JPMorgan raises IRB Brasil price target to R$ 80

JPMorgan raised its price target for IRB Brasil to R$ 80 per share from R$ 68, maintaining an overweight rating. The bank pointed to the passage of Bill 3,540/2026, which it expects will improve profitability and future dividend distribution for the reinsurer.

The new legislation reduces the CSLL tax rate for local reinsurers from 15% to 9% starting in 2027, removes a 10 percentage point surcharge on corporate income tax (IRPJ) starting in 2030, and eliminates the 30% cap on utilizing deferred tax assets. JPMorgan noted these measures reduce tax asymmetry between local players and foreign competitors.

Following the regulatory changes, JPMorgan raised its written premium growth forecasts to 6% in 2027 and 8% in 2028, up from previous estimates of 1.3% and 6%. For 2026, it projects an 8.1% drop. It also anticipates a dividend payout ratio above 50%, which could yield a dividend yield around 8% in 2027. However, the revaluation of deferred tax assets is expected to push profit reserves back into negative territory, delaying dividend resumption until around mid-second quarter of 2027.

In the near term, potential claims from an earthquake in Colombia led JPMorgan to cut its 2026 net profit forecast by 15% to R$ 472 million. For 2027, the bank lifted its net profit estimate by 10% to R$ 738 million. With the R$ 80 price target, the shares trade at roughly 7 times projected 2027 earnings, or about 4.7 times cash earnings. The bank identified upcoming elections as the primary risk, noting that financial results account for roughly 85% of IRB's pre-tax profit.