Credit Suisse downgrades Brazilian reinsurer IRB, cuts target price to 7.50 reais

SAO PAULO (Reuters) - A report by Credit Suisse Group AG CSGN.S late on Tuesday downgraded Brazilian reinsurer IRB Brasil IRBR3.SA from neutral to underperform and cut its target price to 7.50 reais ($1.37) per share.

The new target price set by analysts led by Marcelo Telles is 31% below the closing price on Tuesday of 11 reais per share. CS’ previous target price was 43 reais. Analysts said the reinsurer has a significantly lower sustainable return on equity than expected, 13%, sharply below previous estimates of 37%.

IRB restated its earnings on Tuesday and disclosed large accounting irregularities. Shares fell 11.7%.

Reporting by Paula Laier, writing by Tatiana Bautzer; Editing by Andrew Heavens and Louise Heavens