CIRCULAR SUSEP NO. 650, OF 26 NOVEMBER 2021 (*)
Establishing procedures for the Consolidated Prudential Report preparation and delivery to Susep.
The Superintendent of the Private Insurance Superintendency – SUSEP, in accordance with subitem “b” of art. 36 of Decree-Law 73, of 21 November 1966; with sole paragraph of art. 3 of Complementary Law no. 126, of 15 January 2007, and considering the contents of Susep file no. 15414.607974/2020-86, resolves:
CHAPTER I
THE PURPOSE AND DEFINITIONS
Art. 1. To establish procedures for the Consolidated Prudential Report preparation and delivery to Susep.
Art. 2. For the purposes of this Circular the following terms apply:
I – supervised companies: insurance companies, savings bonds companies, local reinsurers and open supplementary pension companies (EAPCs) incorporated in Brazil and authorized to operate by Susep;
II - prudential group: as set forth in specific regulation from the National Council for Private Insurance (CNSP);
III – control: as set forth in specific CNSP regulation;
IV – joint control: as set forth in specific CNSP regulation; and
V – supervised parent company of the prudential group: the supervised company that holds control of the respective prudential group or, if there is no stock ownership among the supervised companies composing the set subject to the consolidation, the largest company by Net Worth.
V - leading supervised company of the prudential group: as established in a specific CNSP regulation.
(Note: item V amended by Susep Circular 701 of 25 April 2024)
Art. 3. The supervised parent company of the prudential group should prepare the pertinent Consolidated Prudential Report as at 31 December.
§ 1. The supervised companies classified in segment S4 are exempt from the requirement mentioned in the head of this article.
§ 2. The supervised companies composing the prudential group are not subject to the consolidation:
I – in the case that there is joint control, in accordance with the provision of § 3 below; or
II – in the case that they comply with the following requirements:
a) are not under the same direct or indirect stock ownership control in Brazil; and
b) do not have transactions of any nature carried out with the other supervised companies composing the same prudential group.
§ 3. If two or more supervised companies are under the same joint control, they should prepare a Consolidated Prudential Report, in accordance with this Circular.
(Note: par. 2 and 3 repealed by Susep Circular 701 of 25 April 2024)
CHAPTER II
THE CONSOLIDATED PRUDENTIAL REPORT
Art. 4. The Consolidated Prudential Report should contain:
I - the Balance Sheet;
II – the Income Statement for the Accounting Period;
III – the Comprehensive Income Statement for the Accounting Period; and
IV – the following information:
a) the composition of the prudential group, including the percentage participation in each company down to the ultimate level of common control;
b) the list of supervised companies that, being part of the prudential group were not consolidated, containing the justification for such action;
(Note: subitem b) repealed by Susep Circular 701 of 25 April 2024)
c) a detailed description of the transactions among parties related with the supervised companies of the prudential group that are not subject to the consolidation in the accounting period;
c) details of transactions between related parties;
(Note: subitem c) amended by Susep Circular 701 of 25 April 2024)
d) the statement of the consolidated adjusted net worth calculation;
e) the amount of the individual capital bases;
f) the value and breakdown of the consolidated risk capital;
g) possible insufficiencies of the assets allocated to cover the calculated technical provisions for the prudential group subject to the consolidation;
g) any shortfalls in assets offered to cover calculated technical provisions in the prudential group;
(Note: subitem g) amended by Susep Circular 701 of 25 April 2024)
h) marketable securities:
1. classified percentage, in each category;
2. contracted interest rates;
3. market value for the securities; and
4. marketable securities valued by the curve;
i) premiums receivable:
1. average instalment period;
2. balances details, taking the aging into consideration; and
3. reduction to the recoverable amount;
j) other relevant events of the accounting period that either affected or may affect the prudential group’s equity position and net income; and
k) reconciliation statement as regards the effects of the events causing difference among the amounts of the supervised parent company of the prudential group’s net worth and individual financial statements, in comparison with the Consolidated Prudential Report.
Art. 5. The Consolidated Prudential Report should be forwarded to Susep by the supervised parent company of the prudential group up to 15 April of the subsequent accounting period.
Art. 6. The Consolidated Prudential Report should be prepared in accordance with the Accounting Pronouncements Committee’s (CPC) rules, ratified by Susep, provided that these are not in conflict with the provisions of this Circular and with Susep's regulations dealing with the accounting norms applicable to individual financial statements.
Sole paragraph. The criteria of comparability with the amounts related to the end of the previous accounting period apply to the Consolidated Prudential Report.
CHAPTER III
THE CONSOLIDATION PROCEDURES
Art. 7. The Consolidated Prudential Report should comprise the totality of its subject supervised companies on each ‘as at’ date, taking into account the prudential group’s included companies and disregarding the prudential group’s excluded companies during the accounting period.
Sole paragraph. The especially constituted investment funds should not be consolidated on the Consolidated Prudential Report.
Art. 8. The Consolidated Prudential Report should be prepared taking into account the individual financial statements of supervised companies composing the prudential group.
Art. 9. The preparation of the Consolidated Prudential Report should be based on appropriate techniques to reckon the accounting information of two or more supervised companies composing the prudential group subject to the consolidation as if they were a single supervised company, and be predominantly based on techniques of financial statements consolidation.
Sole paragraph. The supervised companies composing the prudential group subject to the consolidation should release to the supervised parent company of the prudential group all necessary information for the preparation of the Consolidated Prudential Report up to 28 February of the subsequent accounting period.
Art. 9. When drawing up the Consolidated Prudential Report, appropriate techniques must be used in order to make it possible to ascertain the accounting information of the members of the prudential group, as if they together represented a single supervised company, basing it mainly on the techniques for consolidating financial statements.
Sole Paragraph. Supervised companies that are members of the prudential group must make all the information necessary for the preparation of the Consolidated Prudential Report available to the leading supervised company of the prudential group by 28 February of the following financial year.
(Note: art. 9 and sole paragraph amended by Susep Circular no. 701 of 25 April 2024)
Art. 10. The entities not supervised by Susep should be registered in the Consolidated Prudential Report by means of the equity method.
Art.11. For the purpose of consolidation, the transactions of any nature, carried out among the supervised companies composing the prudential group subject to the consolidation should be considered as if they were executed among departments of such supervised company, and the following procedures related to intercompanies' operations should be adopted as a minimum:
Art. 11. For the purposes of consolidation, transactions of any nature carried out between the supervised companies that are part of the prudential group must be considered as if they had been carried out between departments that are part of a single supervised company, and at least the following procedures relating to intercompany transactions must be observed:
(Note: head of art. 11 amended by Susep Circular no. 701 of 25.04.2024)
I – eliminate the investment of a supervised company by the corresponding participation in the net worth of the other company;
II – eliminate the declared dividends and the interest on the stockholders’ equity among supervised companies composing the prudential group;
III – eliminate the reduction to the investments’ recoverable amount by the corresponding balance formed as a result of imminent loss in business conducted by the investee;
IV – present the portion corresponding to a potential premium or discount that is not absorbed by the consolidation in a specific account, indicating:
a) the positive difference arising from the expected profitability based on financial projections, or from other economic reasons; and
b) the negative difference arising from the expected loss based on financial projections, or from other economic reasons;
V – reclassify the portion corresponding to tax charges arising of unrealized results related to business conducted among supervised companies composing the prudential group subject to the consolidation, from the accounting period’s net profit or loss to the assets or liabilities, under the title of deferred taxes;
VI – eliminate the debits and credits related to the operations in insurance, open supplementary pension, savings bonds, reinsurance, retrocession and those related to any other operation performed among supervised company members of the prudential group subject to the consolidation; and
VII – eliminate the unrealized profits among the supervised companies composing the prudential group subject to the consolidation.
V - reclassify the portion corresponding to tax charges arising from unrealised gains, relating to transactions carried out between supervised companies that are members of the prudential group, from the net profit or loss for the financial year to assets or liabilities, under the heading of deferred taxes;
VI - eliminate debits and credits relating to insurance, open complementary pension fund, savings bonds, reinsurance and retrocession operations and those relating to any other operation carried out between supervised companies that are members of the prudential group; and
VII - eliminate unrealised gains among the supervised companies that are part of the prudential group.
(Note: items V, VI and VII amended by Susep Circular 701 of 25 April 2024)
CHAPTER IV
THE ASSURANCE
Art. 12. The Consolidated Prudential Report should be the subject of a reasonable assurance report by an independent auditor addressing its adequacy to the provisions set forth by this Circular, among other matters.
Sole paragraph. The Reasonable Assurance Report should be sent together with the Consolidated Prudential Report by the supervised parent company of the prudential group.
CHAPTER V
FINAL PROVISIONS
Art. 13. The supervised companies should prepare the Consolidated Prudential Report from the ‘as at’ date of 31 December 2022.
Art. 14. This Circular becomes effective on 3 January 2022.
ALEXANDRE MILANESE CAMILLO
(Official Gazette “DOU” of 6 December 2021– page 32 – Section 1)
(*) The information provided in this publication is general and may not apply to a specific situation or person. Every effort has been made to ensure that matters of concern to readers are covered. Although the information provided is accurate, be advised that this is a developing area. The information contained herein is not intended to be relied upon or to be a substitute for legal advice in relation to particular circumstances. Specific legal advice should always be sought from experienced local advisers. Accordingly, Editora Roncarati accepts no liability for any loss that may arise from reliance upon this publication or the information it contains.
