this little issue related to the appointment here in IRB is already done with the government in Brazil. So this is the words I would like to emphasize, and I think that now we can open to the Q&A session.

[Operator Instructions] Our first question comes from Mario Pierry, Bank of America.

I have 2 questions. The first one is related to what you said that you are very comfortable with the financials of this company that you don't feel the need to do an internal audit. However, I wanted to understand the reaction from your clients so far, right? Because at the end of the day, you represent a credit risk to your clients. And I was wondering if they are demanding any more information from you, if they are demanding that you do an internal investigation of your accounting. Second question is related to Berkshire. I think it became clear that Berkshire has never held shares of IRB. However, I wanted to understand if there are any commercial relationship with Berkshire. Is there -- do the companies have a commercial agreement? Do you guys share like employees? We have heard in the past that IRB sometimes would send employees to Berkshire and Berkshire would send employees to Brazil. So I wanted to understand, is there any relationship between IRB and Berkshire?

Thanks a lot for the question. It's clear to us that is key, transparency and promising and delivery, promising and delivery. This is something extremely important. Werner is someone, to us and Banco do Brasil, state-owned employee. It was the CFO of BB Seguridade for a long time, was a key CFO. It was the one that was 7 years. So there is zero chance that we will discuss anything that is not true. So this is the only decision, the only choice that we'll have, the only one. I call him after the CEO and the CFO -- the former CEO and the former CFO asked to leave. I call him, he was 30 minutes late and he accepted immediately. So this shows how relevant it is IRB in Brazil and for the whole region. In terms of Berkshire, it's very important that when you ask, and then Werner will expand more. We will always hear the clients in the market. There is no problem. We already had 2 auditing firms, top 4, stating clearly that there is zero problem in the balance sheet. We don't have any questioning from the supervisor. We can do a third, fourth, fifth, sixth, seventh auditing, but the question is, why? But, of course, this is the relevance of Werner. If Werner feels that there is a relevant demand from the market, we can do. But the question is, why? Since the 2 top -- 2 of the top 4 auditing firms think zero problem. So there is also an important point that at some point, you have to ask yourselves, how many auditing firms do we need? We have 2. I doubt it that many listed companies have done 2 top 4 auditing firms. We hired the second one when there was a discussion that the market was not comfortable. So we hired the second one. But this is an important point. And regarding the news from Berkshire. We at the Board are not comfortable. We did not like, so we are launching it, yes, an internal investigation with external help. We discussed this, yes, at the Board, so I cannot tell you right now because it's a discussion of the Board and we have not yet decided. But we should have -- I don't want to advance on this because promise and deliver, and I don't want to promise you that we'll have an answer in 1 week or 2 weeks because we need to -- staff to it. But what I can emphasize to you, that is not acceptable to have something like this. So Berkshire was not a shareholder of IRB, and that was something that made the Board act extremely fast because between -- we knew that on Tuesday night. We have had already talked with Werner 10, 12 hours later or 15 hours later. And we have not -- because he was a state-owned employee, we have some internal obligations in terms of -- it's something of bureaucracy. So that was why also we didn't have the relevant fact immediately because he accepted immediately. The Board had this immediately. I spoke with the CEO of Banco do Brasil, Rubem Novaes, and everyone was fine. So in fact, we have had this decision early afternoon of yesterday. So we act extremely fast. But, of course, BB Seguridade just listed, IRB listed, so we take an extremely -- it's very important for the market. So this is why also Werner was the only choice. He accepted. If he did not accept, we would go for a second one. But I just want to ensure we hear the market. However, we want also to hear, and we have a [ journey ], how much this demand is a demand that is relevant. Again, we already hired 2 external independent auditors. We never ever had any problem in the history of IRB in terms of the balance sheet. So this is something important to put just for everyone. However, Werner will talk to you guys. If he comes to the Board and feels that we need to hire a third one or a fourth one, we will hire because our key commitment is with transparency. This is extremely important for this Board.

Mario, I'll talk a little bit about the retrocession that you mentioned of Berkshire as a client, I would say. So this is a kind of an information that I'm not comfortable now to provide to you. I think that the company needs to know if our clients, they want to have their information disclosed to the market as how they want to disclose this. Of course, we will do this homework together here with all the areas from the company to disclose this as much as possible, as I mentioned. But this is not something that I will mention without knowing if they want to have this information with all the transparency to the market disclosed. If -- I don't know if we have contracts with them that allows me to disclose this kind of information. So I think that this is important. It's very important. I think you know we will look to these agreements with them, with all the clients, and try to understand each client they want to have their information or each one. We looking the agreements with them. We are able to disclose to the market because maybe some of these agreements, they have some clauses that reduce our capacity to full disclosure this information to the market. So it's a concern that I have. And as you know, this is my first day here as a CFO and you know me for a long time. This is kind of something that we need to be very careful because on the other side, we have a client. We have a relationship with our clients. And we need to know if they want or if we are able to disclose this information.

My question was a little bit more related to what has been the reaction of your clients so far, right? If they're sitting outside seeing, right, the CEO, CFO have resigned, the Chairman resigned, what has been the reaction of your clients? Are they dealing with you as business as usual? Or are they requiring more information from you in order to maintain the relationship?

Excellent question. I can ensure you, especially because the Board, we have the CEO of Bradesco Insurance, the key financial guy for Itaú, the former CFO of BB Seguridade that, in fact, only left because they sold their shares and they came back -- he came back. It was Werner himself. So this is another reinforcement of if there was any problem, why should he come back if he was also out of the Board? And I am the CEO of Caixa Econômica Federal, the largest bank in Brazil and Latin America. What I can tell, it's about Caixa, but I think that you can be comfortable to call Alejandro of Nexus and then Werner. But in terms of Caixa, we don't even think in change, for several reasons. First reason, there is no other reinsurance that comes close, not even close, to IRB in terms of quality of the team, in terms of history. They are doing this for 80 years, 8-0 years. I know them personally since 2005. So IRB has grow a lot in terms of improvements in corporate wellness and focus in the management, but the operational side is unparalleled. There is no change. Also they have a much larger balance sheet. So for a large bank, you cannot even do business with other guys because if IRB is not on the deals, it demands a large involvement of large international reinsurer. However, those guys, clearly, they don't know Brazil as well. So really important question. There has been no at all problem in operational terms. But of course, I received several good feedbacks because we changed fast. We had these news on Tuesday night. We saw that Wednesday afternoon. So just the bottom line, zero problem in operational terms, and there is a huge presence of IRB that is even extremely hard for you to not do business with IRB, even if you want. But we are doing because we want, because we felt comfortable. We feel comfortable with IRB, and we have the confidence of the operational guys. And personally, I think this is -- this has not been correct with everyone in IRB and especially the operational guys because they are by far the very best in Brazil.

Mario, just adding one point here because Pedro talked about the banks and the relationship with Brazilian market. But it's important to emphasize as well that one of my main goals now will be to talk with the clients. IRB is a client-oriented company, and we will talk with them to make it sure that we will be there with them or we will explain all the things that they need to have, as you said, to remain with our very good credit rating. It is important for a reinsurance company, and you are right. So a good part of my time will be talking with our clients, our partners and also with the employees to -- as Pedro mentioned, they are a very important part of the company. They built this company, the largest reinsurance company in Latin America. So we will also be very close to the employees of IRB and to our clients to explain whatever they want about all the -- our financial statements or even credit information for them to remain with IRB as a key partner.

Okay. My last follow-up then. Has the rating agency, AM Best, been in touch with you guys? Has there been any more demand? How should we think about your dividend payouts, right? IRB has maintained close to 75% payout ratio. Is there any thoughts about maybe suspending this payout? Or is this going to be business as usual, let's move on. We found like a problem internally, we dealt with it, the company is fine, we're just moving on business as usual?

Excellent question. Business more than usual in the operational point. What we had was a lack of confidence in the financial markets in terms of the financial investment markets, not in terms of our clients. And we solve -- in our opinion, we move to solve. Of course, Werner is here to talk to you, to hear you. We will have several meetings with the rating agents, but nothing changed. We will keep, yes -- of course, this is something that we will discuss with Werner, but we don't intend to reduce at all the payout ratio because this is a money machine. So we want to share with our investors the benefits, the results of IRB. And as all you know, last year, we had a nonrecurrent loss in the agribusiness. And I think it's important probably you know how is the agribusiness sector is doing this year. So probably, and again, this is the CFO role, but probably it's important to analyze what were the recurrents and nonrecurrents. And since clearly, Werner will help you guys. But the question is, did we have more or less nonrecurrent impacts last year? They were more positive or negative. And this is something that we think it's extremely important to have this discussion with the market. The Board agrees. And again, we agree with critics. We want to hear, and in our opinion, the market was correct. We did not have the old business, especially in terms of recurrent and nonrecurrent, and Werner will do what he did by 7, 8 years in BB Seguridade with the MD&A, with the -- hearing you guys. So to finalize, we will do this in detail, and we don't see any at all reason why should we change the dividend policy at all. It's business as usual completely.

The next question comes from Marcelo Telles, Crédit Suisse.

Welcome, Werner, to IRB. I have 2 questions. The first one, you mentioned in the previous call, in the Portuguese call, that the Board has decided to cancel the variable compensation program of the top management, which I think is definitely a very good decision. But how should we think about the compensation of the new CEO and, of course, the CFO going forward? Is that something in the making? So if you could give some color on that that will be great. And the other question is regarding the buyback. You also mentioned there was no shares -- or no buyback yesterday after the stock sell off. Do you expect to resume the buyback at some point? Or this is still on hold?

Thank you. Excellent questions. Yes, this -- the bonus compensation -- there was a type of compensation called bonus de operacoes in Portuguese, that the CFO does not have, the new CFO, and the new CEO will not have. So I understand that that was a critics demands from the market. Again, we hear the market. And that was decided by the Board in 2017 at the time of the IPO to align the management because as a state-owned or quasi state-owned company, I am a public employee now, and there are several limitations in terms of payments, in terms of bonus. So to align the former, Board's decided to this type of compensation that is not valid for the CEO and the CFO. Of course, any directors that have will respect because we respect contracts always. However, the CEO and the CFO are the book of this compensation. The current compensation, the one that we discussed with Werner, is also a normal compensation, a compensation that we have in any company in which you have a long-term interest, long-term alignment and in which we will have grades assigned by you guys. The better is the consideration the market has in terms of the quality of the information. The high end will be his payoff. Why? Because we understand that this is extremely important and especially because of these questions that we have had in the last weeks. So we strongly believe that is important to have a much better understanding by the market about any question and issue in the balance sheet in terms of recurrent, nonrecurrent, and any other questions. So we don't have any more these other bonus. The bonus that we will have compensation is completely aligned with the long term, and it includes not only return on equity but also the quality of information, several compliance, the rating. So everything that is in line with the long-term operation of any company. This is extremely important.

The buyback.

The buyback, we don't want -- we have -- we created this buyback because it's normal for any company to have a buyback and especially a corporation. So this is a discussion of the Board. But again, it's business as usual. Now with the CFO, and I entered as the CEO Monday, 2, 3 days ago, and I expect to be just a few more days because we should have very soon the new Chairman. I don't -- I cannot anticipate and I will not anticipate, but now again, as Chairman, since Monday, this should end soon. So we understand that with this change and also the CEO that will be the last one, we will be able to have the confidence of the financial markets. Again, just an important point, the Chairman is indicated by [indiscernible] that was the secretary of the Ministry of Finance, however, of course, completely aligned with the largest stakeholders and with the Board. We have already started to talk. We have been told, and we have a name. But again, and this is key now, we will not promise something that we cannot deliver. We will not promise that we will announce the new Chairman in 1 or 2 days and have to wait. So we are in the process. This has been a good discussion. We are focused to someone that has a large experience in the insurance and reinsurance market, a large international experience, someone that has been the CEO or C-level of large insurance or reinsurance companies because we do believe that this is important for IRB. So this is -- but what I can tell you guys is that we will announce first the Chairman and then the CEO. And while this -- Werner will have both roles that we are very -- given his experience and his knowledge, the Board thinks that Werner has all the condition for the next days or few weeks to have both roles.

Our next question comes from Colin Dishington, Martin Currie.

Can you talk us through the time line and reasons behind the interim CEO's original departure from the Board?

The reason was a personal reason. He is a friend of mine for over 10 years. He left also as the Board member of Light, electric utility company in Brazil. And he left only after signing the balance sheet in a unanimous decision by the Board.

Sorry to interrupt. My question was actually related to Werner's departure from the Board because as I understand, he left the Board prior to any [indiscernible].

Sorry, sorry. Werner -- excellent question. Werner. Banco do Brasil sold entirely BB Seguridade -- its shares last year. So when they sold, Werner would stay as a Board member until it expire. So he only left after the expiration that, by coincidence, was like 10 days ago. And so when he left was just because we -- he expire and he was substituted. So no reason at all. He could have left after BB Seguridade sold its shares, but again, he remained until the end of his term, and something important is that he came back. So I think that this just reinforce his confidence and [ he's easy ] about the quality of the information and the quality of the balance sheet of IRB.

Okay. That makes sense. And if you don't mind me ask another question because if there's nothing wrong with the financial statements or the operations of the business, as you've stated, then why did the CEO and CFO feel they had to leave or asked to leave or, indeed, feel a need to talk about Berkshire in a public forum?

Yes. Again, if we had any doubts about financial statements, they would have to leave, et cetera, 2, 3, 4 weeks ago when we were discussing the balance sheet. The problem was on Tuesday night, that is something not acceptable. That was something that is not accepted. And they knew that. So there was -- we had a confidence crisis in terms of an information. And this Board is not comfortable at all. Lack of confidence, we do not accept. And each one of us has a relevant role in major companies in Brazil or has had this special role, more senior field. So when we had that information Tuesday night, that was extremely serious. We take this extremely serious. We are launching an investigation. This is something that is ongoing and we are starting to discuss, so just like to reinforce. That was the reason when we had a problem, and both the CEO -- the former CEO and the former CFO, they understood that. They understood that at that point, they didn't have any more the confidence of the market. Several problems. So that was the reason why -- the only reason. There was no question at all in terms of the balance sheet because, again, if we were not comfortable, they would have left 3 weeks ago, 1 month ago, 2 months ago. The question was you cannot say something that is not correct.

Okay. And if you don't mind me just asking one more. Do you accept that the combination of the Chairman resigning for personal reasons and then at the same time, or a couple of days later, the CEO, CFO, asking to leave, do you accept that leaves investors with a huge amount of uncertainty going forward?

I think that there is this uncertainty. Clearly, they were reflected in the price. But this is why also we are choosing people for the CEO, CFO and Chairman, the same quality of Werner. Werner was, until yesterday, the CFO of the largest insurance company in Brazil and Latin America. Banco do Brasil has over BRL 7 billion in market share, is listed at the ADR-Level I, and Werner was there since January of 2014, and he was the first and only choice of the Board. I made his -- the call, I know him a long time, and he accepted immediately. So this shows that there is a confidence, and we are discussing -- again, I cannot anticipate the Chairman role is also -- it will be, for sure, someone with a deep understanding of the business, something key to us. So I think that there was a lot of noise, this is correct, and we act to solve this. We understand that will be a time for the markets to gain back the confidence in IRB. We understand that. And this is why we are taking action like in terms of the CEO and the CFO, the action was taken in 10 hours, 15 hours. The case of the Chairman, again, the former Chairman, there are personal reasons. I don't want to expand on that. I am personal friend of Ivan. But he left not only IRB but also Light. So he left 2 Board members at the same time, more or less the same time. So it's not related with IRB. And what I can ensure to you is that there was never ever any disagreements, anything other than the normal discussions in the Board, never. And this shows that if there was any disagreement in terms of the senior management, we will have not had this change in the CEO and the CFO 3 days later because I am interim Chairman and I arrived on Monday, and on Wednesday morning, we had the letters of resignation for the CEO and the CFO. So this just shows that there is no problem at all, and there was no problem at all. And the last point, every decision of the Board was unanimous. If we had any disagreement, we would not have a unanimous decision. But, of course, this is also probably the largest task of Werner is to bring back the confidence of the market. We understand that there is this problem. We will fight to recover this. We will hear all of your demands. And Werner that made 29 quarterly calls and probably 200 -- probably he spoke with 5,000 investors and analysts, he knows that. And this was the main reason, someone that has a deep knowledge of the market, insurance market, reinsurance market and someone that is used to have a huge responsibility of the market because he was the CFO for 7 years of the largest by very far insurance company listed in Brazil.

Okay. I fully understand the points you've made, but I guess some more again on that. Do you feel there's maybe a duty for the company or even perhaps the Chairman himself to just disclose a little more information around the reasons for his departure? Because ultimately, this uncertainty persists without further information.

No. What I can tell you, it's vital. We -- the reason why the former CEO and the CFO left was the reason -- or because of this -- that information Berkshire. Of course, they have been pressured by all the facts before, but the decision was by what happened Tuesday night. In terms of the Chairman, I can bring for us. He left for personal reasons. And again, very basically, like the most basic, if he had any issue at all, why he would sign the balance sheet? That is basic. I would never ever sign a balance sheet if I didn't agree, never, because as the Chairman, you have the most important responsibility. I -- if I had any problem, I would leave prior or after. I think this is basic. But again, I am the CEO of Caixa Econômica Federal, and it took me 3 months last year to sign the balance sheet and BRL 5 billion of provisions because I did not trust in the balance sheet prior for me to enter as the CEO of Caixa. And guess what, the balance sheet was not audited, fully audit by the auditor since 2016. And 6 months later, the auditing firm recognized that we made all the change that allowed the auditing firm to take back any point. In the case of IRB, we had 2 top 4 auditing firms. I never heard about that. So we not only had one with zero comments, zero problem, but to have a second one. So at some point -- and we had unanimous decision for their Board of Directors. So -- and this is something that I understand that the market has some noise. But what we can say is what I saw, zero problem and the former Chairman signing the balance sheet.

The next question comes from Ravi Vish, Limiar Capital.

First question is in relation to your accounting policies. Were any of your key accounting policy changed after the IPO? Are you happy with accounting policies that have been followed since then? And do you envisage any changes to your accounting policies going forward? And the second question is, are your auditors comfortable with accounting policies that currently exist? And thirdly, you talked about giving more disclosure going forward. Can you provide the same detailed disclosure for the last 4 years since IPO as well?

In terms of the auditors, since never -- none of the both at once issue any warning, nothing, zero. It's a proof that they are completely okay. In fact, we have had several discussions in the Board and several detailed discussions, especially in the last balance sheet, and they stated to the Board several times, all the time, that they are very comfortable. So in terms of the 2 top 4 auditing firms, they stated to the Board that they have 100% confidence. And this is very important because if they have not stated, we would not sign. Why should we sign something if the auditor, the 2 auditors, were not comfortable? Zero chance, zero chance. So the reason why the Board had signed is because there was zero, absolutely zero stress by both auditing firms. So that is something that -- they're okay. But again, very important question, we hear the market. We hear critics. And this is why Werner is also here. If we need to improve something, we will hear, and we will try to improve. This is clear. He is used to do very extensive MD&As. He is used to do the difference between recurrent and nonrecurrent profit. And this is something that I personally ask him to do. We want, already in the first quarter, in the next quarter, the first quarter result of 2020, to do a much better improved MD&A. So this is extremely important. A demand from the Board to the CEO -- CFO is talk to the market, improve the transparency in any way that the market demands.

Just to adding some points about the level of disclosure. So from the first quarter statements, financial statements on, you can count that we'll continue to increase the level of disclosure of our statements. This is one of the main goals I received from the Board and to be very close to the market to explain in a better way each of these changes if we have one. But the change will be to provide you more information, more detailed information to offset any kind of doubt that you still have regarding the financial statements from IRB. Okay?

So do you plan to follow the same policies as before? Or do you see any changes in the accounting policy going forward?

No. Being very straight -- a straight answer to you, there is no change in the accounting policy. The accounting policy remains the same. As Pedro mentioned, we have audit firms, 2 audit firms from the -- 2 from the big 4 auditing the numbers. And we are not going to change the accounting standard of the company. Something that we will do is to improve and increase the level of disclosure of the information but not the accounting standards.

Just one more question. We had understood that the incentives for the Chief Risk Officer had a similar structure to the CFO and CEO before. Is that correct? And if that is correct, do you plan to continue the same structure or have a different one?

Excellent point. From now on, no. However, what was signed in 2017 -- and again, we promise and deliver, promise and deliver. And we respect anything that is in any contract, obviously. So any contract that was signed before, we will respect. However, even for the -- any other directors at C-level, there will be no further program. So the decision of the Board, excellent point, is not only for the CEO and the CFO that I answer to you now, but they will not be extended. And again, the large ones were -- the larger ones, by far, for the CEO and the CFO, but this is very important. Just to ensure to you that we will align the compensation with long-term goals and with goals that talks about governance, the feedback from the market. So the quality of the calls, your opinions will be part of the compensation of Werner. If we have a lot of demands that we feel he's not answering, he will receive less. If we have the feeling that the market has come back with the confidence, he will receive more. This is basically -- it's probably as you -- your compensation and the compensation of our investors, so now it will be a much more aligned compensation in long term.

This is the last question because we are running out of time. Mr. Jason Mollin from Scotiabank.

My question is, before Tuesday, were there other issues or times that caused your Board to question its confidence in the former CFO and CEO? Specifically, were there other instances that the Board is aware when the CFO and CEO spoke untruth?

Jason, Pedro. No. And if there was, there would be an action. So we had something -- on Tuesday night, we had announced 12 hours later. They asked to leave because they felt clearly that there was no condition anymore, but it's not to say that they were not pressured. Of course, there was a huge pressure. So they were pressured. We were talking a lot. However, we at the Board did not agree with any discussion in terms of the quality of the balance sheet and also in terms of Ivan leaving. So even though we knew that there was this -- we were not comfortable, and we have already decided to put much more detail in terms of the explanation, so that was already a decision. So what Werner will do, myself, that the Board has already -- have already demand from the CFO. But what happened on Tuesday night was not acceptable. So there are things that you discuss, and there are things that you do not discuss. We do not have any information and any discomfort of anything because if we had, we would have acted or there will be an action for them earlier.

This concludes the question-and-answer session. At this time, I would like to turn the floor back to Mr. Pedro Duarte Guimarães for any closing remarks.

Thanks a lot. I want to thank you for the participation. It was a very large participation. This is a process in regaining the confidence of the market. We have this first step. Werner is a very good professional, excellent professional. We should have, I don't want to give dates, the next Chairman. The next Chairman will be someone, a large experience in the market and international experience. This is key. And then we will have the CEO. So this is something that we want to regain the confidence of the financial market. However, I want to emphasize that there was zero problem with the operational side of IRB. We do not have any problem. By the contrary, we are extremely liquid. There is no problem at all in terms of leverage and no problem at all in terms of our client base, zero. So we want to emphasize that the problem that is serious is that the market had issues in terms of confidence. We act fast, and this is a job that when I spoke and invited, yes, Werner, he knows that it's his short-term point to hear you a lot and act to rebuild this confidence that is key for the largest reinsurance in Latin America and a company that is so important with 80 years of existence.

So my final remarks here, Werner speaking, will be linked to our clients and employees. So of course, we are concerned in dealing with this market reactions, and our teams will be completely available for you to continue to discuss this -- all this reaction for the market and to give you further information, of course, always in a very -- as I told you, increasing the level of disclosure and doing this to all the markets. And at the same time, we are going to talk with our employees. They are -- as Pedro mentioned several times, they are very good-quality employees from IRB. We have here a very strong team, and we want to have them committed -- continue to be committed with the company, with our clients. So I would dedicate a good part of my time talking with the clients to guarantee that we will have the best of IRB for them. Of course, the best products that we already have, the operational side that's doing -- performing very well and make them strongly, I would say, happy with the performance in the financial statements and all the disclosure available to you from now on. So our goal is to continue improving as much as possible and, as Pedro mentioned, always delivering our targets, our goals, okay? Thank you.

Thank you.

Thank you. This does concludes today's presentation. You may disconnect your line at this time, and have a nice day.