BRAZIL Trends and Developments Contributed by: Cassio Gama Amaral, Thomaz Kastrup and Pedro Ricco, Machado Meyer
through infra-legal regulation. During the term of such agreements, the applicable statute of limitations will be suspended. The reshaping of the administrative disciplinary regime by LC 213 compels supervised entities to adopt a robust compliance programme, as failure to do so may result in substantial fines, the extended suspen- sion of operations and other restrictive measures. The legal provisions on this topic are expected to come into effect on 17 January 2026, and regulation to be issued by CNSP is also expected in the upcoming months. Insurance-linked securities The first step towards bridging (re)insurance and capi- tal markets in Brazil was made on 3 August 2022, with Law No 14,430 (the “Securitisation Act”). Under the Securitisation Act, special purpose vehi- cles (SPVs) fully dedicated to collateralised reinsur- ance transactions are able to issue insurance-linked securities (ILS) to fund insurance, reinsurance and retrocession agreements entered into by SPVs. SUSEP authorised the first SPV to operate in Brazil in December 2024, and the first ever ILS issuance in Brazil was carried out in May 2025, as local reinsurer IRB (Re) sponsored the issuance of a BRL33.7 million deal using its SPV, Andrina. IRB (Re) ceded certain risks from its surety bond reinsurance portfolio to And- rina, which were then financed through the issuance of ILS in the local capital market. Even though ILS were originally designed in the mid- 90s as an instrument for providing reinsurance and retrocession capacity for catastrophic events (such as earthquakes and hurricanes), local players have moved in another direction and are structuring inno- vative transactions in the surety landscape, provid- ing additional capacity to major economic groups involved in tax, civil and labour litigation. This was facilitated by the room for manoeuvre crafted into the Securitisation Act, which will allow SPVs to structure collateralised reinsurance transactions never seen before in the global market.
Notwithstanding the above, local players are also moving to provide additional reinsurance and ret- rocession capacity to traditional lines of business – particularly in the rural insurance landscape, which has seen uncharacteristic deficits and elevated claim ratios over the last couple of years. Thus, cedants underwriting rural insurance policies are eager to con- duct business with SPVs, with a focus on catastrophic events impacting Brazilian agricultural activity. From the investors’ standpoint, the Securitisation Act brings a much-desired alternative for diversifying their portfolios and ensuring adequate decorrelation, to the extent that – when acquiring an ILS bond – investors will be exposed to the risk of occurrence of a pre- defined event and not to traditional economics risks (such as inflation, fiscal deficits and other macroeco- nomic factors that impact the trading value of securi- ties such as shares and debt bonds). It is worth noting that the proceeds raised from the issuance of ILS bonds will likely be invested in sover- eign debt issued by the Brazilian federal government; thus, investors will also benefit from the high interest rate currently set by the Brazilian Central Bank (which at present is at 15 basis points). Currently, at least two SPVs are already operating, while others are in the process of obtaining authorisa- tion. Broader market participation is expected through- out 2026, with new ILS issuances and increased rein- surance and retrocession capacity provided by private investors through capital markets. Final remarks The above-discussed initiatives are transforming the landscape of the local insurance industry. The Brazil- ian insurance market will change significantly over the next couple of years, and the outlook is a positive one – especially when it comes to innovation, alternative mechanisms for increasing underwriting capacity, and transparency in the relationship between insurance carriers and insured.
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