Galapagos Capital gets SUSEP authorisation for SSPE structure to issue ILS in Brazil
Galapagos Capital has now received the expected official authorisation from Brazil’s insurance regulator SUSEP to establish its own Sociedades Seguradoras de Propósito Específico (SSPE), a special purpose reinsurance vehicle that can issue Letra de Risco de Seguro (Insurance Risk Letters), which are insurance-linked securities (ILS).
The move puts Galapagos Capital on track to achieve its goal of becoming the first independent manager to issue the Brazilian brand of insurance-linked securities (ILS).
As we reported just over one week ago, Galapagos Capital had received pre-authorisation from SUSEP to establish an issuer of Letra de Risco de Seguro (Insurance Risk Letters), Brazil’s own insurance-linked securities (ILS) structure.
The investment firm had already been rumoured to be seeking to register and have approved its own Sociedades Seguradoras de Propósito Específico (SSPE), which is the name of the ILS special purpose vehicle that Brazil has regulated for.
Now, the awaited authorisation from Brazil’s regulator has been announced, with Gálapagos Capital Sociedade Seguradora de Propósito Específico S.A., or Gálapagos Capital Special Purpose Insurance Company, added to the official register by the Superintendence of Private Insurance (SUSEP).
The investment firm had already been rumoured to be seeking to register and have approved its own Sociedades Seguradoras de Propósito Específico (SSPE), which is the name of the ILS special purpose vehicle that Brazil has regulated for.
The ILS vehicle regulated for by Brazil is named the Sociedades Seguradoras de Propósito Específico (SSPE).
These special purpose vehicles are allowed to issue Letra de Risco de Seguro (Insurance Risk Letters), the name for the insurance-linked notes that a Brazilian ILS SPV structure can issue, which can then be sold to investors to source capital markets funding for reinsurance arrangements.
Gálapagos Capital SSPE is now authorised to issue LRS’, through which it can attract funding from capital market investors to support and fund reinsurance agreements with and risks ceded by counterparties.
Galápagos Holding Seguradora, headquartered in São Paolo, is the direct shareholder of the SSPE and will operate the ILS issuer, it seems.
This new structure for securitizing insurance risks and transferring them to the capital markets now becomes the second such vehicle authorised in Brazil.
It comes on the heels of the news that SUSEP recently authorised the first insurance-linked securities (ILS) structure in the country, with Andrina SSPE having been sponsored by reinsurer IRB Re and also approved to issue Letra de Risco de Seguro (Insurance Risk Letters).
