Brazil’s newly enacted Law No. 15,525/2026 is poised to narrow the long-standing fiscal gap between domestic and international reinsurers, encouraging insurance groups to establish or expand onshore captive reinsurers, according to a recent Fitch Ratings report.
Fitch believes Brazil’s new tax law could encourage insurance groups to retain a larger share of risks in the country, including through the establishment or expansion of captive reinsurers, by making local reinsurers more tax competitive.
Moreover, it does not view the tax change alone as a rating driver. Credit implications will depend on how groups execute these structures, their capital support and retrocession, and whether they strengthen consolidated financial profiles.
The legislation lowers the Social Contribution on Net Profit (CSLL) rate for local reinsurers from 15% to 9% starting in 2027, followed by the elimination of the 10% corporate income tax surcharge in 2030.
These adjustments will compress the maximum nominal tax rate on local reinsurers’ earnings from the current 40% to 34% across 2027-2029, and down to 24% from 20230 onward. Primary commercial insurers will continue to face the standard 40%statutory ceiling.
The framework also eases the traditional 30% cap on using accumulated tax losses and negative CSLL bases after three years, accelerating deferred tax asset recovery.
Fitch does not expect the lower tax burden alone to trigger a broad transfer of ceded risks from foreign reinsurers to Brazil.
International reinsurance placement reflect credit quality, diversification, and technical expertise for high-severity risks, which local entities may lack, therefore, higher local retention alone will not boost credit quality, Fitch stated.
While the law may make local captive reinsurers more attractive, any tax gains must offset operating, capital, governance, compliance and retrocession costs, with entities requiring economic substance and arm’s-length pricing.
According to the agency, credit profiles could improve if tax savings foster market growth and stronger earnings, but risk concentration in Brazil without sufficient retrocession and diversification – particularly for catastrophe and other high-severity exposures- could create pressure.
Brazil’s reinsurance market continues to combine local retention with international capacity. Ceded premiums totalled BRL15.27 billion in 1H26, equal to 13.4% of total insurance-market premiums, excluding pension and savings bond business.
Local reinsurers received BRL8.08 billion, or 52.9% of ceded premiums, while foreign reinsurers received BRL7.19 billion, or 47.1%. Cessions to occasional reinsurers totalled BRL3.59 billion, or 23.5% of the total, and cessions to admitted reinsurers amounted to BRL3.60 billion, or 23.6%.
International capacity remains vital for capital, technical expertise, and diversification, especially for catastrophe risk, higher-severity exposures.
