BTG Pactual launches Brazil ILS structure to issue LRS
BTG Pactual, a major global investment bank and asset manager headquartered in Brazil, has established an insurance-linked securities (ILS) structure named BTG Pactual Sociedade Seguradora de Propósito Específico S.A. (BTG Pactual SSPE) to issue Letras de Risco de Seguro (Insurance Risk Letters), Brazil’s own-brand of ILS instrument. The investment bank is now the fourth owner of an SSPE structure in Brazil, through which it can issue and facilitate issuance of LRS. The Superintendence of Private Insurance (SUSEP), Brazil’s regulator, has now authorised the entity to operate, setting the bank up to arrange transactions in the domestic market.
Building on previous investments
BTG Pactual is well-known in the reinsurance space, having invested in a number of ventures through its asset management arm while also providing services to insurers and reinsurers across Latin America and in other locations worldwide. In addition, the bank has had an interest in the insurance-linked securities investment market in the past, having acquired Bermuda-based reinsurance linked investments manager Lutece Re Ltd. back in 2018, which was later acquired in 2020 by Hong Kong headquartered reinsurer Peak Re and became Peak Capital.
The Superintendence of Private Insurance (SUSEP) has now authorised BTG Pactual SSPE to issue Letras de Risco de Seguro (LRS or Insurance Risk Letters), with the SSPE having initial share capital of R$ 3,000,500, with 3,000,500 ordinary, nominative and unnamed shares. BTG Pactual SSPE is now authorised to conduct insurance, reinsurance and retrocession business, while issuing LRS to investors that effectively enable the risks to be collateralized, just like any ILS arrangement elsewhere in the world.
The SSPE setting in Brazil
The first SSPE structure in Brazil was IRB (Re)’s vehicle Andrina SSPE and this entity issued the first LRS transaction under the regulatory regime, which as reported last week has now renamed as IRB SSPE. Gálapagos Capital SSPE, owned by global investment company Galapagos Capital, completed its R$100 million first LRS issuance in December 2025. After which Galapagos Capital SSPE issued its second arrangement under the Brazilian insurance-linked securities regime in early 2026 and then facilitated its third issuance in May 2026, a R$126 million offering of LRS which was the first broadly distributed LRS arrangement since Brazil put its own ILS regulations into law. The third ILS structure under Brazil’s regulations was Ariel SSPE, established in Brazil earlier this year to target this now growing domestic Brazil ILS marketplace.
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Established financial institutions are integrating ILS vehicles into their operations due to the existing regulatory framework. The infrastructure for these structures—specifically the SSPE designation—allows traditional capital markets participants to access risk transfer mechanisms without establishing standalone insurance subsidiaries. This approach lowers the barrier to entry for firms that might otherwise find direct underwriting operations too capital-intensive, effectively turning a reinsurance product into a tradable security that fits into standard investment portfolios. This shift from direct risk assumption to securitized risk transfer marks a significant evolution in how capital markets absorb catastrophe exposure.
BTG Pactual SSPE makes it four, and this sees one of the biggest investment banks and asset managers in Brazil recognising the opportunity to get involved in the LRS issuance pipeline, which bodes well for continued ILS activity in the country.
It is a new development.
