RESOLUTION CNSP 444, OF 8 AUGUST 2022 (*)
Provides for prudential preventive measures aimed at preserving the stability and soundness of the National System of Private Insurance, the National System of Savings Bonds and the Complementary Pension Regime, and at ensuring the solvency, liquidity and regular operation of supervised companies.
The SUPERINTENDENCY OF PRIVATE INSURANCE - SUSEP, in the exercise of the powers conferred upon it by Art. 34, Item XI, of Decree 60.459, of 13 March 1967, makes public that the NATIONAL COUNCIL OF PRIVATE INSURANCE - CNSP, in an extraordinary session held on 5 August 2022, in view of the provisions of art. 32, items I, II and III, of Decree-Law 73, of 21 November 1966, in art. 3, § 1, of Decree-Law 261, of 28 February 1967, in arts. 3, items V and VI, 37 and 74 of Complementary Law 109, of 29 May 2001, in art. 2 of Complementary Law 126, of 15 January 2007, and considering what is set out in Susep File 15414.616889/2020-17, resolves:
Art. 1.To provide for the preventive prudential measures applicable to insurance companies, open complementary pension entities (EAPC), savings bonds companies and local reinsurers.
Sole Paragraph. The provisions of this Resolution apply also to companies and entities subject to special supervision and to the regimes of intervention or regulatory oversight.
Art. 2. For the purposes of this Resolution, the following are considered:
I - supervised companies: the companies and entities mentioned in art. 1;
II - supervised markets: National Private Insurance System, National Savings Bonds System and Complementary Pension Scheme; and
III - preventive prudential measures: actions, restrictions or requirements additional to those provided for in the prudential regulations in force, adopted when faced with situations capable of compromising the stability and soundness of the supervised markets or the solvency, liquidity or regular operation of a supervised company, with the purpose of avoiding the aggravation of said situations or making their solution feasible.
Art. 3. The preventive prudential measures will be adopted by a reasoned decision of the Superintendency of Private Insurance (Susep), without prejudice to the application of penalties or other supervisory measures provided for in the regulations in force, considering:
I - the specific circumstances of each material case; and
II - the criteria of reasonableness, similarity and proportionality.
Art. 4. The preventive prudential measures may be applied when the following situations, isolated or cumulatively, are verified:
I - non-compliance with indices, parameters or quantitative limits defined in the prudential regulations in force, considering the adjustments determined by Susep;
II - deterioration, or the prospect of deterioration, of the economic and financial situation of the supervised company, which may compromise its regular operation and operational continuity or cause the situation described in item I;
III - relevant deficiencies in the Internal Control System, in the Risk Management Structure or in bodies, functions or activities essential for corporate governance, as well as their incompatibility with the nature, scale, complexity or risk of the operations of the supervised company;
IV - material exposure to risks not included or inadequately considered in the models used for determining the minimum capital required (CMR);
V - insufficient elements to evaluate the economic-financial situation or the risks incurred by the supervised company, due to deficiencies in the provision of information to SUSEP; or
VI - other situations that, at Susep’s discretion, may bring risks to the stability and soundness of the supervised markets or to the solvency, liquidity or regular operation of a supervised company.
Art. 5. Upon confirmation of the occurrence of any of the situations described in art. 4, Susep may, in compliance with the provisions in art. 3, determine the following preventive prudential measures, separately, concomitantly or sequentially:
I - compliance with:
a) indices, parameters or quantitative limits in addition to or more restrictive than those provided for in the prudential regulations in force, including limits on exposure to risks, retention limits, operating limits or specific liquidity levels; or
b) values additional to CMR;
II - limitation or suspension of:
a) increase in the fixed and variable remuneration, including by way of advancement, of directors, whether or not statutory, and members of statutory bodies, subject to the provisions of the labour legislation, when applicable;
b) payments of portions of variable remuneration of the persons mentioned in subitem "a", subject, when applicable, to the provisions of the labour legislation;
c) remuneration on equity, even as interest on the stockholders' equity, including those modelled as advance payments;
d) commercialization of specific products or plans, or operation in certain lines of business or groups of lines of business of insurance or open complementary pension or savings bonds modalities;
e) certain types of asset transactions or derivatives;
f) use of internal models for CMR determination;
g) hiring service providers or outsourcing of activities;
h) transactions with other companies under common control or related companies, as well as with their controlling or associated controllers, individual or legal persons, managers, members of statutory bodies, and their respective spouses or cohabitants and relatives to the second degree;
i) reduction of capital stock;
j) acquisition, directly or indirectly, of equity interests; or
k) opening of new premises;
III - compulsory portfolio transfer;
IV - compulsory disposal of assets;
V - reversal, whenever possible, of operations that contribute to the occurrence of the situations listed in art. 4.
VI - implementation of specific controls or procedures, also in order to ensure the effectiveness of the other measures mentioned in this article; or
VII - any other measures deemed necessary to achieve the objectives set forth in item III of art. 2.
§ 1. The variable remuneration referred to in subitems "a" and "b" of item II of this article includes bonuses, profit sharing, any deferred remuneration instalments and other remuneration incentives linked to performance.
§ 2. Susep may, once the measures established in items III or IV of this article fail, determine that other supervised company(ies) belonging to the same prudential group as the supervised company receive or acquire the respective liabilities or assets, preserving the solvency, liquidity and regular operation of the acquiring supervised company(ies).
§ 3. Susep may, when applicable, determine that the supervised company appoint director(s) responsible for the fulfilment of the measures provided for in this article, following the respective attributions provided for in its articles of association or bylaws.
§ 4. The non-compliance with the measure determined by Susep subjects the supervised company and the director(s) appointed pursuant to § 3 to the administrative sanctions provided for in the regulations in force.
Art. 6. Whenever there is no urgency or danger in delay, SUSEP should, prior to the adoption of preventive prudential measures, obtain information that will allow it to evaluate the material case and establish the most adequate measures, and it may request that the supervised company:
I - forward the relevant clarifications, within a minimum period of fifteen days, as of the receipt of the request, and under the specific terms defined by Susep;
II - send representatives, including directors, whether or not statutory, members of statutory bodies, controlling shareholders or controlling associates, to appear within a minimum of seven days from receipt of the summons, to provide the pertinent clarifications;
III - prepares and presents, within a minimum period of thirty days, as of the receipt of the request, stress tests, scenario analyses, internal audit reports or other specific studies and evaluations; or
IV - increase the frequency of sending regulatory information and independent accounting or actuarial audit reports, provided for in the regulations in force.
Sole Paragraph. Susep may also, at any time, adopt the actions established in this article with the purpose of evaluating the evolution of situations that have led to the application of preventive prudential measures.
Art. 7. Susep may determine the preparation and presentation of a plan, pursuant to the regulations in force, to remedy situations that give rise to the application of preventive prudential measures, and may also require the submission of reports to monitor the said plans, establish the frequency of these reports and the area or function responsible for their preparation, and stipulate specific parameters to be followed.
Art. 8. Susep is authorized to issue instructions and complementary rules necessary for the execution of the provisions of this Resolution.
Art. 9. The provisions of this Resolution apply even to the situations mentioned in art. 4 started before its entry into force, as long as they last during its validity period.
Art. 10. This Resolution shall enter into force on 1 September 2022.
ALEXANDRE MILANESE CAMILLO
Superintendent
(Official Gazette DOU of 10 august – pages 258 and 259 – Section1)
(*) 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.
