XL Re, the global reinsurance operations of XL Capital Ltd., is set to move into the Brazilian market after being given regulatory approval to serve the reinsurance industry there.

The newly admitted reinsurer, XL Re Latin America, will run offices in both Rio de Janeiro and Sao Paulo, according to regional operating officer Carlos Caputo, who will manage the reinsurance operations.

James Veghte, chief executive of XL Re, said: "We are extremely gratified that our application has been approved by Brazil's regulators. We look forward to serving the Brazilian market by offering primary insurers an array of options for services and business specialties that have not existed under the prior monopolistic reinsurance structure.

"We have had a representative office in Brazil for many years led by an outstanding management team. I believe we are ideally positioned to be a market leader in Brazil's newly opened and competitive reinsurance environment."

Mr. Veghte added that XL Re was also awaiting regulatory approval to operate a local reinsurer. XL Re was seeking to operate both local and admitted reinsurance entities to serve the Brazilian market. Local reinsurers have rights of first refusal up to 60 percent of coverage sought by primary insurers until 2010, and rights of first refusal for up to 40 percent of business afterwards.