Andrina issues Brazil’s first ILS

Publicado em: 30/05/2025
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A wholly owned subsidiary of IRB(Re), SSPE begins operations with the issuance of surety bonds worth BRL 33.7 million

Andrina Sociedade Seguradora de Propósito Específico (SSPE) issued, today (05/30), the first Insurance-Linked Security (ILS) on the Brazilian market, worth BRL 33.7 million. The operation, in this case, involves the securitization of surety insurance risks and was structured jointly with Itaú.

“We are inaugurating a new form of risk transfer in the local market. The issuance of insurance bonds allows insurance market risks to be absorbed by the capital market. In the international market, the largest volume of these letters are cat-bonds, also known as catastrophe bonds. In this way, we expand the sources of capital for insurers and reinsurers in the country, allowing the increase in capacity of the entire sector”, says Marcos Falcão, CEO of IRB(Re).

A wholly owned subsidiary of IRB(Re), Andrina was the first SSPE to receive authorization from the Superintendence of Private Insurance (Susep) to operate in Brazil, in December last year. In practice, SSPEs transfer to capital market investors the risks of insurance, supplementary pensions, supplementary health, reinsurance or writeback from one or more insurers or reinsurers, known as counterparties. This occurs through the issuance of an ILS, which securitizes the receivable.

“With this, the financial market now has new risk options available for the investment portfolio. This is because these securities linked to insurance and reinsurance are not correlated with the traditional financial market. In other words, its profitability is not affected by economic cycles or price variations in the economy, such as interest and exchange rates”, adds Falcão.

The decision to start operations with an ILS linked to surety insurance reflects, according to Cesar Cavalcante, president of Andrina, the high demand for this type of protection. “We will continue to seek new opportunities to expand and enhance this new business. The ILS is widely used abroad and we have a great opportunity to strengthen our market, highlighting and fulfilling the sector’s social role: protecting society”, he assesses.

In 2022, Law 14,430 authorized the formation of the ILS market in Brazil. “To pave the way for this first issuance, precisely because of our pioneering nature, cooperation with the government and other actors was necessary to structure the market. In fact, a great effort was made to ensure that the legal requirements were met”, says Cavalcante, highlighting the work of the Ministry of Finance, Susep and the Federal Revenue Service, in addition to the support of B3, Oliveira Trust and the Machado Meyer and Mattos Filho offices.

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