Galapagos Capital SSPE issues R$13.5m LRS, its second under the Brazilian ILS regime

Gálapagos Capital Sociedade Seguradora de Propósito Específico S.A., the Brazil based SSPE or special purpose reinsurance vehicle that can issue Letra de Risco de Seguro (Insurance Risk Letters) and is owned by global investment company Galapagos Capital, has now issued its second arrangement under the Brazilian insurance-linked securities regime.

Galapagos Capital was authorised by Brazil’s insurance regulator SUSEP to establish its own Sociedades Seguradoras de Propósito Específico (SSPE) back at the end of 2024.

The firm wanted to become the first independent manager to issue the Brazilian brand of insurance-linked securities (ILS), known as LRS or Letra de Risco de Seguro.

In late 2025, the first LRS transaction from the Galapagos Capital SSPE came to light.

Galapagos Capital SSPE’s R$100 million first LRS issuance in December 2025 saw BS2 Seguros serving as counterparty to the transaction, holding responsibility for issuing judicial guarantee insurance policies which underpinned the LRS securities.

That first from Galapagos Capital was actually the second ILS transaction to come out of Brazil’s regulatory regime for LRS’, after IRB (Re) had sponsored the issuance of a R$33.7 million deal to securitize surety bond risks, using its Andrina Special Purpose Insurance Entity (SSPE).

The risks again differed from what we are more used to seeing in the global insurance-linked securities market, being surety and surety judicial bond related in those first two deals.

Now, it appears Brazil has a third LRS issuance, as Galapagos Capital has completed its second, again being differentiated from the more typical nat cat ILS we see in the market.

Galapagos Capital said that its SSPE has now completed issuance of a R$13.5 million Letra de Risco Seguros (LRS), with the use-case being to guarantee a tax contingency that unlocked an M&A arrangement in the agribusiness sector.

The investment manager explained, “In this operation, the policyholder had exhausted its capacity in the traditional reinsurance market.

“The solution was to access professional investors from the capital market to assume the risk, expanding the boundary between insurance and the financial market.”

Galapagos Capital highlighted the speed of implementation for its latest Brazilian LRS arrangement, saying that from the first discussions to issuance took only 20 days.

“With another issuance concluded, Galapagos Capital reinforces its position at the forefront of the ILS (Insurance-Linked Securities) market in Brazil, connecting those who need protection with those looking for risk diversification,” the investment manager stated.

The Brazilian ILS initiative is continuing to gain traction, with now three arrangements issued that we know of.

You can find all our coverage of Brazil’s ILS regime under this archive.