Privatization of the IRB Brazil Re (the government-controlled reinsurance company that has held a monopoly for several decades) is not on the cards, as far as left-wing presidential candidate Lula da Silva is concerned. However, he has indicated his support for the opening of the reinsurance market, while retaining the state's control of the IRB.

For reinsurers around the world, the opening of the market is more important than privatization. This was officially authorized in 1996 by Brazil's Congress, and in 1997 the IRB was put on the queue for privatization.  In 1998 Swiss Re and other reinsurers began opening representative offices in anticipation of an opening of the market, but in 2000 the privatization process came to a grinding and frustrating halt, stalled by a series of legal challenges.

The IRB has know-how that is important for any reinsurer hoping to operate in the market.  They have a varied portfolio, and stability in staffing, which is important in the reinsurance business which relies so much on face-to-face relationships.

The medium term for the IRB will see competition from large international reinsurers, because it has the background knowledge about reinsurers and all the work necessary to carry out reinsurance.  Here it is the IRB that does everything and presents it to the insurer.  In the international market it is the opposite.

Insurers are therefore likely to want to stay with the IRB, but little by little would begin to see the advantages for establishing their own reinsurance contracts.  In the past year, the IRB’s results improved.  Premium income grew by 40% in 2001 to R$1.7bn.  Various factors contributed to this.  The IRB did not have to pay for the September 11 attacks, but benefited from the increase in prices, as well as gains in the dollar’s value.