Alterra to Open Local Reinsurer in Brazil

Alterra Capital Holdings Ltd. said it's opening a local reinsurance company in Brazil, after receiving approval from the Brazilian insurance and reinsurance regulator, Superintendencia de Seguros Privados.

Rio De Janeiro-based Alterra Resseguradora do Brasil S.A. is expected to immediately begin offering reinsurance to insurance companies in Brazil.

Carlos Caputo, chief executive officer of Alterra Latin America, will also serve as CEO of the company.

Alterra Re Brasil will complement the existing Alterra at Lloyd's office in Rio de Janeiro, said W. Marston Becker, president and CEO of Alterra.

"We are committed to increasing our presence in the buoyant economies of Latin America, including Brazil, the region's largest insurance market, which experienced impressive double-digit premium growth in 2010," Becker said in a statement.

Attempts to reach the company for additional comment were not immediately successful.

Since setting up Alterra Latin America late in 2009, the company has also opened reinsurance offices in Bogota, Rio de Janeiro and Buenos Aires.

Recent changes in the Brazilian reinsurance regulations have enhanced the position of local reinsurers by replacing the "first right of refusal" requirement with a rule making it compulsory for local insurance companies purchasing reinsurance to cede a minimum of 40% of each risk to local reinsurers.

However, international insurers are lining up to enter Brazil as regulatory changes and a booming economy make the Latin American country an attractive market (Best's News Service, Jan. 18, 2012). So far this month, three other companies have announced they've either received permission or applied for permission to do business in the country.

Sirius International Insurance Corp., a Stockholm-based subsidiary of White Mountains Insurance Group, said it is now registered as an "occasional" reinsurer there, while the Brazilian arm of Allianz Global Corporate & Specialty said it's applied for a local reinsurance license. Allianz was already had a local primary insurer, and an admitted reinsurer there. XL Group plc, which has also been active in the reinsurance market in Brazil, said it's launching a new primary insurance operation, Sao Paulo-based Xl Seguros Brasil S.A.

Reinsurers have had great interest in Brazil since 2007, when the country ended a state-run reinsurance monopoly and opened up the reinsurance market, said Greg Reisner, a senior financial analyst with A.M. Best Co.

Brazil has three different types of reinsurance registrations: local reinsurers are domestic companies with capital kept locally; admitted reinsurers are foreign companies that establish a representative office in the country; and occasional reinsurers are foreign companies that do not establish a representative office (Best's News Service, Jan. 8, 2012).

Alterra's subsidiaries have a Best's Financial Strength Rating of A (Excellent).

Shares of Alterra (NASDAQ: ALTE) were trading at $23.48 a share on the morning of Jan. 18, down 0.51% from the previous close.

(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com)