In February we reported that Lloyd’s was to apply for admission as a reinsurer in Brazil (see the post here: http://www.insurereinsure.com/BlogHome.aspx?entry=479).
On 16 April 2008, Lloyd’s announced that it has received approval from the Superintendent of Private Insurance to become the first admitted reinsurer in Brazil. Lloyd’s syndicates will therefore be able to write reinsurance business from Brazil as an ‘Admitted’ reinsurer (on an offshore basis), under Lloyd’s single registration and – on the basis of Lloyd’s current ratings – without having to post collateral in Brazil.
As we reported previously, following legislative changes in 2007, several foreign reinsurers have expressed an interest in entering Brazil – which is Latin America’s largest insurance market – as an admitted reinsurer. Lloyd’s has established its first Brazilian representative office in Rio de Janeiro and will look to enhance its presence elsewhere in the country over time in line with business development opportunities.
Lloyd’s Market Bulletin summarises a number of key elements of its status as an ‘Admitted’ reinsurer, including that local reinsurers must be offered a right of first refusal in respect of at least 60% of the risk being ceded (although this does not apply to retrocession) and that business can be written on a ‘cross-border’ basis only. Binding authorities are not recognised under Brazilian law and coverholders cannot therefore be appointed to operate in Brazil on behalf of managing agents.
The Bulletin also reports that Brazilian regulations specifically require certain subject areas, including Insolvency and Law and Jurisdiction or Arbitration, to be addressed in the reinsurance and retrocession contracts. Suggested wordings for appropriate model clauses are expected to be available through the Lloyd’s website shortly.
Lloyd’s Market Bulletin announcing the approval can be found here: http://www.bulletins.lloydsoflondon.com/bulletins/mktcirc.nsf/mktBulletins/Y4149/$file/Y4149.pdf
