Letra de Risco de Seguro (LRS) news

Galapagos Capital, a global investment company headquartered in Brazil that offers a range of investment management, banking and financial services, has received pre-authorisation from the insurance regulator SUSEP to establish an issuer of Letra de Risco de Seguro (Insurance Risk Letters), which are Brazil’s own type of insurance-linked securities (ILS).

The Brazilian insurance regulator SUSEP has now authorised the first insurance-linked securities (ILS) structure in the country, with Andrina sponsored by IRB Re and now approved to issue Letra de Risco de Seguro (Insurance Risk Letters), which is the name for the insurance-linked notes a Brazilian ILS structure can issue to be sold to investors.

Speaking at a Fitch Ratings event on the development of insurance-linked securities (ILS) in Brazil, Rodrigo Botti, former CFO of IRB and former CEO of Terra Brasis, emphasised a domestic market-first approach, with no intention of competing with other established ILS hubs.

The first insurance-linked securities (ILS) structure under Brazil’s regulations for “Letra de Risco de Seguro”, or LRS which translates to Letter of Insurance Risk, could be named Andrina Seguros and sponsored by local reinsurance company IRB RE, according to a report.

Brazil’s regulations for “Letra de Risco de Seguro”, or LRS which translates to Letter of Insurance Risk and are effectively insurance-linked securities (ILS) laws, are seen as a positive step for the local re/insurance market and already some activity is expected to be seen, according to Fitch Ratings.

Brazil’s regulations for “Letra de Risco de Seguro”, or LRS which translates to Letter of Insurance Risk and are effectively insurance-linked securities (ILS) laws, have passed a key hurdle and been approved by its National Monetary Council.

The Brazilian government has published new legislation in its official gazette for what are being termed “Letra de Risco de Seguro”, or LRS and translates to Letter of Insurance Risk, which are insurance-linked securities (ILS) laws, as the country looks to encourage risk transfer and reinsurance to the capital markets.

With Brazil’s government having recently formalised and published legislation related to special purpose reinsurance transformer vehicles and insurance-linked securities (ILS) issuance, the country’s insurance regulator Susep has said it hopes the regime will reduce reinsurance costs for carriers.

Brazil has now published its awaited rules on insurance-linked securities (ILS) issuance and special purpose reinsurance vehicles, which are due to come into force from January 4th 2021 bringing domestic ILS capabilities to its marketplace.

The South American nation of Brazil aims to develop a legal and regulatory environment to allow for the issuance of insurance-linked securities (ILS) in the country, but its regulator Susep is calling for the local insurance and reinsurance sector to embrace transparency to support these ambitions.