Changes in Reinsurance Regulatory Framework

At present, Argentine cedants may reinsure with:

1. Argentine reinsurance companies or Argentine subsidiaries or branches of foreign reinsurers, with a capital in Argentina of at least AR$ 20,000,000 (i.e., approximately USD 5,000,000). At present, since there is basically no such company, cedants reinsure through any of the options described below.
2. Foreign reinsurers underwriting risks from their home office provided they are registered with the Argentine Superintendence of Insurance (the “ASI”).
3. Foreign reinsurers underwriting risks from their home office, not registered with the ASI, provided a reinsurance broker registered with the ASI intermediates in the pertinent reinsurance contract.
4. Argentine insurance companies, up to certain limits and subjects to certain formal requirements.

From September 1, 2011 Argentine cedants will only be able to enter into reinsurance contracts with Argentine reinsurance companies or Argentine subsidiaries or branches of foreign companies, with a local capital of at least AR$ 20,000,000 (i.e., approximately USD 5,000,000).

Foreign reinsurers that have not set up an Argentine reinsurance subsidiary or branch will only be able to underwrite risks from Argentine cedants when, due to the importance and type of risk to be ceded, there is no local capacity and subject to the approval of the ASI (which will be granted on a case by case basis) and to the registration of such foreign reinsurer with the ASI.