A loosening of reinsurance regulations in Brazil could provide a boost for Bermuda business, the president of the Association of Bermuda Insurers and Reinsurers (Abir) said yesterday.

Bradley Kading told an international relations meeting in Rio de Janeiro that the Brazilian government’s decision to phase out mandates on local reinsurance operations would end the limited availability of affiliate reinsurance in the country and ease cross-border trade with unaffiliated reinsurers.

Mr Kading said: “Abir’s property and casualty reinsurance members are well regarded global providers of commercial insurance and reinsurance with major underwriting operations in Bermuda.”

And he added that the removal of barriers had been backed by Brazilian risk managers, who believe that the plan would lead to increased reinsurance capacity and access to more innovative products.

The Brazilian authorities acted after the International Monetary Fund (IMF) advised the Brazilian Centre for International Relations that protectionist reinsurance policies hindered market development.

The IMF also said that liberalisation of the market would also allow smaller companies to compete and reduce concentration risk, while international best practice called for a risk-based supervisory regime, which required the removal of limits on reinsurance placed abroad.

Mr Kading said: “Such conformance with international regulatory standards is a necessary ingredient to positioning Rio de Janeiro as a reinsurance hub for South America.”

He added afterwards that the majority of Abir members have operations or representatives in Brazil — which is viewed as a major developing market.

Mr Kading said: “The removal of the protectionist regulations in Brazil is very good news.

“The phase out begins in 2017 and is a five-year programme The impact of the phase-out is that more cross-border reinsurance trade can take place.”

But Mr Kading added: “However, Brazil still has in place a restriction on cross border trade with low-tax jurisdictions like Bermuda. So that will limit the impact on direct placements into Bermuda although it does not necessarily limit the impact on cross-border trade with Abir members that have multiple platforms.”

Mr Kading said that an increased reinsurance market in Rio de Janeiro would be unlikely to be competition for Bermuda.

He explained: “As to development of a Rio commercial insurance hub. It will take time to design and implement.

“It’s probably more of a competitive threat with existing Miami operations than with Bermuda operations.”

And Mr Kading said: “If it expands market opportunities into South America then it is likely a net positive.”