30 March 2020 – Modified rules applicable to investment management in the insurance sector

Intervention Categories: Legal and policy; Regulatory change
Level of Jurisdiction: National

Overview: The The Superintendency of Banking, Insurance and Private Pension Fund Administrators (SBS) made various changes to rules applicable to investment management in the insurance sector.

The SBS temporarily increased (up to 10 business days) the individual limit of investment per counterparty in the case of financial institutions. The proportion of the fund applied to eligible investments issued or backed by the financial institution was increased from 7% to 9.5%. If the institution is a financial institution that has a risk rating of “A”, the limit is increased from 10% to 12.5%. If the institution loses its A rating, it has to send a letter to the SBS with a recovery plan for approval.

There is also a temporary increase (up to 10 business days) in “the limit corresponding to the sum of the eligible investments in deposits in current accounts in the same financial institution, applied to the support of its technical obligations” from 5% to 10%.

There is also a temporary suspension of accounting rules for writing down the impairment of financial instruments and exception of restrictions for accounting reclassifications and sales of instruments classified as matured.

Finally, there is a temporary suspension of the accounting update of the valuation of investments in real estate valued under the discounted cash flow (CDF) methodology. Does not apply to investments in real estate that a company sells or transfers (in whole or in part) during the term of this measure.
Full details here: https://www.sbs.gob.pe/Portals/0/jer/COVID19/OM_11233.pdf