The Brazilian government signed a decree on Wednesday setting the terms for a reduction in its stake in IRB-Brasil Re, the state-controlled reinsurer. The government plans to auction off to the entity's employees a package of common and preferred shares of the Rio de Janeiro-based institution worth 2.58 billion reais ($1.25 billion) through Feb. 20, before offering them to private investors.
The plan is another step in the government's decision to open the reinsurance market to private investors - a move that began in 2004 with the gradual privatization of IRB. Apart from the federal government, Itaú Unibanco Holding SA and Banco Bradesco SA are shareholders of IRB-Brasil Re, the gazette added.
Details on the potential offer to investors were not available in the decree.