Brazil: SUSEP opens public consultation on reinsurance collateral and reinsurer ratings

On November 9, 2026, Brazilian Insurance Authority (SUSEP) published two public consultation notices in the Federal Official Gazette (Diário Oficial da União): Public Consultation Notice No. 16/2026 and Public Consultation Notice No. 17/2026. Together, the proposals address two complementary topics: a new framework under which collateral posted by admitted and occasional reinsurers could reduce the credit risk capital that ceding companies are required to hold; and refinements to the rules governing the risk classifications (ratings) for foreign reinsurers.

Notice No. 16 contains a draft resolution from the National Council for Private Insurance (CNSP) – the policy-setting body that sits above SUSEP — amending CNSP Resolutions No. 422/2021, No. 432/2021, and No. 494/2026. Notice No. 17 contains a draft SUSEP resolution amending SUSEP Circular No. 700/2024.

According to SUSEP, the goal is to align more closely the capital that ceding companies (i.e., insurers and local reinsurers) must hold with the risk they actually bear when transferring exposures to reinsurers, consistent with international practice. The proposals stem from studies conducted under item 16 of SUSEP’s 2026 Regulatory Agenda.

Collateral

SUSEP’s proposal does not impose a general obligation to collateralize reinsurance or retrocession cessions. Instead, it establishes a voluntary mechanism available only for cessions to admitted and occasional reinsurers; transactions with local reinsurers would remain subject to the current rules.

When collateral is recognized, its value would be deducted from the exposure used to calculate installment 1 of the credit risk capital requirement (known as “CRcred1”), thereby reducing the capital the ceding company must hold.

Eligible collateral assets

Under the draft and its accompanying Statement of Reasons, only bonds issued by the Brazilian Federal Government and registered with a securities registry or a centralized depository system authorized by the Central Bank of Brazil (Bacen) would qualify (proposed Article 38-A, paragraph 1, of CNSP Resolution No. 432/2021). Although the bonds remain the reinsurer’s property, they must be registered and held in custody in Brazil under infrastructure governed by Brazilian law (Articles 38-C and 38-G). SUSEP justifies limiting eligible collateral to these instruments on the grounds of their high liquidity, price transparency, and the well-established registry and lien infrastructure available for them – reflecting what SUSEP describes as a gradual, conservative approach.

Requirements for recognition

The draft makes clear that the reinsurer’s mere ownership or custody of bonds does not, by itself, constitute eligible collateral (Article 38-A, paragraph 3). The framework’s practical benefit will therefore depend on whether the required structures prove feasible. The main requirements include the following:

• Dual contractual structure. The reinsurance contract must include a clause authorizing the use of collateral, and a separate collateral agreement – ancillary to the reinsurance contract – must govern the creation, monitoring, replenishment, and enforcement of the collateral (Articles 38-B and 38-D). The reinsurance contract must also expressly reference this collateral agreement (proposed paragraph 3 of Article 15 of CNSP Resolution No. 494/2026).
• Lien effective against third parties. The collateral must be established through a lien, encumbrance, fiduciary encumbrance (vinculação fiduciária), or an equivalent mechanism, and must be registered with authorized infrastructure (Article 38-C, paragraph 1).
• Asset segregation. The bonds must be kept separate from the reinsurer’s operational assets and may not be sold, transferred, or pledged to secure other obligations while the encumbrance is in place (Article 38-C, paragraph 2). In practice, the challenge will be structuring and documenting this segregation so that it is enforceable against third parties and can withstand potential insolvency proceedings involving the reinsurer abroad—while maintaining the arrangement for the full duration of the covered risks, which is likely to entail ongoing operational costs for the reinsurer.
• Collateral must be identified on a ceding-company-by-ceding-company and instrument-by-instrument basis; the same collateral may not simultaneously cover different cessions unless each is clearly segregated (Article 38-D, paragraph 6).
• Independent enforcement. The ceding company must be able to enforce the collateral without relying on the reinsurer’s subsequent authorization or cooperation (Articles 38-C, paragraph 4, and 38-E, paragraph 4).
• Minimum enforcement triggers. The collateral agreement must allow the ceding company to enforce the collateral in at least the following circumstances: default by the reinsurer on a monetary obligation; payment delay beyond the contractual deadline; insolvency, liquidation, bankruptcy, reorganization, intervention, or equivalent proceedings involving the reinsurer; cancellation, suspension, or loss of the reinsurer’s authorization in a manner that compromises its ability to pay; a covered claim that has become a liquidated and enforceable obligation; and other credit events defined in the contract (Article 38-E, paragraph 1).
• Insolvency resilience. The collateral must remain valid and enforceable even if the reinsurer becomes insolvent, including in cross-border proceedings initiated abroad (Article 38-E, paragraphs 2 and 3).
• Burden of proof on the ceding company. The ceding company bears responsibility for demonstrating, whenever requested, that the collateral is eligible and effective. SUSEP may require legal opinions from independent specialists—whether Brazilian or foreign—to support this showing (Article 38-F), in addition to mandating the retention of supporting documentation (Article 38-G, paragraphs 3 through 5).

Although the new rule is not mandatory, if Brazilian ceding companies that purchase international capacity were to adopt it widely, this could result in reduced capacity and pricing different from current levels. Moreover, because these are cross-border relationships involving parties subject to legal regimes that may differ significantly from one another (and from Brazil’s), it will be important to understand whether SUSEP will consistently adopt clear minimum standards over time for meeting all of the requirements above, so as to provide legal certainty to ceding companies wishing to benefit from these rules.

Rating

The proposals do not change the minimum rating levels or risk grades currently applicable to foreign reinsurers. The changes primarily clarify which rating must be considered and refine existing rules for reinsurer registration and credit risk capital calculations. The main points are:

• Type of rating. Current regulations already require foreign reinsurers to hold a solvency classification issued by a recognized rating agency, but they do not specify which type of rating. The draft would clarify that the relevant measure is the long-term, global-scale Financial Strength Rating (as distinct from, for example, an issuer credit rating or a local-scale rating). This requirement would apply to the CRcred1 calculation (proposed paragraph 5 of Article 3 of Annex XIV of CNSP Resolution No. 432/2021), to the registration of foreign reinsurers (revised Article 28, item II, of CNSP Resolution No. 422/2021), and to the documentation required under SUSEP Circular No. 700/2024 (revised item 4 of Annex II).
• Multiple ratings. The existing rule—under which the least favorable classification prevails when a reinsurer holds more than one rating—is retained. The draft simply clarifies that this rule applies to ratings issued by different agencies and does not require comparison among various rating products from the same agency (revised Article 3, paragraph 3, of Annex XIV of CNSP Resolution No. 432/2021).
• Suspended reinsurers. Under the current framework, a ceding company must aggregate its exposures to reinsurers that are not authorized by SUSEP, treat them as a single counterparty, and apply the risk factor corresponding to Grade 3 / Type 3—the highest (most punitive) tier in Table 1 of Annex XIV of CNSP Resolution No. 432/2021. The draft would extend the same treatment to suspended reinsurers (revised Article 3, paragraph 4, of Annex XIV), regardless of the reason for the suspension, including where the reinsurer’s rating falls below the required minimum.
• Additional guidance and unforeseen scenarios. SUSEP would be authorized to issue supplemental guidance and to evaluate ratings not expressly covered by the rules, taking the relevant agency’s methodology into account (proposed paragraphs 6 and 7 of Article 3 of Annex XIV of CNSP Resolution No. 432/2021).

If these proposals are adopted, ceding companies will need to verify that the admitted and occasional reinsurers with which they contract hold a long-term, global-scale Financial Strength Rating at the minimum required levels. If a reinsurer holds only other types of ratings, it risks failing to meet registration requirements and, if suspended, could be assigned the maximum risk factor in the CRcred1 calculation — thereby increasing the ceding company’s capital burden.

Interested parties may submit comments and suggestions on the drafts within 15 calendar days of the publication date of the notices, exclusively through SUSEP’s Public Consultation System, in accordance with the instructions available on SUSEP’s website.

For more information on this topic, please contact Mattos Filho’s Insurance, Reinsurance & Private Pensions practice area.