Changes in Investment Regime of Insurers

At present, as a general rule, insurers may keep abroad up to 50% of their investments and funds. According to Resolution No. 36,162 (the “Resolution”), this faculty will be eliminated, with some temporally exceptions, which may be granted by the Argentine Superintendence of Insurance (“SSN” after its acronym in Spanish), case by case.

From November 4, 2011, insurers will have a term of:

1. 10 working days to file with the SSN an affidavit, reporting all investments located abroad; and
2. 50 days running to evidence with the SSN the transfer to Argentina of all the investments and funds located abroad.

All investments and funds must be located in Argentina as from the balance sheet closed on December 31, 2011.

Exceptionally, based on market reasons or in inconveniences to adequate to the Resolution, the SSN may authorize the temporally maintenance of investments abroad. In both cases, the grounds of the request of exception must be evidenced prior to the filing of each balance sheet.

The Resolution provides a different regime for reinsurers (recently created, please refer to Insurance News # 1 “Changes in reinsurance regulatory framework”). It sets forth that Argentine reinsurers’ investments and funds located abroad must not exceed, in any case, 50% of their assets.

The text of the Resolution poses several doubts as regards its interpretation, application and implementation, which are being currently considered by the insurance market, in order to obtain the pertinent answers from the SSN.

The measure is in line with others that protect the Argentine foreign exchange market and bind the foreign exchange settlement in the country to the industries of oil, gas and mining.