Gálapagos Capital Sociedade Seguradora de Propósito Específico S.A., the Brazil based SSPE or special purpose reinsurance vehicle that can issue Letra de Risco de Seguro (Insurance Risk Letters) and is owned by global investment company Galapagos Capital, has completed issuance of the largest transaction under Brazil’s insurance-linked securities regime so far.
This particular transaction saw Gálapagos Capital collaborating with Avla Seguros, one of the top five financial lines insurance groups in Latin America.
They worked alongside independent asset manager Tivio Capital and fintech collateral agent Marvin, while law
firms Mattos Filho, Pinheiro Neto Advogados and Madrona Advogados all provided counsel for the transaction.
The R$126 million Letra de Risco de Seguro arrangement has been designed to cover credit insurance operations for a large retailer.
Notably, this is the first of the initial LRS deals to have distribution to the market, reportedly to five investors, With the participants saying this underscored the ability to access risk capital by “directly connecting the insurance market to the capital market, in a context of growing demand for insurance solutions and alternative investment assets.”
Felippe Astrachan, CEO of Avla Brasil, the insurer that led the process, commented, “LRS allows direct access to capital from the financial market to finance insurance risks, creating an alternative for both investors and the sector. The model represents an important shift in the traditional market logic by establishing a direct link between those who take risks and those seeking investment opportunities.”
Roberto Takatsu, partner in the insurance business at Galapagos Capital, highlighted how this larger and more broadly distributed offering demonstrates Brazil’s ILS market activity gaining pace, “The accelerated dissemination of this instrument in the market implies a long learning period, which is only now gaining more traction.
“The first issuances were created from scratch, without references that could expedite the process. Therefore, we had to educate both insurers and investors on how to understand this new segment.
“Today, we have a contractual framework already in place, and the players already have a more advanced understanding of LRS, which allows new issuances to occur more quickly.”
Astrachan of Avla Brasil noted that the insurer is already evaluation further LRS issuances, saying, “The potential of this instrument is broad, both because of the diversity of risks that can be structured and because of its ability to attract different investor profiles. We are at the beginning of a movement that could transform the way risk is financed in the country.”
Tivio Capital is an alternative asset manager and part of the Bradesco Group. The company acted as both asset manager and anchor investor in this LRS issuance, while actively participating in its structuring from the initiation of the project.
Matheus Alencastro, head of operations at Tivio Capital, said, “LRS is still a relatively new instrument in Brazil, although it is already quite widespread abroad. For our clients, it represents access to a source of return uncorrelated with fixed and variable income, with a favorable risk-return ratio — something that was previously restricted to insurance and reinsurance companies. This operation is another step in building a robust and diversified alternatives platform, which continues to expand.”
Marvin acted as both guarantor and co-structurer of the LRS issuance, enabling it through the arrangement and management of the financial collateral to underpin the securities.
Bernardo Vale, CEO of Marvin said, “We are very pleased with the success of this first issuance. We found in Avla a partner equally dissatisfied with the ‘it can’t be done’ mentality. This is the first of a series that we will launch later this year.”
IRB (Re) was first to sponsor a Letra de Risco de Seguro issuance in Q2 2025, with a R$33.7 million deal to securitize surety bond risks, using its Andrina Special Purpose Insurance Entity (SSPE).
Later that year, Gálapagos Capital SSPE completed its R$100 million first LRS issuance in December 2025.
Galapagos Capital, using its SSPE again, issued its second arrangement under the Brazilian insurance-linked securities regime earlier this year.
Now, Galapagos Capital has facilitated its third issuance under its SSPE, while as we reported last week a new issuer, Ariel SSPE, has also recently been established in Brazil to target this now growing domestic Brazil ILS marketplace.
The LRS, Brazil’s own brand of ILS instrument, is clearly finding acceptance from both sides of the trade, sponsors and investors, which bodes well for future issuance activity in the country.
The transactions have all been focused on surety bond and credit insurance related risks so far, but as potential sponsors gain an understanding of the benefits of accessing capital markets for risk capital and risk transfer we expect the use-cases for LRS transactions may expand as well.
You can find all our coverage of Brazil’s ILS regime under this archive.
