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FOR IMMEDIATE RELEASE
OLDWICK - JULY 30, 2015 03:13 PM (EDT)
A.M. Best has released a new briefing focusing on the National Council of Private Insurance issuance of CNSP Resolution CNSP No. 322, which decreases the amount of premiums that local insurers must "place" with local reinsurers, from 40% today gradually declining to 15% by 2020.
The Best's Briefing, titled, "Resolution CNSP No. 322 Brings Changes to Brazilian Local Reinsurance Market," focuses on the "place or offer" wording in the resolution as the mandated "offer" of 40% of ceded premiums to the local market has not changed. Local reinsurance companies still have the right of first refusal for 40% of the market premium. What has changed is the percentage of business insurers must "place" with the local reinsurance market, and that percentage will be allowed to gradually decline over the next five years.
The second major consideration of the new resolution pertains to companies linked or belonging to the same financial conglomerate headquartered abroad, provided they are registered as admitted or occasional reinsurers. This provision will allow for greater financial and capital efficiency for these multinational organizations and may lead to greater participation on their part going forward.
A.M. Best does not perceive that these recent changes will have any near-term impact on the market profiles or operating performances of the Brazilian companies it currently rates; however, A.M. Best will continue to monitor the situation for any potential ratings impact.
For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=239957 .
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