[Foreign language]
Good morning, ladies and gentlemen, and thank you for waiting. Welcome to IRB's conference call for the third quarter of 2024 results. If you require simultaneous translation, we have this tool available on the platform. To access it, please click on the interpretation button using the globe icon at the bottom of the screen and choose Portuguese or English. If you're listening to the conference in English, you have the option of muting the original audio in Portuguese by clicking on Mute Original Audio. We would like to inform you that this video conference is being recorded and will be made available on the company's investor relations website, ri.irbre.com, where the complete material from our earnings release is available. You can also download the presentation by clicking on the chat icon. The download is also available in English. During the company's presentation, all participants will have their microphone turned off.
We will then start the Q&A session. To ask questions, please click on the Q&A icon at the bottom of your screen and type in your question to join the queue. When your name is announced, you will receive a request to turn on your microphone. You must then turn it on and ask your question. We recommend that you ask all of your questions at once. We emphasize that the information contained in this presentation and any statements that may be made during this conference regarding the company's business prospects, projections, operational, and financial targets are simply the company's beliefs and assumptions based on the information they currently have available. Remarks about the future are not guarantees of performance, as they involve risks, uncertainties, and assumptions, and refer to future events that therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, market conditions, and other operating factors may affect the company's future performance and lead to results that differ materially from those expressed in these forward-looking statements. Today, we're joined by the company's executives: Mr. Marcos Falcão, the company's Chief Executive Officer, Financial Vice President and Investor Relations Director. Mr. Daniel Volpe, Technical Underwriting Director. Mr. Paulo Valle, General Director of IRB Asset. And Ms. Eduarda de La Rocque, Internal Controls, Risk, and Compliance Director. I will now give the floor to Mr. Marcos Falcão, CEO, who will begin his presentation.
[Foreign language]
Good morning, everyone. It's a pleasure to be here with you to present the figures for the third quarter. Before we get to the numbers, I want to tell you that today we will have Duda presenting the regulatory indexes and Volpe replacing Castillo, who is on vacation. Duda has taken over the risk management, internal controls, and compliance department. Now to the numbers. In the third quarter, we had the LATAM contract renewals in July, and we continued keeping track of claim notices in Rio Grande do Sul, which Volpe will mention later. As a reminder, although we are disclosing figures in IFRS 17 in accordance to CVM rules, we are once again going to have this call looking at figures in IFRS 4. In 2025, we will gradually incorporate the concepts of IFRS 17, which I'll touch on briefly at the end of today's presentation.
The highlight for this quarter, as you can see, was a net profit of BRL 116 million, which in the nine-month period totaled BRL 260 million. Both grew significantly compared to 2023. We saw a drop in claims of 6 percentage points in the quarter and 11 percentage points in the first nine months of the year. The aggregate combined ratio stood at 102%. If we separate life and non-life, the latter is already at below 100%. We hope to have combined ratios below 100% by 2025.
In IFRS 17,
Under IFRS 17, we saw a net income of BRL 192 million in the quarter and BRL 623 million in the nine months to date. This quarter, we also received the news that our rating agency, AM Best, revised our rating from A- with a negative outlook to A- with a stable outlook. This took place in September and allowed us to have the Monte Carlo Conference, which is very important for the renewals in January, with this rating already at hand. On the next slide, we see our net income. You can see the non-recurring effect of BRL 33 million related to the sale of the Avenida Beira Mar plot of land next to our former Marechal Câmara headquarters, which had been sold a number of years ago.
It's important to note that this result, even with the event in Rio Grande do Sul, showed that our retrocession program, once tested, is well-suited to our needs. This advance in net income shows that the company's turnaround process is consolidated, and we consider it will end in 2024. The next slide shows our results using the accumulated 12 months. The set of graphs makes it clear that our management is focused on building a profitable and healthy portfolio, prioritizing paying returns to our shareholders and not the volume of premiums. After re-underwriting, premiums seem to have stabilized at this level. We need to be patient and always confident that our work is going in the right direction. The underwriting result and net income are already approaching the figures we had targeted for the year.
Financial results were still impacted by some long positions in lower interest rates, but now being helped by the prospect of higher interest rates ahead. I will now hand it over to Daniel Volpe, who will talk about the figures for underwriting. Go ahead, Volpe.
[Foreign language]
Good morning, everyone, and thank you for joining us once again. I'd like to introduce myself. I'm a technical underwriting director, and I'm responsible for pricing, retrocession, and market intelligence. I was director of risk management from 2021 to 2023 and have been with the company since 2017. I'm replacing Daniel Castillo during his vacation. On this slide, we highlight our underwriting strategy. We continue to concentrate our business in Brazil, as this is the market we know very well, and we see in it an opportunity to increase our profitability.
The Brazilian market is showing organic and rate growth, especially due to the risks impacted by weather events. Note that we grew our premiums in Brazil by 10% in the first nine months of 2024, reaching 4 billion BRL. Still in Brazil, over time, we should see a reduction in life in its share in the company's portfolio. We believe that the current rate conditions in this market do not provide an adequate return on capital. We will continue to be active in quotations and bid tenders in order to monitor the evolution of terms and conditions and to identify opportunities in life. International premiums fell by 21% in this period, reaching 1 billion BRL. Notice that our percentage of premiums in Latin America is around 7%, below our target.
These business renewals took place in the third quarter of 2024 since most Latin American clients renewed their businesses on July 1st. We had hoped that with these renewals, we would increase our share of LATAM businesses. However, renewal rates were below what we considered appropriate for underwriting the risks. Therefore, we preferred not to participate in some businesses that did not achieve the desired target profitability. The company is constantly assessing market conditions inside and outside Latin America in order to identify capacity allocation opportunities that meet the profitability and diversification criteria that we have. This quarter, we saw an increase in oil and gas participation in the special risks line due to a specific contract that was renewed. On the next slide, I'd like to give you an update on the claims related to the floods in Rio Grande do Sul.
The impact on our results for the quarter was only BRL 5 million, and this shows the effectiveness of the reserves we set up and the portfolio protection program to date. We also saw a reduction in the volume of claims reported over the months. As mentioned last quarter, we have a portfolio protection program, which are retrocession contracts, limiting the loss to priorities for the engineering, property, and housing lines. This limit was reached in the second quarter of 2024, which means that the notices given in the quarter and the new notices will be recovered from the retrocessionaires. This was an important event for testing the company's protection program, which had most of its contracts renegotiated on October 1st, maintaining its structure on a large scale.
With contracts renewed, the company continues to be protected against claims that it may be exposed to in the next cycle, which is extremely important considering the increased frequency and intensity of climatic events that we expect. The cost of this program was 16% of the company's retrocession expenses over the last 12 months. For the other lines of business, notably vehicles and miscellaneous risks, we set up an IBNR provision of BRL 107 million in Q2 2024. In Q3 2024, we had claims notices of BRL 57 million and an IBNR reversal of BRL 52 million. There is, therefore, a remaining provision of BRL 55 million for claims that have not yet been notified, which we feel is adequate at the moment given the reduction in the volume of claims reported over time. We will reassess the amount of IBNR by the end of the year.
On the next slide, we'll look at our loss ratio. We can see the reduction in the loss ratio from 74% in Q3 2023 to 68% in Q3 2024, mainly due to a reduction in loss ratios in the rural and property lines. Some portfolios had higher-than-expected claims, such as aviation, a line in which we were involved in the accident that took place in August involving a Voepass airplane, liability, and transportation. However, as they are less representative lines, they did not change the downward trend in claims, both in the quarterly comparison and the accumulated figures up to September.
When we look at the life versus non-life, it's clear that non-life is more stable and has a lower claims ratio for the quarter. For the life segment, we saw impacts from claims related to discontinued contracts abroad. Next slide, we will be addressing commission expenses.
This covers both broker compensation and reinsurance commissions to cedents in proportional reinsurance contracts. Q2 2024, we executed a commutation known as a cutoff on a high-commission life contract in Brazil. Following the cancellation of the contract, we observed a decrease in the life commission ratio, which led to a reduction in the overall commission ratio to 19% in Q3 2024. If you look at the non-life commission ratio, it did remain stable, while the life ratio dropped significantly, and the reason for this was contract cancellation since the remaining life portfolio carries a lower commission rate. Given the cutoff and anticipated reduction in life premiums, we expect the commission ratio to show less volatility and to trend closer to the non-life ratio over the medium term. Next slide. On the top, we see that consolidated combined ratio declined quarterly and over the nine-month cumulative basis, reaching 102%.
On the bottom section of the slide, we see the effects for life and non-life. The combined ratio for non-life segment was 98% for the first nine months of 2024. That's an 8 percentage point decrease compared to the same period last year. Conversely, the life segment's combined ratio for the same period was 118%, and that represents a 7 percentage point increase over the prior year. For the same reasons we mentioned on the commission slide, we anticipate that the consolidated combined ratio will trend closer to the non-life ratio over the medium term. And back to Falcão.
[Foreign language]
Thank you. And I'd like to draw your attention to admin expenses. These have remained around 80 million BRL per quarter. Note that the figures for depreciation and contingency, we're refining our criteria for categorizing OpEx and CapEx.
When we compare this to premium volume, it's clear that we have an efficiency challenge that we need to tackle in early 2025, focusing on current expenses and personnel costs. Next slide shows an overview of our employee base. We're very proud of the active approach we've taken to manage cultural change, and we're confident that in a company like ours, quality of management does reflect the quality of our team. We're investing in training and development to build a world-class team, and we continue to work on cultural transformation to establish a high-performance workplace. The following slide shows that we have been practicing sound management of our technical claims reserves, and we see the same trends compared to prior quarters. The next slide shows the asset portfolio managed by our asset team for the company.
We broke it down to floats. Those are reserved for paying claims and total assets under management. We also include premiums issued to illustrate the proportion of these assets. I will now hand it over to Paulo Valle, who is responsible for investment management.
[Foreign language]
Good morning. Here we see progression of the company's total assets and final financial and equity results. Third quarter 2024, we closed with a total of BRL 8.5 billion in assets under management, financial and equity results of BRL 196 million. Note that this quarterly result includes BRL 37 million from the sale of the Beira Mar property, which happened in September. This slide shows the investment portfolio. On the left, we see distribution of investments across the different categories: guarantee assets, total BRL 6.9 billion; collateral assets, BRL 1.3 billion; and free assets totaling BRL 270 million.
To guarantee assets, the onshore segment includes funds managed by IRB Asset. Offshore assets include the Brazilian sovereign bonds and private foreign currency instruments. Specifically, the Brazilian corporate bonds, treasury bills, CDs used for hedging. These collateral assets serve as security for retrocession operations. This is primarily concentrated in the U.S. and the Canadian treasuries. The chart on the right has the same investment portfolio classified by the benchmark index. Of the 61% allocated onshore, 32% is linked to the Selic CDI; 12% is what we term legacy investments tied to inflation from the pandemic; and 10% is actively managed inflation-linked assets. 6% is in private credit instruments. For the 39% allocated offshore, 14% is in U.S. and Canadian sovereign bonds, 11% in Brazilian sovereigns, and 9% in Brazilian corporate bonds, Time Deposits, CDs in a number of currencies, all used for currency hedging.
You can see portfolios characterized as low credit risk and low market risk. This next slide shows a detailed view of our investment returns, and this will clarify projections for our financial results. For onshore, which is the first table on the left, there's a total of BRL 5.1 billion. 54% of our total assets are allocated in government securities. That's 32% tied to Selic, which yielded 102% of the CDI this year. That's 11% annualized rate. 22% were linked to inflation. Of this 22%, 12% is what we term legacy. That refers to investments made during the pandemic with lower rates, yielding 66% of the CDI. That's 7.1% annualized. On the right side of the slide, we break down the assets by maturity and entry rates. There's 10% in actively managed inflation-linked assets, yielding 80% of the CDI. That's 8.6% annualized.
6% in private credit instruments, yielding 125% of the CDI. That's 13.5% annualized, resulting in an overall onshore portfolio return of 9.8% annually, 94% of the CDI. For the 39% offshore portion, that's BRL 3.3 billion, which is used for the portfolio that the hedging showed on the previous slide. We have the following distribution returns: 14% in U.S. Canadian sovereigns, yielding 83% of the Fed funds rate. That's 4.4% annualized. 11% in Brazilian sovereigns, with a return of 116% of Fed funds. That's 6.2% annualized yield. 9% in Brazilian corporate bonds, TDs, and CDs in a number of currencies, yielding 120% of Fed funds. 6.4% annualized, resulting in a total offshore portfolio return of 5.5% per year. Total portfolio return was 7.8% onshore-offshore. Finally, on the lower right, we have a graph with legacies.
We have annualized returns on onshore assets since 2021 against the reinvestment opportunity cost, using the accumulated CDI as our reference. Initially, investments yielded above the CDI, and you can see this in the comparison to 2021. But with the rising interest rates following 2021, returns fell below the reinvestment rate. Note that these assets mature in 2025, 2026, and 2028, so that in coming years, we will reinvest at a more favorable rate for this currency. I'd now like to pass the mic over to Duda de La Rocque.
[Foreign language]
Thank you, Paulo. I'd just like to start by introducing myself. I'm Eduarda de La Rocque, Director of Internal Controls, Risk, and Compliance since August. But before that, I was a risk management consultant here since March of this year.
I hold a bachelor's, master's, and PhD in economics from Rio, specialized in finance and public sector, and I've been in risk management for 12 years. I've also served as an advisor for the BNDES, the Brazilian Development Bank. I've taught at different schools. I've worked at the National Treasury and in asset liability. I'd like to start by talking about regulatory solvency in relation to capital [Foreign language] , which is an insufficiency of 123%. This combination of two factors that we see on the right, decrease in minimum required capital and an increase in adjusted equity from the last year to this year, and this is due primarily to improvements of our subscriptions. Next slide. We're going to look at the next regulatory indicator.
If we look at SUSEP, this covers our actuarial commitments. This is to cover our actuarial commitments, technical provisions, the third quarter of 2024, with a sufficiency of BRL 599 million. This indicator remains stable over the quarter, even with a volume of claims payments. We include a buffer, which is a trust margin to cover this. We include 15 different indicators to buffer against solvency. So from a regulatory standpoint, we're in a very comfortable position, both in terms of liquidity and in terms of solvency. Moving on to the next slide, I'd like to present our ratings. This is according to international agencies. AM Best, which is a rating agency that specializes in insurance and reinsurance, has classified us in September. They revised their rating from negative to stable. This was the first positive rating action since 2020, and it reaffirms an improvement in our business trajectory.
I'd like to stress how we've been working hard on the quality of our enterprise risk management, which has gone from 4.5, which is considered excellent for international business. In addition to the AM Best rating, we also have a rating from S&P, and that's for debt insurers. This is also considered excellent and was revised this year. We use these rating agencies' capital models to assess our balance sheet and capital model. So we've also been intensifying our internal capital and intensifying improvements with our model, according to the regulations from the European Union. Solvency II. We're practically ready for resolution 471 for SUSEP, which adapts this regulation to Brazil and the Brazilian market, is based on business line goals, parameters for capital allocation, and generation. These are all the challenges we face.
Following the slide, I'd like to mention that we are committed to the Brazil Business Integrity Pact, which is an initiative of the Comptroller General of Brazil, CGU. This encourages the private sector to voluntarily commit to public ethics and integrity. Thus far, 160 companies that operate in Brazil have joined, and our participation reinforces our commitment to the future of the society,
so we have accelerated the execution of our business strategy, and I'd like to highlight the first IRB forum that will be held in September and our policy for people with disabilities. We have hired 11 people, and 40% of women in leadership roles.
We want to be very active in the ESG agenda, and therefore we're starting a process to identify gaps so that we can join Pró-Ética, ISE B3, and IFRS S1 and S2, which we want to adopt in 2026, one year before what is required by the Resolution 193 . And I'll pass it over back to Falcão.
[Foreign language]
Thank you, Duda. It's great to have you on our team. We have a lot to do together, and you are an expert in risk management, which is our business. Now, on this slide, I'll cover the aspects of the result in IFRS 17, and I can tell you that I have Thaís and Natalia, who lead our accounting team, and they will be at my side to help us answer any questions you may have.
We can see a net income of BRL 192 million in Q3 against an income of BRL 44 million in Q3 2023. And the quarter of this can mainly be explained by an increase in revenue from reinsurance of BRL 227 million, mainly due to a higher premium issuance in the property segment and the revenue generated from the early termination of a specific contract in the life segment, the cutoff that will be mentioned. We had a positive variation in retrocession with an effect on net income of BRL 238 million. This was mainly due to recovery in claims during this time. Finally, our net financial result dropped by BRL 71 million, impacted by the exchange rate variation in the quarter. We can see the recognition of CSM, or Contractual Service Margin. You're going to hear more about this indicator next year.
It's the main component of reinsurance revenue, which is 12% higher when comparing the nine-month periods of 2024 and 2023. The pie chart shows the portfolios that contributed the most to our reinsurance margin. That brings us to the end of our presentation. In the last quarter of the year, we'll be focused on preparing for the renewals on January 1st. Castillo is going to return soon to lead us for this important time of the year. We're preparing the 2025 budget, which will soon be analyzed for our governance bodies, bearing in mind the efficiency challenges that lie ahead. At the end of the year, we'll be turning the page on the turnaround process. We're paying close attention to the volatility coming from climate change, geopolitical challenges, and the macroeconomic scenario, both domestically and abroad.
In 2025, we will also regulate the insurance law, which is still subject to presidential sanction. We're confident that IRB(Re) is strengthened to start 2025 on a good footing, and we're prepared to have a great year. But before moving on to questions, I'd like to thank our employees and leaders, our board of directors, our supervision board, and our shareholders who have placed their trust in our management. I would especially like to thank SUSEP, which has been working with the market to strengthen our sector. I'm sure that we're all touched by the protection gap we experienced in the recent event in Rio Grande do Sul when economic losses were 10x the insured loss. Let's move on. Thank you very much.
[Foreign language]
Thank you. We will now begin the questions and answers session.
As a reminder, if you'd like to ask a question, please click on the Q&A button at the bottom of the screen to type in your question and join the queue. Once your name has been announced, you will receive a prompt to activate your microphone. You must then turn it on to ask your questions. We kindly ask that you ask all of your questions at once. [Foreign language] . Our first question is from Eduardo Rosman, a sell-side analyst from BTG. [Foreign language] .
Go ahead, sir.
[Foreign language]
Hello, can you hear me? Perfeito, Róger.
[Foreign language]
Yes, we can hear you.
[Foreign language]
Hello, everyone. I have a couple of questions on my side.
First, on 2025 and dividends, if you can give me a more qualitative answer. I know that you don't have the full budget, but right now, I know that you are recovering your growth margins. Although we're focusing on profitability, we know that the Selic rates are higher. There's a higher demand for your products since there's all of these climate issues. So, in general, what do you believe will be your results for 2025? Do you think you will continue to grow and pay dividends by the middle of the year? That's my first question. And also, if you can give us an update of the competitive scenario. The impression we get is that IRB went through tough times recently, but that it still maintained a top position in the market. I mean, the gap is smaller, but we don't really hear about major players taking up any space.
So we'd just like to know a bit more about your competition and if you believe there is a possibility of having a tougher market. Thank you.
[Foreign language]
Please remember. Please remind me if I forget to answer any of them. But first, you had asked about dividends. I'll talk about our profit growth, and then I'll talk about our competition. So first, on dividends, we still have an accumulated loss on our balance. It was BRL 390 million on September 30th. So this needs to be paid in 2025. So we'll use some of our profits from 2024 to pay this in 2025, and that needs to be done before we can pay out dividends. I think in order to create less anxiety, the most realistic thing that we can say is that dividends will probably be paid in 2026, not in 2025.
But I think we can continue keeping track of these numbers. Your second question was about profitability growth. We will certainly have higher income levels in the next year. We've talked about this in the past, the impact of underwriting quality and how long it takes for it to grow. So 2025 will be the first year in which the renewals we made in 2023 at higher prices will have a 100% impact on our results. So we will start seeing operational growth and a better combined ratio for 2025. We believe that this will happen. We actually expect this to happen. We will see higher interest rates as well. And our portfolio is below the CDI index. Some of it has been purchased during a time in which interest rates were lower. So our income will grow.
But of course, not in the same order of magnitude that we had recently. This year, we grew significantly in comparison to the prior year, but I think this will be normalized starting next year. So as you said, our budget is not ready, but we're trying to have at least 30%-40% growth rates in income. But this is not a guidance. We're going to see if we can achieve it, okay? This is just one of our goals. Oh, and to answer your last question about competition, the competitive environment is quite interesting right now. And we can publish this information later, but what we saw in the reinsurance market recently was that it grew, and there was a lot of intergroup reinsurance.
There are major international groups, and after 2019, when legislation allowed reinsurance companies to do this freely, there are major groups providing reinsurance to each other. So if you look at the data, major international reinsurance companies are using retrocession through their intergroup channels. So it seems like a safer, competitive environment, but it's actually still very similar to what we saw in the past. So IRB is still the leader in this market, and we might be able to give you some more accurate data later on. I don't have this at hand, but my impression is that we're still in a leadership position.
We remain strong, and we're very excited for 2025 because we're going to have a better rating with more capital, because right now we are at BRL two billion in PLA, and only BRL 1 billion of our capital is being used, which is the risk that we have right now. Our retrocession schedule has been even more refined. So in 2025, we will have better prices and an even better capacity to offer them. So if we're successful, we're going to have more visibility for this in mid to late January. That will be our first thermometer. So that's our expectation, and we'll update you once we have the facts. Thank you.
[Foreign language] .
We will continue with the next question from Maria Guedes, a sell-side analyst. [Foreign language]. Go ahead,
[Foreign language]
Hello, can you hear me?
[Foreign language]
Yes, we can hear you. Good morning.
[Foreign language]
Good morning. My question was, I'd just like to get more details on the retained premiums for 2025. I think you will need to accelerate what was promised or reduce your retrocession levels. You mentioned this during your last answer, but I'd just like to know what you're thinking about this, which one of these two levers is more viable, and will retained premiums keep up with the level of growth you've been having? I'd also like to know what you're thinking about your exposure. You mentioned that life had unfavorable renewal rates, so what are you considering for 2025?
Do you see any potential across any other lines of business? Thank you.
[Foreign language]
Sorry, Maria, we had an issue with your audio, and I'm not sure if I got your question. So you started talking about issued premiums. Can you repeat your question, please?
[Foreign language].
Yes, we'd just like to get more details on your retained premiums. I'd just like to understand if you have some room to grow in issued premiums or if you can reduce retrocession levels, and which one of these two components would be the most viable for you. [Foreign language] . And my second question is about your exposure to different lines of business.
[Foreign language].
That's our major objective.
[Foreign language].
We want to limit or we want the best risks. We're looking at innovation, so we grow with retained premium. [Foreign language] . Offer more capacity that trends is that this premium grows. And this retained premium, if we multiply it by the combined ratio, we're excellent. So we're looking at our business. So expectations are that it grows and that the budget grows. That's number one. With more capital, we'll be able to retain more business lines over others without, obviously, overlooking the necessary protections. We talked about sectors. We're going to continue growing in the same lines, which is our main area, which is engineering, etc. Life, that's an interesting market. It's very different from non-life. Non-life has great prices, and in Brazil, it's a very dynamic market.
Life is small, and the prices are soft. It's not very attractive for us to underwrite this right now. So unless something drastically changes, we're very aware that life is not going to be growing too much over the next few years.
[Foreign language]
[Foreign language]
Did I answer your questions? Yes, I did. That's great. Thank you.
[Foreign language].
Next question . . Thiago from Goldman Sachs. Tiago Binsfeld. Sell-side analyst, Goldman Sachs.
[Foreign language]
what about allocation of the portfolio no Brasil e também when we look at interest rates in Brazil and recent openings na [Foreign language] ? Right, vis-à-vis inflation.
[Foreign language] and do you see more value as you saw some from the para provisões wealth or assets relacionada a Rio Grande do Sul and do you see anything else that we should expect from what happened in Rio Grande do Sul? I think these are the three areas that should be addressed, and I'd like to have more information. Thank you very much.
[Foreign language]
Good morning. Thank you so much for your questions. Your three questions. I'm going to go backwards to forwards, okay? . And then Paulinho Valle is actually going to talk about the portfolio. When we talk about Rio Grande do Sul, we've got 55% still, BRL 55 million still assigned or earmarked for that.
[Foreign language] for the third quarter with claims. [Foreign language] BRL 5 million. We did see an impact, but of only BRL 5 million. [Foreign language] , we expect BRL 55 million to be in our till the end of the year, depending on how it plays out. By the end of the year, at the end of the year, we might see a reversal. Second question was [Foreign language] assets whatever was necessary to sell that was of real importance to sell. We sold, which was one bit of land and one building. Now, if we look at everything that we've got in terms of real estate, remaining real estate, we've got about BRL 10 million real. It doesn't really amount to much.
So we're going to continue to sell, but impact is not expected to be too significant. [Foreign language] we're going to be focusing on our core business. I'm going to pass it over to Paulo Valle. He's going to be talking about portfolio allocations vis-à-vis Selic and what to expect for the coming year.
[Foreign language]
Good morning. When it looks at resource allocation [Foreign language] , that the interest rates are going to increase because of the U.S. elections, etc., we're paying attention. But it's going to be with this conservative outlook. We have to kind of really keep a close eye on it. We're being very conservative with Selic, 32% in Selic titles.
There's a possibility of reallocation, but for the time being, we're just patiently paying attention to decide whether we need to migrate or not. [Foreign language] . O CDI also impacts 6% in private credit, and we're also keeping a close eye on this and possibly going to reallocate. 38% is in CDI. With an increase in interest rate, this should increase results over the year, and we're going to continue discussing allocation should there be a problem with inflation rates or something really high. It's already around 7%.
[Foreign language]
[Foreign language] just adding to what Paulo said. [Foreign language] moving target. Interest rates next year are going to be a moving target. It's very hard to figure out where it's going to be. You know, it's more comfortable in a float.
That's what we feel right now. We'll see how things play out between now and the end of the year and whether we change our ideas, change our mind. Thank you very much. Thank you for the questions.
[Foreign language].
Next question. Edu Arnon Shirazi sell-side do SIC. Edu
[Foreign language]
Edu Arnon Shirazi. Thank you very much, everyone. Thank you for the opportunity to ask questions. One question is related to your turnaround process. You said that this is expected to be done by the end of 2024, by early 2025. Everything will be back to normal. What do you expect? What are the effects of this between now and the end of the year?
[Foreign language]
Thank you. Edu Arnon, good morning. Thank you.
[Foreign language] Sorry, I missed you. What are you expected at the end of the year? I didn't catch you. What do you still think needs to be done for the turnaround process? Is there anything outstanding? Não. Thank goodness. No, we've been working hard on this over the last two years. On the 17th, I'll have been here for two years. It's been hard work. I hope to really take some vacation around Christmas time, and I hope this all to be completely done. [Foreign language] . No, no, but all jokes aside. Our budget is solid. This has been something that's been bothering us. If the company continues with this premium level, we'll need to be more efficient because our premiums are high.
That's the real thing that we've been focusing on for the last quarter. I mean, we've been concretely doing our homework and we've solved our issues and it's been very positive. This should be completed by the end of the year. Absolutely. Thank you very much for the question. Thank you. Thank you very much.
[Foreign language]
Guilherme Grespan, do J.P. Morgan. Guilherme. J.P. Morgan is our next person to ask the question. Guilherme Grespan, sell-side analyst, J.P. Morgan.
[Foreign language]
Good morning, Tim. Good morning, everyone. [Foreign language] . I'm sure there might be some subsegments there. Você que o a percepção é que ainda tem subsegmento that the hard market is really strong for this segment.
[Foreign language] so looking at the whole combination, when we look at non-life, it's naturally volatile. [Foreign language] but I see that the mix is converging towards non-life. But the margins have increased. It went from 95% [Foreign language] 60%. Last year. [Foreign language] and it went down this year. So looking forward, given this hard market [Foreign language] to PNC? What are the outlooks for this combined non-life for the coming years? [Foreign language] ? Is it going to be close to 100% or is it going to go down? Na carteira.
What about the duration of the portfolio and the legacy? You know, what's the outlook that we have? Timeline for repricing. And a quick second question, 2025, are you going to continue to [Foreign language] . Are you going to continue to announce the results in IFRS 17? [Foreign language] .
[Foreign language]
Thank you very much for your questions. Good morning. [Foreign language] IFRS 17 versus 4. Tem sido muito interessante a nossa trajetória do time convivendo com o IFRS 17. Trajectory has been very interesting. [Foreign language]? And this is a gradual process. [Foreign language] . So I don't want to promise anything. Mas fazendo em IFRS 17. But we continue to work with IFRS 4 until we feel comfortable with 17 and we can add informational value.
And I was talking about this yesterday with the team. What could happen is that we'll start talking more about IFRS 17 with each subsequent quarter. So we're not leaving IFRS 4 behind, right? So we're just going to gradually move over to 17. So it's very intellectually challenging. We're learning a lot in this process. [Foreign language] . Abroad. And we've been watching what's been happening with companies abroad, obviously. And combined ratio calculations are very interesting. IFRS 17 is different. [Foreign language] The effects do CSM, [Foreign language] , do net, do CR. [Foreign language] . LSR. All are very different. [Foreign language] And we're going to be slowly shifting over each quarter, over subsequent quarters. [Foreign language] a... I'm sorry, what was your first question? [Foreign language]
[Foreign language]. Yes, thank you for answering that second question. [Foreign language] . PNC, I'm sorry, I remember, I remember. Yeah, I remember. O [Foreign language] It doesn't come from the last quarter or from the previous year. It's from years before sometimes. So when you talked about the portfolio ratio, so claims. [Foreign language] Affected by legal questions, it can be a much longer timeline. Aqui é short tail com [Foreign language]
We have a short tail portfolio, but it's two years long. That's how we look at our portfolio. What we get from the past, claims will affect this quarter, but it comes from all the way back, right? [Foreign language] Which our claims rate is close to our pricing. Agro was actually surprising, very low this year. [Foreign language] So we had some adjustments there. [Foreign language] It's going to continue to be rather volatile. [Foreign language] But it's going to be heading towards. [Foreign language] The 95% price adequacy. [Foreign language]
[Foreign language]I don't think anything as dramatic as what we've seen recently. But it's going to be very interesting with these changes in 2025, how this is going to impact our portfolio in the coming year. We're going to keep you informed and we'll be updating you as things take place, as things happen. Thank you so much.
[Foreign language]
. We will now continue with the next question from Caio Prato, a sell-side analyst for UBS
[Foreign language]
Good morning, Falcão and the rest of the team. Thank you for taking my question. It's a single question to follow up on what you mentioned before.
You had mentioned renewal contracts and the challenges you might have if your premiums don't go up. So my question is about growth, if you can give us some more details about what is the expected growth that you expect for the company next year in premiums, considering the current price, and where this will come from, if it will be more domestic or international. Thank you.
[Foreign language]
Kaio, thank you for your question. We're really at a stage in which we're preparing for this renewal early next year, and that's when we will understand what our growth potential is. When we started the year in the first call, we said that we expected to grow 10%-20% this year if prices would allow. But they didn't. We set the price and people were very responsive to the price.
So we expect that this will be reduced because now people perceive that risks are higher and this will, of course, be translated into the price. I mean, I think buyers will accept it and we're also more strengthened because we are stronger because we can offer a greater capacity. So if we're not growing on the number of clients, then we can grow in capacity. So I will repeat that I'd like to grow by 10%-20% in retained premiums, which is what really impacts our bottom line. [Foreign language] . As I said, I think it's important to talk about this in January. I think it will make a lot more sense. Did you ask another question or was that it?
[Foreign language] ?
Oh, right. You had also asked about DA. So the problem is that this is what defines a reinsurance company's competitiveness. If your DA is low, you can gain a big share of the market. We would love to have a DA of about 5% of the premium. Ele paga essa DA também. Tem 5% do premium. A gente está em torno de 9% agora. And we're about 9%. So it went up a bit because premiums are down. So we're going to have to have internal discussions, especially after that renewal in January. And if premiums don't go up, as a manager, I'm going to push for efficiency and to reduce expenses. That's our commitment. We're always trying to have a good level of profitability, and we want to do right by our shareholders. So I think that's why we're looking at DA so much. Great, thank you.
[Foreign language]
[Foreign language]. We will now turn it over to the company again, who will answer the questions sent in writing.
[Foreign language]
Thank you, Aline. Thank you for this call once again. I'm just going to mention a couple of things that were asked in the chat. As per usual, I'm mixing it up [Foreign language] . Someone asked about the continuity of the business. Despite my age, I still have a lot of energy, and I continue to lead the company. Our team is getting better and better, and working here is a very good intellectual challenge and a pleasure for me. Someone asked about Andradina. SSPE, que fará os nossos... Andradina is the SSPE that's going to provide our securitization risk notes.
The first was going to be issued this year, and we did what was under our control, but the factors that were not under our control will not allow us to issue this year. But this is not very relevant in terms of numbers. This is something that's going to grow gradually and will really only impact us in the coming years, not even in 2025. In 2025, we will start earning, and we'll see a greater impact from this later on. So that's it. Thank you very much. This concludes our earnings call, and I'm sure that the next one will have a different presentation. And it will be after the renewals in January. So we'll be able to talk about the entire year. It will be the end of the turnaround process, and we'll have a different format. So we'll see you then. Thank you once again.
[Foreign language]
This concludes the questions and answers session.