Thomaz holds an LL.M from Columbia University, where he was appointed Harlan Fiske Stone Scholar. He specializes in the insurance and reinsurance industries, advising clients in regulatory and corporate matters, including M&A transactions, purchases and sales of portfolios and other assets involving many players in this segment. Thomaz also assists with setting up joint ventures, corporate reorganizations, and contracts for distributing insurance products (bancassurance), having been involved in many of the main transactions of this nature in Brazil.
The author of several papers and publications on insurance law, Thomaz is a member of the International Insurance Law Association (AIDA), the Insurance Committee of the International Bar Association (IBA), the Insurance and Reinsurance Committee of the British Chamber of Commerce and Industry (Britcham), and Director of the Alumni Representative Committee of the University of Columbia (ARC). He previously worked as an international lawyer at Cleary Gottlieb Steen & Hamilton (USA).
Bachelor of Laws – Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio);
Specialization in Insurance and Reinsurance – Escola Nacional de Seguros (Funenseg);
Master of Laws (LL.M.) – Columbia University, USA (Harlan Fiske Stone Scholar).
AM Best – Recommended Insurance Attorneys (2020);
Análise Advocacia 500 – Business Contracts (2020 – 2021), Civil (2020 – 2021), Insurance (2017 – 2018, 2020 – 2021) and São Paulo (2020 – 2021);
Best Lawyers – Insurance (2019 – 2021);
Chambers Global – Insurance (2017 – 2019, 2021);
Chambers Brazil (formerly Chambers Latin America) – Insurance (2017 – 2019, 2021);
Latin Lawyer 250 Insurance & Reinsurance (2020 – 2021);
Euromoney – Expert Guides – Insurance & Reinsurance (2020);
The Legal 500 – Insurance (2014 – 2015, 2017 – 2021);
Who’s Who Legal – Insurance & Reinsurance (2017 – 2021);
Who’s Who Legal Brazil – Insurance & Reinsurance (2017 – 2021).
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On September 28, 2020, the Brazilian Private Insurance Authority (“SUSEP“) issued an ordinance which sets forth deadlines for it to decide on authorization requests. Such ordinance is a byproduct of the Brazilian Economic Freedom Act, which provides that everyone has the right to know the term for a given authority to analyze requests related to business activities.
From the date on which the applicant submits all required documents to obtain a given authorization, SUSEP will have from 45 to 360 days to decide on it, depending on the subject matter of the request, provided, however, that requests related to any subject matter not listed in the ordinance shall be examined in a 60-day deadline. If SUSEP does not issue a decision within such timeframe, the request will be automatically approved. Nevertheless, the ordinance grants SUSEP the right to halt the examination only once in order to request additional documents or in case new facts arise during its assessments.
Among the terms listed in the ordinance, we highlight those listed below:
This new rule is an attempt to bring more legal certainty as well as predictability to the insurance market, fostering a more business-friendly environment in Brazil.
Mattos Filho’s team is available to provide any further clarification regarding this ordinance. In any event, we will continue to closely monitor this and other matters and shall keep you informed of any updates.
On August 24, 2020, the Brazilian Private Insurance
Authority (SUSEP) opened a public consultation to receive suggestions from the
market concerning the draft resolution (“Draft Resolution”) regulating P&C
products covering large risks (grandes
riscos) (Public Consultation No. 18/2020, available in Portuguese by clicking on this ).
The Draft Resolution not only defines what should be understood as “large
risks insurance”, but also sets forth new regulation concerning this kind of
coverage, ensuring more flexibility and autonomy for the involved parties to take out
The public consultation will be open for comments and suggestions through the e-mail address firstname.lastname@example.org, until October 9, 2020. Comments and suggestions must be made by filling in a specific form also available at SUSEP’s website.
According to the Draft Resolution, large risks insurance encompasses:
- policies belonging to the following lines of business:
a) directors’ and officers’ liability (D&O);
b) oil & gas risks;
c) named risks and all risks property;
d) bankers’ blanket bond (global de bancos);
f) stop loss;
g) nuclear risks;
h) port operators’ all risks; or
- regarding other lines of business, any policies taken out by legal entities (including in their capacity as policyholders (tomadores)), in any of the scenarios below:
a) when the policy’s maximum indemnification limit (limite máximo de garantia – LMG) exceeds R$ 20 million; or
b) when the legal entity (in its capacity as insured or policyholder, as the case may be) owns assets exceeding R$ 27 million or has gross annual revenues exceeding R$ 57 million, in the year immediately prior to retaining said insurance coverage.
The proposed regulation also sets forth that the taking out of large risks insurance must comply with the following principles: broad contractual freedom, good-faith, clear and concise information, equal treatment of contracting parties, promotion of alternative dispute resolution methods, freedom to conduct business and, what is remarkable, exceptional and vicarious state intervention in the drafting of insurance products.
The new rules establish that contractual freedom will prevail over specific regulation regarding insurance products, giving room to a broader negotiation of large risks insurance policies. To ensure the parties’ contractual freedom, SUSEP is proposing that the insurance contract or policy must be signed by the involved parties, which is currently not customary in the insurance market.
In this context, the Draft Resolution:
a) ceases to require submission or approval, by SUSEP, of the large risks insurance products’ contractual general terms and conditions (condições contratuais) and technical actuarial notes (notas técnicas atuariais);
b) enables the drafting of policies/contracts encompassing different lines of business, with due regard to applicable accounting regulation;
c) fosters the adoption of alternative dispute resolution methods, such as mediation and arbitration; and
d) allows the development of ‘all risks’ insurance.
For insurance policies/agreements encompassed by the new rules, the issues listed below must be addressed in the respective instruments, the wording of which is to be freely agreed by the respective parties:
a) geographic coverage limit;
b) premium payment schedule(s) and default consequences, including – if applicable – specific rules for insurance policies requiring registration (apólices abertas com averbação);
c) covered and excluded risks;
d) term for compliance with undertakings set forth in the respective agreement/policy;
e) renewal procedures, if applicable;
f) criteria for restatement and change of insured limits;
g) procedures for notification, adjustment and liquidation of insurance claims;
h) events of termination of the agreement/policy; and
i) deductibles, mandatory self-retention sums, grace periods, reinstatement of covered limits, if applicable.
When enacted, the new rules will apply to insurance policies issued or renewed thereafter. The use of said new rules to insurance products, insured or policyholders that do not meet the applicable requirements shall subject the respective insurers to administrative penalties.
The Draft Resolution is the answer to an old demand of the local market, following the general guidelines set forth by the recently enacted Brazilian Economic Freedom Act, and being fully aligned with SUSEP’s effort to simplify industry regulations. SUSEP once again takes an important step towards deregulation, fostering the growth of insurance business by valuing creativity to meet the demands of insureds.
Mattos Filho’s team is available to provide any further clarification regarding the Draft Resolution. In any event, we will continue to closely monitor this matter and inform any updates accordingly.
SUSEP proposes to make financing rules of the insurance market more flexible through subordinated debts
On August 12, 2020, the Brazilian Private Insurance Authority (SUSEP) opened a public consultation to receive suggestions from the market on the draft resolution, which, if approved, will allow insurers, open private pension entities, savings companies, and local reinsurers (all together, “regulated companies”) to raise funds through the issuance of subordinated debts.
The proposed rule defines subordinated debts as “debentures or any other debt instrument, issued by a regulated company, whose guarantee is conditioned to the payment of other liabilities”. In the event of the issuer’s liquidation, SUSEP proposes that the related debt instruments be paid after the settlement of the other liabilities, having preference only over the shareholders regarding the remaining assets, if any. In addition, the debt instrument must also prevent any payments from being carried out to the related creditors, including the principal amount owed upon maturity of the underlying debt, in the event of issuer’s lack of liquidity, solvency, and sufficiency of technical provisions, even when these situations potentially arise from the respective debt payment. It is also worth mentioning that SUSEP will have the power to suspend, for a defined term, any payments to creditors, including the principal amount owed upon maturity of the debt, in order to safeguard the rights of insureds, policyholders, beneficiaries, assisted individuals and saving bondholders, as well as of pension plan members, provided that such suspension is based on a technical analysis.
This is an old claim from the market, which had restrictions in terms of raising funds from third parties other than capital contributions by its shareholders. Once the new rule is approved, the insurance market may finance itself with third parties, including in the national and international capital markets, subject to the restrictions below, leading to an increase in the financing options availability and a possible and desired reduction of cost. This measure will allow national or international groups to manage a single cash flow in a faster and more efficient manner.
Here are some highlights:
(i) Operations Registration System (“SRO“): only the regulated companies that, on an optional or mandatory basis, have started registering their operations in the SRO may issue subordinated debts (working as an incentive to adhere to the SRO);
(ii) S4 Prohibition: subordinated debts cannot be issued by regulated companies which are classified as “S4 segment”, such as smaller insurers or monolines that operate, for instance, in microinsurance;
(iii) Corporate Approvals: the general shareholders’ meeting of the regulated company must resolve on the issuance of the subordinated debt and set its conditions and criteria, while the latter’s Board of Directors may, when applicable, authorize the issuance of debts not convertible into shares, as well as fix its conditions and criteria;
(iv) Deed: the deed which details the issuance of the subordinated debt, as well as any related advertising materials, must contain a specific chapter called “Subordination Center” (in Portuguese, ‘Núcleo de Subordinação‘) with clauses that evidence compliance with the specific requirements set forth in the applicable regulation;
(v) Reporting to SUSEP: the regulated companies must inform SUSEP in advance about the issuance of a subordinated debt; however, it is not necessary to obtain any prior approval from the said local authority; and
(vi) Term: encouraging long-term indebtedness, the draft resolution establishes a minimum term of 5 years, prohibiting partial amortizations during this period.
The possibility of issuing subordinated debts is an innovative measure of the insurance market, bringing it closer to the financial and capital markets. This is an additional step that SUSEP is taking to place Brazil in the same level of most developed international markets.
The public consultation will last 30 days, as from August 13, 2020, and is available at http://susep.gov.br/menu/atos-normativos/normas-em-consulta-publica.
Mattos Filho’s lawyers are available to answer any questions regarding SUSEP’s draft resolution. In any case, we will continue to monitor this issue closely and inform you in the event of new developments.
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