(Reuters) — IRB Brasil Resseguros SA said on Monday it was considering a new capital increase to strengthen its financial structure, after market participants raised several alarms about the Brazilian reinsurer’s capital adequacy.
The move would most likely be a new follow-on stock offering, the company said in a securities filing, adding that it has not yet made a final decision or approved the potential financing or its terms.
Shares in IRB fell 9.5% to 2.09 reais after the announcement, making it the worst performer on Brazil’s Bovespa stock index, which fell 1.4%.
Local financial website Brazil Journal reported on Friday, citing sources, that the reinsurer was expected to announce a new offering to raise up to 1.5 billion reais ($292 million) at about 1 reais per share.
That would represent a 56.7% discount to Friday’s closing price of 2.31 reais per share.
Recently, IRB’s successive monthly losses led analysts to raise the alarm about its capital adequacy, with Citi and Genial Investimentos saying the company would likely need a capital increase.
Shares in the company have fallen about 47% so far this year, while the Bovespa index is up 6%.
The IRB entered a downward spiral in 2020, when Rio de Janeiro’s Squadra Investimentos discovered accounting irregularities at the company, forcing a management review.
Earlier this year, a former senior executive was accused of fraudulently planting a false story that Warren Buffett’s Berkshire Hathaway Inc. had made a significant investment in the company.