Entry into force of New Reinsurance Framework
On February 2011 the Argentine Superintendence of Insurance (“SSN” after its acronym in Spanish) enacted resolution No 35,615, which dramatically affected the insurance regulatory framework (please refer to Insurance News #1 “Changes in reinsurance regulatory framework”). The SSN complemented the regulation with resolutions No 35,726 and 35,794 (please refer to Insurance News #3 “Reinsurance Legal Framework – Reinsurance Contracts” and Insurance News #4 “Further Changes to Reinsurance Regulations”).
From yesterday Argentine cedants will only be able to enter into reinsurance contracts with “Local Reinsurers”, i.e., Argentine reinsurance companies or Argentine subsidiaries or branches of foreign companies established in Argentina and registered as “Local Reinsurers” with the SSN. The “Local Reinsurers” must have a capital of at least AR$ 20,000,000 (i.e., approximately USD 5,000,000). They will also be able to enter into reinsurance contracts, subject to certain conditions, with other Argentine insurers.
Exceptionally, Argentine cedants will be able to enter into reinsurance contracts with certain foreign reinsurers (referred to as “Admitted Reinsures” in opposition to “Local Reinsurers”) when, due to the to importance and type of risk to be ceded, there is no local capacity and subject to prior approval by the SSN on a case-by-case basis. Also, when an individual risk exceeds USD 50.000.000, the excess may be reinsured with Admitted Reinsurers, without the need to obtain the SSN’s prior approval. “Admitted Reinsures” must register with the SSN and also register a local representative with the Public Registry of Commerce.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.