Brazil tax relief could boost local reinsurers, but offshore reliance persists

By Ashish Tiwari Oct 16 (The Insurer) — Brazil's tax changes could give local reinsurers a competitive boost, but whether they will translate into broader domestic risk retention remains unclear as foreign players retain an edge in scale, diversification and expertise for high-severity exposures, according to rating agencies. The changes come as Brazil’s reinsurers benefit from disciplined underwriting, favorable 2025 results and high interest rates that lifted investment income, although a softening market and offshore competition remain headwinds. Fitch Ratings, in a commentary published on October 13, stated that the lower tax burden may encourage insurance groups to expand local reinsurance operations or establish captive vehicles. But the agency “does not expect the lower tax burden alone to trigger a broad transfer of ceded risks from foreign reinsurers to Brazil.” Meanwhile, AM Best this month revised its outlook on Brazil's reinsurance market to stable from negative, citing improved underwriting performance and financial income. The tax change, through Law No. 15,525/2026, lowers the social contribution on net profit rate for local reinsurers to 9% from 15% effective in 202