Brazilian Regulation for Reinsurance Companies -
Setting Up in Brazil as an Admitted Reinsurer

On February 1st, 2008, SUSEP (Private Insurance Superintendence) published Ruling (Circular) No 359 in the Official Gazette, establishing the procedures for the registration of admitted reinsurers in Brazil and for obtaining SUSEP´s authorization for opening a representative office (“escritório de representação”) in Brazil.

The admitted reinsurer, i. e., every foreign reinsurer with representative offices in Brazil, must be duly registered with SUSEP to operate within its territory and satisfy the following minimum requirements:

I - be incorporated under the laws of its home country for underwriting local and international reinsurance in the fields it intends to operate in Brazil and have operated in the country of origin for more than 5 (five) years;

II - have financial capacity of at least US$100,000,000.00 (one hundred million US Dollars);

III - have the following minimum ratings: (i) BBB if issued by Standard & Poor's, (ii) BBB if issued by Fitch; Baa3 if issued by The Moody's and B+ if issued by AMBest;

IV – appoint an attorney-in-fact residing in Brazil, with broad administrative and judicial powers, including the power to receive summons and notices.

Foreign reinsurers based in tax havens (i.e., countries and territories in which there is no income tax or income tax is levied at a rate lower than 20%) and in any country in which its legislation contemplates corporate ownership secrecy.

The admitted reinsurer must, in addition to the requirements outlined above: (i) maintain an account in foreign currency linked to SUSEP in the minimum amount of US$1,000,000.00 (one million US Dollars) for operating life/health insurance and US$ 5,000,000.00 (five million US Dollars) for operating in all fields, and (ii) regularly submit its financial statements.

The representative office of an admitted reinsurer must have as its only corporate purpose to act as a representative of the foreign reinsurer in Brazil and must have in its corporate name the expression “Representative Office in Brazil” (“Escritório de Representação no Brasil”).

Further, such office must be set up as a branch of the foreign reinsurer in Brazil or as a Brazilian subsidiary with: (a) minimum participation of 4/5 of the corporate capital being held by the foreign company, (b) establish in the company´s articles of association that its sole purpose is to represent the foreign reinsurer in Brazil, (c) follow the rules for the appointment of the members of its boards, and (d) the company´s officer must be the foreign reinsurer´s appointed attorney-in-fact residing in Brazil or an associate attorney-in-fact (“representante adjunto”).

Finally, SUSEP Ruling No 359/08 sets forth that the sporadic reinsurer may apply for the modification of its registration to one of an admitted reinsurer but to do so it must comply with the requirements for operating as an admitted reinsurer.

Additional information may be provided by the firm’s partner, Neil Montgomery at neilmontgomery@felsberg.com.br and by associate Ana Carolina Penteado at anapenteado@felsberg.com.br.