This Wednesday (6th), the Senate approved a conversion bill (PLV) that establishes a regulatory framework for securitization companies and creates the Letter of Insurance Risk (LRS), which is a credit instrument, transferable and freely negotiated. The text goes to presidential sanction. Until the enactment of the provisional measure that gave rise to the PLV, the securitization rules were dispersed in several laws.
Securitization is a process that allows the transformation of debts into negotiable securities and the business is carried out by securitization companies, non-financial companies specialized in placing securities representing receivables rights on the market. These bonds, called receivables certificates (CR), are purchased by investors who receive remuneration (interest plus monetary correction, for example). Until the MP, the legislation contemplated the issuance of real estate (CRI) and agribusiness (CRA) certificates.
The MP also creates the Letter of Insurance Risk (LRS), a transferable and freely negotiated credit instrument, representing a promise to pay in cash. The intention is to expand the options for risk dilution of insurance, supplementary pension, supplementary health or reinsurance operations.
The LRS is linked to insurance and reinsurance risks and may be issued exclusively through Special Purpose Insurance Companies (SSPE), which are companies operating in the insurance, supplementary pension, complementary health, reinsurance risk market ( insurance for insurers) or retrocession (expropriation carried out by the Government).
* With information from the Senate Agency