Joint Resolution No. 9 — Regulation of the Fiduciary Agent in the Issuance of Insurance Risk Notes via Special Purpose Insurer

Joint Resolution No. 9

JOINT RESOLUTION NO. 9, OF FEBRUARY 22, 2024

Regulates the performance, requirements, duties, and responsibilities of the fiduciary agent in the issuance of Insurance Risk Notes through a Special Purpose Insurer.

The Superintendence of Private Insurance and the Central Bank of Brazil make public that the National Council of Private Insurance, in a session held on February 19, 2024, based on art. 32, items I and II, of Decree-Law No. 73, of November 21, 1966, and the National Monetary Council, in a session held on January 25, 2024, based on art. 4, item VIII, of Law No. 4.595, of December 31, 1964, having in view the provisions of art. 9 of Law No. 14.430, of August 3, 2022, and considering what is contained in Susep Process No. 15414.638034/2022-09,

R E S O L V E:

Art. 1. This Joint Resolution regulates the performance, requirements, duties, and responsibilities of the fiduciary agent in the issuance of Insurance Risk Notes (LRS) through a Special Purpose Insurer (SSPE).

Sole Paragraph. For the purposes of this Joint Resolution, the following shall be considered:

I - Special Purpose Insurer (SSPE): an insurance company whose exclusive purpose is to carry out one or more operations, with independent assets, of transfer of insurance, pension, supplementary health, reinsurance, or retrocession risks from one or more counterparties and their financing via the issuance of LRS, a debt instrument linked to insurance and reinsurance risks;

II - Insurance Risk Note (LRS): a nominative, transferable, and freely negotiable credit title, representing a promise of payment in money, linked to insurance and reinsurance risks;

III - insurance and reinsurance risks: insurance, pension, supplementary health, reinsurance, or retrocession risks;

IV - counterparty: the insurance company, the reinsurer, the pension entity, the supplementary health operator, or the legal entity, of public or private nature, headquartered in the country or not, that cedes insurance and reinsurance risks to the SSPE;

V - risk transfer contract: instrument entered into between the SSPE and the counterparty, with the transfer of risks from the counterparty to the SSPE;

VI - securitization operation: operation of transfer of insurance and reinsurance risks to the SSPE, which raises the necessary resources as collateral, through the issuance of LRS, with asset independence from other operations and from the SSPE itself, and with its own registration in the National Registry of Legal Entities (CNPJ);

VII - LRS premium: value paid by the counterparty to the SSPE as a result of the risk transfer contract;

VIII - securitization guarantee: resources raised by the SSPE from investor holders for each securitization operation of insurance and reinsurance risks, through the issuance of LRS, necessary to guarantee the insurance and reinsurance risks;

IX - independent operation assets: independent assets constituted for each securitization operation of insurance and reinsurance risks, affected and linked to the LRS, corresponding to the total value of the assets of each securitization operation; and

X - Maximum Risk Exposure (MRE): the total nominal value of the maximum possible loss arising from the risk transfer contract, which must be increased by any expenses that the SSPE may incur as a result of claims.

Art. 2. The SSPE may appoint a fiduciary agent to represent the investor holders of the LRS.

§ 1. Only financial institutions and other institutions authorized to operate by the Central Bank of Brazil that have the administration or custody of third-party assets in their corporate object may be appointed as fiduciary agents.

§ 2. The identification of the fiduciary agent and its acceptance for the exercise of the function must be stated in the LRS.

§ 3. The appointment of the fiduciary agent shall be accompanied by the indication of its duties, its responsibilities, and its remuneration, the circumstances, conditions, and manner of its dismissal or replacement, and the other conditions of its performance, observing the applicable regulation.

§ 4. The remuneration of the fiduciary agent must be compatible with the responsibilities and the degree of dedication and diligence required for the exercise of the function.

§ 5. The SSPE shall make available to the appointed fiduciary agent access to all and any information necessary for the execution of its duties and responsibilities.

§ 6. It is prohibited for related parties to the SSPE to exercise the activity of fiduciary agent.

§ 7. It is prohibited to appoint a fiduciary agent that is a creditor, by any title, of the SSPE or of a company controlled by it.

§ 8. It is prohibited to appoint a fiduciary agent that, in any other way, is in a situation of conflict of interest.

§ 9. For LRS distributed publicly, the fiduciary agent shall also observe the regulation of the Securities and Exchange Commission (CVM).

Art. 3. Without prejudice to competencies established in specific legislation and regulation, it shall be incumbent upon the fiduciary agent:

I - to exercise its activities with good faith, transparency, and loyalty towards the investor holders of the LRS;

II - to safeguard the protection and realization of the rights and interests of the investor holders, carrying out diligence at the SSPE necessary for the maintenance of the regularity of the risk transfer contract and the securitization operation;

III - to monitor compliance with the clauses contained in the LRS and the risk transfer contract;

IV - to verify the means adopted by the SSPE for the purpose of preserving the asset independence of the securitization operation from other securitization operations and from the SSPE itself;

V - to monitor the provision of periodic information by the SSPE and alert investor holders about inconsistencies or omissions of which it has knowledge;

VI - to verify, with the SSPE, the accounting and financial control procedures adequate to the requirements related to the administration of the assets that make up the independent operation assets of the securitization operation and the liabilities of this operation, including through the hiring of specialized third parties;

VII - to adopt, with the SSPE, accounting and actuarial control processes adequate to the requirements related to the constitution of the technical provisions of the securitization operation;

VIII - to request, when deemed necessary, external audit of the securitization operation;

IX - to communicate to investor holders, through its website, as soon as it becomes aware, the occurrence of claims covered by the risk transfer contract and the payment of indemnities by the SSPE related to the securitization operation;

X - to adopt the necessary judicial or extrajudicial measures to defend the interests of the investor holders;

XI - to convene a general assembly of investor holders of LRS, when necessary;

XII - to prepare and make available to investor holders, based on periodic information provided by the SSPE, an annual report describing the relevant events that occurred during the fiscal year related to the LRS and containing, at a minimum, information regarding:

a) the values of the LRS premium, the securitization guarantee, and the MRE;

b) the assets comprising the independent operation assets of the operation, as well as the indication of the accounts linked to the Superintendence of Private Insurance, in which they are registered, custodied, or deposited, if applicable, in accordance with the regulation in force;

c) the liabilities constituted by the securitization operation, including the technical provisions;

d) the realization of any risks with the occurrence of covered claims and any divestments and payments made as a result of these claims;

e) the total nominal value of the maximum possible loss arising from the risk transfer contract, increased by any expenses that the SSPE may incur as a result of a claim; and

f) any redemption of the independent operation assets of the operation and renegotiation of the LRS;

XIII - to publish on its website, within four months after the end of the SSPE's fiscal year, an annual report in accordance with item XII, which shall be kept available for consultation for a period of three years;

XIV - to keep permanently updated the information relating to the assets comprising the independent operation assets and liabilities of the securitization operation;

XV - to keep updated the list of investor holders of the securities and their addresses; and

XVI - to execute the other duties and responsibilities assigned to it in the LRS.

Art. 4. In the event of the decree of extrajudicial liquidation or bankruptcy of the SSPE, the rules used for insurance companies shall apply, to the extent applicable, in accordance with specific regulation, with the fiduciary agent being exempt from administering the securitization operation, maintaining its duties and responsibilities assigned in the LRS.

Art. 5. Infractions of this Joint Resolution subject the fiduciary agent, its administrators, and the members of its statutory or contractual bodies to the penalties provided for in the applicable legislation.

Art. 6. This Joint Resolution enters into force on March 1, 2024.

ALESSANDRO SERAFIN OCTAVIANI LUIS Superintendent of the Superintendence of Private Insurance

Roberto de Oliveira Campos Neto President of the Central Bank of Brazil