CNSP RESOLUTION 388, OF 8 SEPTEMBER 2020 (*)
Establishes the segmentation of insurance companies, savings bonds companies, local reinsurers and open supplementary pension fund entities (EAPCs) for the purposes of proportional application of the prudential regulation.
The SUPERINTENDENCY OF PRIVATE INSURANCE - SUSEP, in the use 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 ordinary session held on 4 September 2020, and in accordance with the provisions of art. 32, item II, of Decree-Law 73, of 21 November 1966, in arts. 3, item II, 37 and 74 of Complementary Law 109, of 29 May 2001, in art. 3, § 1, of Decree-Law 261, of 28 February 1967, and in art. 5 of Complementary Law 126, of 15 January 2007, and considering the contents of File SUSEP 15414.631006/2019-57,
RESOLVES:
CHAPTER I
OBJECT AND SCOPE OF APPLICATION
Art. 1. To establish the segmentation of insurance companies, savings bonds companies, local reinsurers and open supplementary pension fund entities (EAPCs) for the purposes of proportional application of the prudential regulation.
§ 1. The provisions of this Resolution do not apply to insurance companies participating in the Regulatory Sandbox.
§ 2. CNSP and Susep, within the scope of their powers, may establish the prudential requirements and regulatory reporting applicable to each segment.
§ 3. Regardless of the provisions of § 2, specific requirements may be defined for the companies mentioned in the head of this article that, in accordance with the criteria defined by the International Association of Insurance Supervisors (IAIS), are identified as members of Internationally Active Insurance Groups (IAIGs) based in Brazil.
Art. 2. For the purposes of this Resolution, the following are considered:
I - supervised companies: insurance companies, savings bonds companies, local reinsurers and open supplementary pension fund entities (EAPCs) constituted in Brazil and authorized to operate by Susep;
II - premiums:
a) for insurance and reinsurance products, premiums written, as defined in the accounting rules in force;
b) for pension funds products, commercial contributions, net of returns and cancellations; and
c) for savings bonds products, the receipts in savings bonds, net of returns and cancellations; and
d) for insurance and reinsurance risk securitization operations, the Insurance Risk Note (LRS) premium, as defined by the specific regulation.
(Note: item d) included by CNSP Resolution No. 453, of 12.19.2022)
III - benchmarking parameters: values of premiums or technical provisions used for classify the supervised company in the segments defined in this Resolution, as set toth in art. 4;
III - benchmarking parameters: values used for classifying the supervised company in the segments defined in this Resolution, as set forth in art. 4, corresponding to:
a) premiums or technical provisions, for insurance, reinsurance, pension funds and savings bonds operations; or
b) premiums, for insurance and reinsurance risk securitisation operations.
(Note: item III amended and items a) and b) included by CNSP Resolution No. 453, of 12.19.2022)
IV - prudential group: group of supervised companies in which the same partner or group of partners holds the control or participates in a regime of joint control;
IV - prudential group: a group of supervised companies in which the same shareholder or group of shareholders has control;
(Note: item IV amended by CNSP Resolution no. 467 of 25 April 2024)
IV-A - leading supervised company of the prudential group:
a) the one that controls the other supervised companies in the respective prudential group; or
b) in the event that the control mentioned in subitem "a" does not exist, the one indicated as such before Susep;
(Note: item IV-A included by CNSP Resolution no. 467 of 25 April 2024)
V - control: direct or indirect ownership of partner's rights capable of ensuring permanent preponderance in corporate decisions and the power to elect or dismiss the majority of the officers; and
VI - joint control: contractually agreed sharing of the control of a business, which only exists when decisions regarding the relevant activities require the unanimous consent of the sharing control parties.
§ 1. Supervised companies whose control is joint, as provided for in item VI of the heading, should not form part of the prudential groups of their controllers, and if there are two or more supervised companies subject to the same joint control, they should form a separate prudential group.
§ 2. When the provisions of item V of the heading are not verified, Susep may consider that two or more supervised companies are under the same control if they:
I - have directors or members of the board of directors in common, in whole or in part; or
II - are related by operating in the market under the same brand or trade name.
§ 3. In order to avoid distortions in the proportional application of prudential regulation, Susep may determine the inclusion or exclusion of supervised companies from prudential groups, ex officio or at the request of a supervised company, considering, among other factors:
I - the governance structure of the supervised companies;
II - the degree of strategic and/or operational integration between supervised companies; or
III - the existence, materiality and purpose of transactions between supervised parties.
§ 4. In the cases provided for in par. 2 and 3, when applied ex officio, the supervised party is guaranteed the due process of law.
(Note: par. 1, 2, 3 and 4 included by CNSP Resolution no. 467 of 25 April 2024)
CHAPTER II
THE SEGMENTS
Art. 3. The classification of the supervised company in the segments defined in this Resolution will be based on:
I - if the supervised company belongs to a prudential group, the consolidated benchmarking parameters of the respective prudential group; or
II - otherwise, the individual benchmarking parameters of the supervised company, in compliance with the accounting rules established by Susep.
§ 1. For the purposes of the provision in item I of this article, the consolidated benchmarking parameters will be calculated by means of the sum of the individual benchmarking parameters of each supervised company that is a member of the prudential group, with due regard for the accounting rules established by Susep and the adjustments established in this article.
§ 1. For the purposes of the provision in item I of the head of this article, the consolidated benchmarks should be calculated by adding the individual benchmarks of each supervised company belonging to the prudential group, and, in the case of Special Purpose Insurance Company (SSPE), the independent assets of each operation of insurance and reinsurance risk securitization, in compliance with the accounting standards established by Susep and the adjustments established in this article.
(Note: paragraph 1 amended by CNSP Resolution No. 453, of 12.19.2022)
§ 2. The consolidated premium of the prudential group will be deducted of the reinsurance or retrocession premiums ceded to supervised companies belonging to the same prudential group.
§ 3. The consolidated technical provisions of the prudential group will be deducted of the reinsurance or retrocession assets and reinsurance or retrocession credits relating to claims paid whose counterparts are supervised companies belonging to the same prudential group.
§ 4. In the case of supervised companies included in two or more prudential groups according to the criterion of joint control, their benchmarking parameters will be divided equally between the prudential groups that share control, for consolidation purposes.
(Note: paragraph 4 repealed by CNSP Resolution 467 of 25 April 2024)
Art. 4. The supervised companies should fit into one of the following segments:
I - Segment 1 (S1);
II - Segment 2 (S2);
III - Segment 3 (S3); or
IV - Segment 4 (S4).
§ 1. S1 is made up of the supervised companies that have, individually or jointly with other supervised companies of the same prudential group, as established in art. 3 of this Resolution:
I - technical provisions equal to or higher than 6.0% of the total technical provisions of the entire market supervised by Susep;
§ 1. S1 is composed of the supervised companies that have, individually or together with other supervised companies of the same prudential group, as set forth in art. 3, the following benchmarks:
I - technical provisions equal to or greater than 6.0% of the total technical provisions of the entire market supervised by Susep, except in the case of SSPE;
(Note: paragraph 1 and item I amended by CNSP Resolution No. 453, of 12.19.2022)
II - premiums equal to or higher than 9.0% of the total premiums of the entire market supervised by Susep; or
III - reinsurance and retrocession premiums, net of the adjustment provided for in § 2 of art. 3 of this Resolution equal to or higher than 0.36% of the total premiums of the whole market supervised by Susep.
§ 2. S2 is composed of the supervised companies that do not fit into S1 and that have, individually or together with other supervised companies of the same prudential group, as established in art. 3 of this Resolution:
I - technical provisions equal to or higher than 0.2% of the total technical provisions of the entire market supervised by Susep;
§ 2. S2 is composed of the supervised companies not included in S1 that have, individually or together with other supervised companies of the same prudential group, as set forth in art. 3, the following benchmarks:
I - technical provisions equal to or greater than 0.2% of the total technical provisions of the entire market supervised by Susep, except in the case of SSPE;
(Note: paragraph 2 and item I amended by CNSP Resolution No. 453, of 12.19.2022)
II - premiums equal to or higher than 0.9% of the total premiums of the entire market supervised by Susep; or
III - reinsurance and retrocession premiums, net of the adjustment provided for in § 2 of art. 3 of this Resolution equal to or higher than 0.09% of the total premiums of the entire market supervised by Susep.
§ 3. S3 is composed of the supervised companies that have, individually or jointly with other supervised companies of the same prudential group, as set forth in art. 3, and that are not classified in segment S4:
I - technical provisions lower than 0.2% of the total technical provisions of the entire market supervised by Susep;
§ 3. S3 is composed of the supervised companies that are not classified in segment S4 and that have, individually or together with other supervised companies of the same prudential group, as set forth in art. 3, the following benchmarks:
I - technical provisions lower than 0.2% of the total technical provisions of the entire market supervised by Susep, except in the case of SSPE;
(Note: paragraph 3 and item I amended by CNSP Resolution No. 453, of 12.19.2022)
II - premiums lower than 0.9% of the total premiums of the entire market supervised by Susep; and
III - reinsurance and retrocession premiums, net of the adjustment provided for in § 2 of art. 3 of this Resolution, lower than 0.09% of the total premiums of the whole market supervised by Susep.
§ 4. S4 is made up of the supervised companies which, individually or jointly with other supervised companies of the same prudential group as established in art. 3 of this Resolution:
I - comply with items I and II of § 3 of this article;
II - have, except for the amounts held in current accounts, cash on hand and properties for their own use, only as investments:
a) those specified in item I of art. 8 of the Regulation Annex to the National Monetary Council (CMN) Resolution 4.444 of 2015, and its subsequent amendments; or
b) provided they are used to cover technical provisions in foreign currency, those specified in item I of art. 11 of the Regulation Annex to the National Monetary Council (CMN) Resolution 4.444 of 2015, as amended, with the exception of investment funds of the "Shares" and "Multimarket" classes or that seeks to reflect the variation of a variable income index abroad, as well as investment funds in quotas of investment funds with such characteristics.
III - do not operate with derivative instruments, except through the investment funds admitted in subitems "a" and "b" of item II and under the conditions established by the National Monetary Council (CMN) Resolution 4.444 of 2015; and
a) specified in item I of art. 8 of the Regulations Annexed to CMN Resolution no. 4.993, of 24 March 2022, as amended; or
b) provided that they are used to cover technical provisions in foreign currency, as specified in item I of art. 11 of the Regulations Annexed to CMN Resolution No. 4.993 of 2022, as amended, with the exception of classes of financial investment fund quotas categorised as "Equities" or "Multimarket" or index funds whose reference is foreign variable income indices;
(Note: subitems a) and b) amended by CNSP Resolution no. 467 of 25 April 2024)
III - do not operate with derivative instruments, except through the investment funds authorised under subitems "a" and "b" of item II and under the conditions established by CMN Resolution 4.993 of 2022; and
(Note: item III amended by CNSP Resolution no. 467 of 25 April 2024)
IV - have only the following types of operations:
a) microinsurance;
b) insurance in the Motor or Housing groups whose period of validity of the policy, certificate or slip does not exceed 1 (one) year;
c) insurance of the Property group, with the exception of loss of profits, engineering risks, miscellaneous risks and named perils and operational risks, for which the period of validity of the policy, certificate or slip does not exceed one (1) year; or
d) personal lines and pension funds under the financial regime of pay-as-you-go whose period of validity of the policy, certificate or slip does not exceed one (1) year; or
e) securitization of insurance, pension plan, supplementary health, reinsurance or retrocession risks.
(Note: item e) included by CNSP Resolution No. 453, of 12.19.2022)
§ 5. The values of the benchmarking parameters defined in this article should be annual, relative to the base date of 31 December.
§ 6. The values of premiums and technical provisions of the entire market supervised by Susep will correspond, respectively, to the sum of the individual values of premiums and technical provisions of all the supervised companies in operation, regardless of the specific market segments in which they operate, and the adjustments pursuant to art. 3 of this Resolution do not apply.
§ 6. The values of premiums and technical provisions of the entire market supervised by Susep will correspond, respectively:
I - the sum of the individual premium values of all the supervised companies in operation, and, in the case of SSPEs, of all the independent assets of the insurance and reinsurance risk securitization operations, regardless of the specific market segments in which they operate, and being not applied the adjustments set forth in art. 3 of this Resolution; and
II - the sum of the individual amounts of technical provisions of all operating supervised companies, with the exception of SSPE, regardless of the specific market segments in which they operate, and being not applied the adjustments set forth in art. 3 of this Resolution.
(Note: paragraph 6 amended and items I and II included by CNSP Resolution No. 453, of 12.19.2022)
§ 7. In the cases in which the procedure described in § 4 of art. 3 of this Resolution results in the classification of a single supervised company into two or more distinct segments in accordance with the prudential groups to which it belongs, the segment with the lowest sequential numbering will apply to the supervised company.
(Note: paragraph 7 repealed by CNSP Resolution 467 of 25 April 2024)
§ 8. For the supervised companies that begin their operations after the entry into force of this Resolution, the initial classification will be calculated considering the information contained in the business plan submitted to Susep.
CHAPTER III
S4 SEGMENT CLASSIFICATION
Art. 5. The supervised company classified in segment S3 that opts to comply with the provisions in items II, III and IV of § 4 of art. 4 of this Resolution, for the purposes of classification in segment S4, should:
I - formalize its option in a meeting of the Board of Directors, or, if there is no Board of Directors, of the Executive Board;
II - adopt all measures necessary to the effective implementation and maintenance of its option, including the adoption of specific internal controls for this purpose; and
III - communicate its option to Susep, only after the provisions in items I and II of this article have been complied with.
Art. 6. Once the supervised company is classified in segment S4, the supervised company should communicate to Susep, within 10 (ten) working days, the occurrence of the following situations:
I - waiver of the option mentioned in art. 5, and such decision should be previously formalized in a meeting of the Board of Directors, or, if there is no Board of Directors, of the Executive Board; or
II - verification of non-compliance with the provisions in items II, III or IV of § 4 of art. 4 of this Resolution.
Art. 7. The supervised company should not be classified in segment S4 if:
I - the prudential group to which it belongs has other supervised companies that do not meet the provisions in items II, III or IV of § 4 of art. 4 of this Resolution;
II - it has been reclassified from S4 to another segment based on the provisions in art. 9, item II, subitem "a" of this Resolution, unless the referred reclassification occurred more than 3 (three) years ago; or
III - it is in charge of the administration of the Mandatory Personal Injury caused by Motor Vehicle Insurance Pool (DPVAT).
CHAPTER IV
CHANGE OF CLASSIFICATION
Art. 8. The change in the classification of the supervised company between segments S1, S2, S3 and S4 should occur:
I - to S1, when the supervised company, individually or together with other supervised companies of the same prudential group, as provided in art. 3, meets the provisions of § 1 of art. 4 of this Resolution for 2 (two) consecutive years;
II - to S2, when the supervised company, individually or jointly with other supervised companies of the same prudential group, as provided in art. 3 of this Resolution:
a) if from S1:
1. does not meet the provisions of § 1 of art. 4 for 3 (three) consecutive years; and
2. in any of the three (3) years mentioned in point "1", meets the provisions in § 2 of art. 4 of this Resolution; or
b) if from S3 or S4:
1. does not meet the provisions of § 3 of art. 4 of this Resolution for two (2) consecutive years; and
2. in any of the two (2) years mentioned in point "1", meets the provisions in § 2 of art. 4 of this Resolution;
III - to S3:
a) when the supervised company, individually or together with other supervised companies of the same prudential group, as provided in art. 3, meets the provisions of § 3 of art. 4 of this Resolution for 3 (three) consecutive years, if coming from S1 or S2; or
b) at the moment Susep confirms the receipt of any of the communications pursuant to art. 6 of this Resolution, if from S4; and
IV - to S4, at the moment in which Susep confirms the receipt of the communication of option for S4 provided in item III of art. 5 of this Resolution, in accordance with the provisions of art. 7, as long as the supervised company is already classified in segment S3.
Art. 9. Susep may determine at any time, including before expiry of the periods mentioned in art. 8 of this Resolution, the change in the classification of the supervised company between segments S1, S2, S3 and S4, in the following situations:
I - transfer of portfolio, merger, spin-off, incorporation, changes in control, significant change in the conduction of business or any other situation that indicates absence of perspective of return of compliance with the requirements for classification in the original segment; or
II - supervisory actions that evidence the best adequacy between the operation of the supervised company and the prudential regulation of the target segment, including, but not limited to:
a) non-compliance with the provisions in items II, III or IV of § 4 of art. 4 of this Resolution by a supervised company classified in segment S4; or
b) existence of systemic risk, considering characteristics such as level of substitutability, interconnectivity, foreign operations, among others.
a) non-compliance with the provisions of items II, III or IV of par. 4 of art. 4 of this Resolution by a supervised company in the S4 segment;
b) the existence of contagion and/or systemic risks, considering characteristics such as the level of substitutability, interconnectivity, operations abroad, including through subsidiaries of the supervised company, among others; or
c) a change in the composition of the prudential group, based on par. 2 or 3 of art. 2.
(Note: subitems a) and b) amended and subitem c) included by CNSP Resolution no. 467 of 25 April 2024)
Sole Paragraph. The reclassification carried out in accordance with this article should be applied to all the supervised companies belonging to the same prudential group.
Art. 10. The change in classification will produce its effects:
I - if carried out pursuant to art. 8 of this Resolution, as from 1 January of the year following the classification assessment; or
II - if carried out pursuant to art. 9 of this Resolution, on a date to be set by Susep considering the particularities of each specific case and, if necessary, the deadline for adaptation to meet the requirements of the target segment.
Sole Paragraph. The provision in item I of the head of this article does not apply to the cases provided for in item III, subitem "b", and item IV of art. 8, when the effects are immediate.
CHAPTER V
TRANSPARENCY
Art. 11. Susep will disclose annually, up to 30 April, the information related to the preliminary classification of the supervised companies in the segments defined in this Resolution.
Art. 11 The preliminary classification of supervised companies in the segments defined in this Resolution, based on art. 8, will be published annually by Susep by 30 April.
(Note: head of art. 11 amended by CNSP Resolution no. 467 of 25 April 2024)
§ 1. The supervised companies that disagree with the preliminary classification disclosed may request, until 31 May, the review of their classification.
§ 2. After analysing the information contained in the request of the supervised company, Susep will disclose, up to 30 June, the definite classification of the supervised companies in the segments defined in this Resolution, being further review prohibited.
§ 3. The provisions in this article do not apply to the changes in the classification carried out pursuant to art. 9 of this Resolution, which will be individually informed to the supervised companies involved when they occur.
(Note: paragraph 3 repealed by CNSP Resolution 467 of 25 April 2024)
Art. 11-A. Changes to the composition of prudential groups, based on §§2 or 3 of Art. 2, or to the framework, based on Art. 9, will be informed individually by SUSEP to the supervised companies and prudential groups involved, when they are intended and, where applicable, put into effect.
(Note: art. 11-A included by CNSP Resolution no. 467 of 25 April 2024)
CHAPTER VI
TRANSITORY AND FINAL PROVISIONS
Art. 12. The initial classification of each supervised company in operation will be defined considering the values of the benchmarking parameters relative to the base date of 31 December 2019, and applying the steps and deadlines established in §§ 1, 2 and 3 of this article.
§ 1. Susep will disclose, up to 15 October 2020, the information related to the preliminary initial classification of the supervised companies in the segments defined in this Resolution.
§ 2. The supervised companies that disagree with the initial preliminary classification disclosed may request, up to 15 November 2020, the review of their classification.
§ 3. After the analysis of the information contained in the request of the supervised company, Susep will disclose, up to 30 November 2020, the definite initial classification of the supervised companies in the segments defined in this Resolution, being further review prohibited.
§ 4. For the initial classification of the supervised companies that have started to operate after 31 December 2018, Susep will consider the information contained in the business plan submitted during the authorization process.
§ 5. The initial classification will become effective as of 4 January 2021.
(Note: art. 12 repealed by CNSP Resolution no. 467 of 25 April 2024)
Art. 12-A. The following provisions apply, exceptionally, to the classification carried out in 2024:
I - the deadlines for each stage of the timetable set out in art. 11 are automatically extended by three months;
II - the classification of supervised companies or prudential groups whose control is joint, as well as supervised companies or prudential groups that share their control, will be defined considering exclusively the values of the measurement parameters relative to the base date of 31 December 2023; and
III - requests for the inclusion or exclusion of supervised companies from prudential groups, based on par. 3 of art. 2, will only be dealt with as of 1st October 2024.
Sole Paragraph. The changes to the classifications made in accordance with the provisions of items I and II of this article shall take effect on 1 January 2025.
(Note: art. 12-A included by CNSP Resolution no. 467 of 25 April 2024)
Art. 13 Susep is authorized to issue supplementary rules and guidelines necessary to the implementation of the provisions of this Resolution.
Art. 14 This Resolution shall come into force on 1 October 2020.
SOLANGE PAIVA VIEIRA
(Official Gazette DOU of 10 september – pages 43 and 44 – 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.
