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Brazil set to end their state reinsurance monopoly. 03-07

The President of Brazil has signed a bill to end their country’s state reinsurance monopoly. The replacement regulations will have restrictions, the detail of which has not yet been announced. Although the final process may take some time it is clear that the opening of their reinsurance market is certain, will be taken away from IRB; the current local reinsurer and imminent.

There will be three types of reinsurer:

- A local reinsurer domiciled in Brazil
- An admitted foreign reinsurer with representative offices in Brazil
- Occasional reinsurers; a foreign company with no representation in Brazil

Local reinsurers will have preference of admitted and occasional companies and from the outset at least 60% of ceded business will have to be with a local reinsurer. This level is planned to decrease to 40% after three years. The impact of this change will be an un-doubted increase in global programmes being reinsured internationally and with increased competition there will be pressure upon rating.

Charles Parmenter, Managing Director of Contego Underwriting Limited, the specialist Construction and Engineering insurance provider commenting upon this said:

“The recent and progressive moves by the IRB are most welcome by Contego. We recognise that our existing strength and market presence in Latin America will be further enhanced by the opportunity to fully service the Brazilian market. Having been active in the region for over 15 years Contego believes that its experience will bring significant benefit to cedents within Brazil. This move by the IRB is an exciting development and we look forward to working closely with this new customer base.”

For further comment please contact Charles Parmenter or Anthony Willsher