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Brazil publishes “Letra de Risco de Seguro” rules for ILS securitization

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.

We’ve explained before that Brazil’s insurance and reinsurance market regulator, the Superintendência de Seguros Privados (Susep), had been working towards enabling direct capital market’s sources of third-party reinsurance and retrocession capital to be accessed by Brazil’s re/insurers, ultimately to help lower insurance costs for the country’s consumers.

The regulations were formalised and published by the government and the awaited rules on insurance-linked securities (ILS) issuance and special purpose reinsurance vehicles came into force from January 4th 2021.


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