‘Pesification’ and retirement insurances

1. ‘Pesification’ and surrenders

In the “G.E.R. c/ Nación Seguro de Retiro s/acción de amparo” case the plaintiff demanded to be authorized to exercise the right to surrender a retirement insurance in U.S. dollars as agreed in the policy. The proceedings were held before the Federal Justice of First Instance in the city of San Carlos de Bariloche.

The Court determined that the ‘pesification’ and reschedule-of-deposits rules are not applicable to insurance contracts because the higher onerousness of the obligations of the insurer, caused by the devaluation of the Argentine peso, is part of the risks the insurer must undertake when entering into an aleatory agreement.

The Court upheld that Decree No. 558/2002 allows insurance companies to resolve insolvency situations by submitting plans of regularization and reorganization to the approval of the Superintendence of Insurance. According to this decision, as long as insurers fail to present these plans to the Superintendence of Insurance, they must perform their obligations with the insureds as originally agreed.

Besides, the Court considered that Decree No. 905/2002, allowing for the discharge of part of the obligations of insurance companies by delivering bonds in U.S. dollars, is another proof that the reschedule and ‘pesification’ rules are not applicable to retirement insurance. The Court understood that only after Decree No. 905/2002 came into effect, would insurers be able to fulfil their obligations by delivering public bonds. Except for this case, such decree establishes that the obligations must be performed as agreed in the contract.

Notwithstanding, the Court understood that Decree No. 905/2002 is not applicable to the case because the Decree became effective when the plaintiff had already fulfilled the requirements to get the funds reimbursed. In other words, the right to discharge obligations as granted by Decree No. 905/2002 would not be applicable in respect of those obligations of the insurer that were already in arrears at the time the Decree became effective.

Therefore, the Court ordered the insurer to pay the U.S. dollars accrued in the insured’s individual capitalization account.

2. ‘Pesification’ and life annuities

In the “Fabricante, María Cristina y otro c/Poder Ejecutivo Nacional s/amparo” case (held before the Commercial Justice of First Instance No. 18/36) the owners of a life annuity in U.S. dollars, were receiving annuities at a rate US$ 1 = $ 1.40 from Siembra Compañía de Seguros de Retiro S.A. They demanded a provisional remedy that would order the Company: (i) to deliver the differences between the actual sums delivered and the sums that should have been delivered, regarding annuities already paid by the insurer, taking into account the exchange rate on the day of payment, and (ii) to pay in U.S. dollars, or in pesos at the free market exchange rate on the day of payment, regarding future payments.

The Court understood that the provisional remedy requested was excessive. If ordered as requested, the Court would be rendering a final decision in advance because what had been requested by the plaintiff in the complaint was the same as that requested as a provisional remedy.

Without prejudice of the aforementioned, and without analyzing the applicability and the constitutionality of the regulations involved, the decision ordered the insurance company to deposit the differences resulting from the annuities which had already been paid and from payments to be made, in an account in the court’s name until the final decision is issued.

3. Conclusion

To date, the few decisions published about the effects of the ‘pesification’ on retirement insurance have put in doubt the application of the emergency rules.