Argentina’s Insurance Superintendency (SSN) has issued amendments to Resolution 35,615 in order to clarify some of its provisions with regards to foreign reinsurers.
As explained in our previous blog (see here http://www.insurereinsure.com/blog.aspx?entry=3218), Resolution 35,615 requires that effective September 1, foreign reinsurers must either set up a local branch in Argentina or obtain a specific waiver from the SSN in order to write exceptional business.
To clarify the transitional period, Communication 2804, which was published on May 4, 2011, provides that reinsurance contracts currently in force will expire at their stated termination date and will not be affected by the implementation of Resolution 35,615. Multi-year and open-ended contracts should be amended to comply with the new Resolution by January 1, 2012. Contracts incepting between March 11 and September 1, 2011, must comply with the new Resolution and have a period of no longer than one year. Such contracts may still be entered into with any foreign reinsurer that is currently registered with the SSN under the existing regime.
Communication 2804 also provides that foreign reinsurers wishing to write exceptional contracts under Article 19 of the Resolution must comply with section 118 of the Companies Law (Law 19,550). This regulates the establishment of branches and representative offices and requires them to be registered with the local commercial register. This is a change from the original Resolution as it means that companies writing exceptional contracts would need to formally register a representative office, instead of just being registered with the SSN. Setting up a representative office for the purposes of Article 19 requires similar paperwork as setting up a branch, but representative offices cannot conduct business independently of their head offices. Their advantage is that they would not need the minimum capital of US$5 million required of local reinsurance companies, which it appears is needed for setting up a branch company.
Finally, Communication 2804 provides that authorization to accept risks on an exceptional basis under Article 19 of the Resolution will not be given to foreign reinsurers whose head office is in a tax haven, tax shelter or other secretive or uncooperative jurisdiction. Such reinsurers were already prohibited under the Resolution from becoming authorized by opening branches in Argentina; this amendment now prohibits them from writing business on an exceptional basis too.