Insurance companies: new rules
New Corporate Governance Rules applicable to Insurance Companies
On December 5, 2018, Resolution No. 1119/2018 of the Federal Insurance Authority (Superintendencia de Seguros de la Nación, the “SSN”) was published in the Official Gazette. Such resolution amends the General Regulation on Insurance Activity (Reglamento General de la Actividad Aseguradora, “RGAA”) regarding corporate governance aimed to modernize and professionalize the insurance activity.
Through this resolution the SSN established (i) the “Principles and Recommendations of Corporate Governance of Insurance and Reinsurance Companies”, and (ii) certain rules applicable to the organization of management and supervisory boards and “senior management”.
Among the Principles and Recommendations of Corporate Governance of Insurance and Reinsurance Companies, the following should be highlighted: the need to establish clear procedures for the delegation of tasks by the management board, the need that their members and other employees of higher hierarchy have enough experience and autonomy to perform their duties, evenhanded treatment to the shareholders, compliance with mid-term and long-term strategic plans, risk minimization in transactions with related parties, assurance of wise investment policies and promotion of the management board’s assurance of the solvency of the offered products.
Each year the entities shall prepare a self-assessment on the application of the aforementioned principles, which shall be made available to the SSN.
Among the rules applicable to the organization of the management and supervisory boards and “senior management”, it is worth highlighting that at least two thirds of the members of the management board shall have verifiable experience in the insurance activity or financial entities, that the appointment of the members of the management board may be objected by the SNN, and that as from March 31, 2019, the management board of the entities shall have at least one “independent” member who shall be appointed according to its trajectory and independence criteria. Furthermore, certain grounds of inability to occupy positions in the management and supervisory boards and “senior management” of insurance and reinsurers companies were established.
In order to comply with these rules, the members of the management and supervisory boards as well as senior managers shall file affidavits with the SNN by means of an online platform (Trámites a Distancia, TAD).
Finally, the resolution establishes that shareholders of insurance or reinsurance companies during the last five business years immediately preceding the resolution revoking its license to operate are barred from being shareholders of insurance or reinsurance companies, if the forced liquidation of such company was ordered.
For further information, do not hesitate to contact Néstor J. Belgrano, Máximo J. Bomchil or Mariana Viola.
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