Good morning, everyone. Welcome to this disclosure for the third quarter of 2022. In this teleconference today, we have Mr. Raphael de Carvalho, the company's CEO. Mr. Willy Jordan, CFO and Investor Relations Officer. Mr. Wilson Toneto, Technical Vice President and COO. Carlos André Guerra Barreiros, Compliance Officer and Legal VP. Mr. Daniel Volpe, P&C and Specialties VP, and Mr. Ronald Luis, Life Director. We would like to inform you that this teleconference is being recorded and that all the participants will be on listening mode during this presentation. At this point, when we conclude the presentation, we will start our Q and A session. If you need any help, please press star zero. This presentation was prepared by IRB Brasil RE and should not be considered as a data source for investment.
This presentation may contain certain forward-looking statements and information pertaining to the company which reflects the current views and/or the expectations of the company and its top management with regards to its performance, to its business, and to its future events. Forward-looking statements include, without limitations, any statement that may contain forecasts, indication, or estimation and projection about future outcomes, performance, or objectives, as well as words such as we believe, we anticipate, we expect, we estimate, among other words with similar meanings. These forward-looking statements are subject to risks, to uncertainties, and to future events. We warn our investors that there are many important factors that affect the result, and it may be significantly different from the plans, from the objectives, expectations, projections, and all the intentions expressed in this presentation.
Under no circumstances, neither the company nor its subsidiaries, directors, Board members, officers, agents, or employees shall be liable to third parties, including investors, for any investment decisions that are made based on the information and the statements that are contained in said presentation, or for any specific or general damages arising therefrom. The market and the competitive position related information, including market forecasts that will be mentioned throughout this presentation, they were obtained through internal surveys, through market research, through public domain information, as well as corporate publications. Mr. Raphael de Carvalho, the representative of our IRB Brasil RE, will start his presentation at this moment.
Good morning. Welcome to our quarterly conference. Well, page number two. As you can see, we have a summary of the third quarter here.
I think that first and foremost, the most relevant point that we can highlight is that the company is now back to operating within the required regulatory indicators. So we have the reserve coverage indicator and regulatory solvency indicator, both of which are in line. I would like to take this opportunity to bring your attention to the fact that with regards to solvency, when you look at total solvency, not only regulatory, we've always been at a level which is in line with the international market. Now, further down in the presentation, over to the end here, Guerra, who is next to me, will present these indicators, and he will make his comments about that. In the last month of the quarter, we concluded our follow-on, which enabled us to capitalize the company.
This capitalization was to the tune of BRL 1.2 billion, and this initiative was essential for us to be in line with our regulation. When it comes to the results of our third quarter, our loss of BRL 299 million, the first observation is that this is a result that is worse than expected when we concluded our second quarter. The performance of our third quarter was seriously affected by the high loss ratio to the tune of 117%, which is derived especially from our rural portfolio and still some COVID-related issues in the life portfolio. Overall, from a rural perspective, we did have some impact from the drought, which really affect the winter crops in 2021 and the summer crops in 2022, and that could still happen in this quarter. As Wilson Toneto is about to show you further down, there was an impact which was higher than what we expected.
Unfortunately, this is the reality. On the bottom right, on this page here, one can see that once we normalize the loss ratio and the atypical effects on the rural portfolio, we achieve the level of 91%, which is an index that is very much below the 119% observed in the same period last year. Obviously, we don't see 91% as a loss ratio to be maintained from now on. Further in the presentation, we can see that it was the result of some specific and concentrated events. Switching over to revenue. When it comes to premium, we had a growth a little north of 1% in our Brazilian emissions or issuance. Throughout this presentation, we are going to see that the drop in total premium happened due to the premium issued abroad, in line with our strategy that was broadly disclosed to increase concentration in Brazil.
In the top right of this slide, we can see that year in, year out, we have been consistent on our focused actions in Brazil. In the year to date, in the first nine months of 2022, Brazil already accounts for 67% of our portfolio, in line with our objective, which is to have at least two-thirds of our business positioned in the domestic market. It's worth pointing out that Brazil represented roughly 60% of our portfolio in the previous months. To conclude here our initial remarks, I would like to point out that the indicators as G&A in those first nine months in year to date, they are better than the levels observed in the same period last year, and this is a crucial improvement to help us improve our operating margins. Next slide now.
As it is our habit, we show you how our quarterly went through. So 85% in the contracts that we wanted to review, which is a better index that we had in the previous quarter last year, which is in line with our underwriting improvement. It's important to point out that this index, besides proving that our customers have the trust, this is a recognition of the quality of our services as well. When you look at the bottom part of the slide, this is a little bit about our strategy. One has to mention that our business dimension and the search for further business is one of the hallmarks of our strategy. The orange line above here shows the behavior of the dilution of our contracts in Brazil. Period after period, we can see that there has been a decrease.
From contract to contract, we have a lower share, a lower participation, and that number reached 40% in the nine first months of the year. This is roughly the level that we see ourselves for the near future. The same can be observed for the foreign contracts. Our share in the foreign contracts is lower. We reached the level of 8%, which is also a level that we believe we will maintain. That being said, I will hand it over to my colleague to discuss a little further our results.
Thank you, Raphael, and good morning, all of you. Let us move on to slide number four. Right here, we can see the development of the premium issued in Brazil, and we can see that on the quarterly comparison as well as the 2022 comparison.
As Raphael said, IRB moves forward as we redirect and reconduct our business with a focus in Brazil. In the first nine months of 2022, the premium issued in Brazil grew 1.3%. With that, we reached the level of 68% of total issued premium, which is a level that we see as a balanced level for the foreseeable future. On the bottom side of the graph, we can see the development of the issued premium comparing the first nine months of 2021 and 2022. It is clear that property, life, and rural are still the company's mainstay. We are maintaining a proper level of diversification by segment. Moving on to slide number five. Over here, we can see the backwards premium. As we can see here, I am sorry, the retrocession premium.
As we can see, there has been a growth of 34% in the comparison with the same quarter of 2021, surpassing the level of BRL 865 million- BRL 1 billion. While the retrocession premium went from 33% to 48%, which is a 15 percentage point increase, which is much due to our LPT, loss portfolio transfer, which was conducted in the international aviation segment. If we were to exclude the impact of this LPT, the retrocession premium would be 37%. We see that the retro levels are relatively higher than the previous quarters because in those dates, we had the renewal of a special risks contract, which has an important volume of retrocession premium. In the first nine months of 2022, the retrocession premium increased to the tune of 19% compared to the first nine months of 2021, totaling BRL 2.2 billion compared to BRL 1.1 billion last year.
The retrocession premium level of the company increased, therefore, by 8.4 percentage points, going from 27% last year to 36% on the year to date in the first nine months of 2022. It is important to point out that in the first quarter, we had an LPT on international property, which increased also our retrocession premium line to the tune of BRL 218 million, and that gets coupled with and added to the numbers we had in the previous quarter on the line of international aviation. If we were to sponge off the effects of those two operations and also considering the closure of another LPT now in July, the retrocession index in the first nine months of 2022 would be 28%, which is in line with the same period last year.
Now I'll hand it over to Toneto so he can talk a little bit about our loss ratio on slide number six.
Thank you. Good morning, ladies and gentlemen. Now on the graph to your right on slide number six, we can see that the retained claims on the third quarter of 2022 totaled BRL 1,387 million . When we compare that to the same quarter last year, we can observe that there's been a reduction in the order of BRL 605 million. Now when it comes to the loss ratio on the gain premium, it was 117% compared to 119% in 2021. Now the performance in this quarter was substantially affected by the following events. The increase of our claims because of the agribusiness contracts, which were signed in 2021, because we had some adverse climatic conditions that were really catastrophic that affected some important growing regions in Brazil.
We should also remember that in the last disclosure call, we commented that in this quarter, however, we could register some events of this fact, which indeed occurred. Now considering the loss ratio we had in June 2022 and based on the insurance information, we had some deviation due to the variation in the estimation that the insurance companies themselves had for the claims and the actual value that was observed after the process of regulation and everything was concluded.
As we normalized the loss ratio in the quarter, as Raphael mentioned, the company loss rate would be 91%, which is much lower than the 119% observed in Q3 2021. In addition to agri, we also have some unusual events that affect our loss ratio. The first one is the increased loss of the international businesses, especially in International life due to a contract in Peru. This is a multi-annual contract that will not be renewed for next year. Another important event was an annual contract in retrocession by a major reinsurance company and the loss ratio was much higher than what we predicted when we priced. That being said, we talk about the retained loss ratio year to date to BRL 3.9 million, which is lower than the BRL 715 million as compared to the same period of 2021. The main detracting factor, as mentioned, was the agro and domestic areas.
When we normalize the loss ratio in the period and you consider the LPT operation mentioned, the one weight loss ratio of the company would actually be 85%, which is better than what's observed in 2021 at the same time, which was 97%. The amount resulting from normalization in these nine months is BRL 901 million. So that was the deviation that was recorded in that area. Another important effect was the COVID claims. Even with less deaths as compared to 2022, we recorded BRL 179 million of retained claims. In the previous year, we had at the same time recorded BRL 315 million. So the impact on the claims tends to be lower and lower. Adding up these two events, COVID and agro, we add up to close to $1 million , which is close to the loss recorded in September, which was BRL 1,070 million.
If these events hadn't happened, the company would have had results close to zero, which is not ideal, as Raphael mentioned, but much better than what we see in previous periods. I will now conclude on loss ratio, but because agricultural insurance has been the topic of the year for insurance and reinsurance company, I'd like to call our friend, Daniel Volpe, to talk about the matter in a more prospective matter.
Thank you very much. As the winter crops harvesting are finished, we are getting close to know the final results for the winter crop for the insurance markets, which allows us to bring some forecast considering the catastrophic events of the two latest crops.
Before we go there, I believe it's important to mention that these events that caused the biggest loss in agricultural insurance in Brazil led the market to enter a hard market cycle based on two pillars here. Drastic reduction of insurance and reinsurance capacity in the market, and two, strong adjustment to the conditions offered to farmers. I think some important numbers help understand this. The winter crop is addressed here. The reduction for market availability for winter crop reduced by 15%, considering the demand for the product, which was increasing. This demand also helped implement adjustment measures in the conditions of the market. The average rates for the winter crop were adjusted by 30%, and the insured productivity reduced more than 10% in critical areas. Climate also contribute positively as it favored the development of crops in the main regions.
With a combination of factors, we can certainly say that we will have positive results for the winter crop. As for the summer crop, which represents most of the contracts and was the core of the historical losses happened in 2022, we are now finalizing insurance commercialization. What we can say is that the high rates and the coverage restrictions will remain for the upcoming cycle. I'll now hand it over to Willy.
Thank you, Daniel. Going to slide seven now, we show the acquisition cost, which in Q3 added up to BRL 309 million with a 6.4% rate reduction in relation to Q3 2021. When we analyze acquisition cost and premium gained in the period, this index went from 20% to 26%.
Now, when we exclude the effect of LPT, the commissioning index would be 21% in Q2 2022, which means to say it's in the same level as compared to previous periods. The same happens when we look at the nine months of 2022. In this case, commissioning index is 21%, which disregards the effect of LPT. That is the same level as what was accumulated in the nine months of 2021. In the lower part of the slide, you show the general expenses, SG&A expenses added up to BRL 88 million, which is a 3% reduction in relation to last year's. With that, the index was 7.4% in Q3 2022. But once again, if with this regard, LPT, the index would be 6.1%, which is stable as compared to previous quarters. The same effect happens in the nine first months of this year, and the index ends up at 5.7%.
A result of all of these I've just mentioned, I go now to slide eight, and we can show in the upper part that our expanded combined index progression that shows final profitability of the business itself was affected, as mentioned in the two last quarters due to the result in agricultural insurance and life insurance. In the lower part of the slide, we show the same index after being normalized from the LPT and climatic events from this period, which has been broadly explained by Toneto and Daniel. This expanded combined index once normalized for the nine first months of 2022, excluding the atypical events, would be 103%, which is still beyond what we expected, but very close to the level where premium plus financial results will cover commissioning claims and admin expenses costs.
On slide nine, we see that the asset portfolio in September reached BRL 8.7 billion with a BRL 700 million growth in relation to the first half of the year in July. This increase is related to the restricted offer of shares closed in September where we sourced BRL 1.2 billion . Part of the resources were used in the first quarter as cash generation by operations was negative. Cash consumption in this quarter was due to the lowest volume of premium due to adjustments in the underwriting policy. And the higher payment of claims highlights to advance payments done to insurance companies in the rural segment. In Q3 2022, the financial result and equity was positive in BRL 173 million, presenting a 33% reduction in relation to the same period last year.
The thing is, in 2021, this period was impacted by the extraordinary financial revenue of BRL 167 million for tax recovery. If we disregard this event, the financial and equity results for this year show progress of 93% as compared to the same quarter last year. This increase is mainly due to the increased interest rate of the IRB Brasil investment portfolio. We will now have Guerra to talk about regulatory indicators in slide 10.
Thank you. As for total solvency of the company, which is one indicator that allows us comparison with other players in the world, what we can say is we maintained its robustness at 245%. It's important to mention that insurance company and reinsurance need to be adherent to two indicators. First is solvency, which considers total solvency and disregards some assets in its calculation.
In this indicator specifically, we had 109%, resuming our classification, which was the main driver for the follow-on process. The second indicator is technical provision coverage. So we have presented in September, BRL 322 million. It was also driven by capital growth and also added by the LPT operation mentioned before. It's important to highlight that even without the LPT, the provision coverage indicator would already surprise. So this is the slide that shows both indicators, and I'd like to hand over to our CEO for his final remarks. Raphael.
Okay. I'd like to look a little bit into the future to show you where we are going to be focusing and to give you some perspective. Our first commitment, let me just adjust my mic here. Our first commitment is to keep our discipline in executing our strategy. That is, we are focused on Brazil.
We think we have better competitive edge here. Remember, in the nine first years of the year, we have over 60% here. We will continue working to reduce risk by reducing business concentration or contracts and preventing portfolio diversification. It's important to stress here that we were able to optimize our protection contracts for the very reason that we are focusing in Brazil and reducing risk. It's important to say that there's been little protection in the international market for the portfolio as a whole. Price adjustment will continue in line with the global market to contribute to recover our operational margins. Last but not least, strict control on commercialization and administrative expenses. We know that volatility is part of our business. That being said, we believe that the market for the next few months is positive. First, we see the hard market being maintained.
The perception here in hard market was recently addressed in an important reinsurance conference. We believe that the scenario Guerra mentioned for higher demand for reinsuring will not change in the short term. These two factors combined, hard market and more demand towards reinsurance, favors our price adjustment and condition adjustment strategy. We saw in Toneto's presentation that we have specific reasons that can be mitigated to cover the issues we've had. These specific reasons have to do with the specific contracts that may not renew as was mentioned. Also about claims, it's important to say that older contracts that have affected a lot our results last year have been under control year to date, and we don't think this is going to change.
We also have to consider the interest rate, which is beneficial to our financial results. I think that finally, I think it's worth saying that we started the fourth quarter in a better shape than what we started Q3. With that being said, we can open up for Q and A. Thank you so much.
Thank you. We hereby begin the question and answers period. If you have any questions, you can press star one oon your phone. At any point, if your question is answered, you can press star two to remove yourself from the queue. Questions will be answered as they come in, and we request to please kindly ask one question at a time. Please, once you ask your question, take the phone off the hook. In this way, there will be a better quality of tone for all the listeners.
Please wait as we collect all the questions. The first question is from Gabriel Gusan from Citibank. Please, you may ask your question, sir.
Hello. My question is about the results. We're still talking about the effects from the rural portfolio and the ag insurance issues that we observed.
Your first question about January and February. What I can say is we had a lot of claims coming in, and this led to a delay in the analysis on the part of insurance companies, and we follow them. We have to wait for the insurance companies to finalize their process, then they will report to us, and then we will make the record. There is certain delays, so to speak. We can make a forecast, of course, but with the longer regulatory process, this delay may be altered or expanded, if I may. In Q3, we have much more mature information, so we do not hope that would be significant changes for Q4 due to the catastrophic events. The other question you made on the older contracts, Raphael just touched on that. Let us try and remember here.
In December, we informed that this had a big importance in the claims of 2021, tune of 25%. This year, this represents much less, lower than 15% year to date, which tells us that these effects will not be relevant or significant in the next few quarters. They will increasingly reduce, in fact. For the remaining of your questions, I will hand it over to my colleague so he can make your comments.
The first observation here is that we considered that the increase in capital done was sufficient and brought us back to where we had to be in the regulatory standpoint. Now, speaking of the CMR, the minimum capital required, I think it is important to make a brief introduction of what the CMR is made up of, and then you understand the perspective. The required capital has four components.
I will focus on one which accounts for about 60% of its composition, which is underwriting capital. Underwriting capital is based on two pillars. First, premium, which is related to exposure, and the second is the claims related to loss ratios. Claims are half or more than half of what premium is worth. To reduce the pressure on the CMR, the claims are extremely important, and this is what we see happening in these subsequent periods, reducing the loss ratio. Actually, once the atypical events normalize, and we hope they will not happen again, our level would be much different, and the pressure on CMR would be much lower in the next periods. All that being said, I can tell you we are comfortable with the capitalization that was done, and we do not see any abrupt changes for the near future.
Thank you. Once again, if you want to ask a question, press star one .
We are now closing the Q and A session. I would like to hand over the floor to the operator so that the conference can be concluded. I believe there is another question. No, it is not actually a question, it is just a message, text message. I would like to thank everyone for your attendance here, and I reinforce that we have a very positive perspective for the months to come. Thank you very much.
This call for IRB-Brasil RE is now finished. You may disconnect now and have a great day. Thank you very much for your presence