Regulation No. 2013-02 - Regulation on Life Insurance Activities, Update No. I - Regulation on the Preparation of the Financial Statements of Life Insurance Companies, Update No. I

THE GENERAL DIRECTOR OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO

HAVING REGARD to Law No. 165 of November 17, 2005, and in particular Article 39, which grants the Central Bank of San Marino the power to issue measures containing binding and general provisions;

HAVING REGARD to the Statute of the Central Bank of the Republic of San Marino approved by Law No. 96 of June 29, 2005, and in particular Article 30, paragraph 3, of the said Statute, pursuant to which acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Director;

HAVING REGARD to Regulation No. 2008-01 on life insurance activities;

HAVING REGARD to Regulation No. 2009-01 on the preparation of the financial statements of insurance companies exercising life insurance activities;

HAVING REGARD to the resolutions of the Supervisory Coordination and the Board of Directors, by which the text of Regulation No. 2013-02 constituting Update No. I to Regulation No. 2008-01 on life insurance activities, as well as Update No. I to Regulation No. 2009-01 on the preparation of the financial statements of insurance companies exercising life insurance activities, was approved;

HEREBY ISSUES the attached Regulation No. 2013-02 which will enter into force on July 18, 2013.

San Marino, July 15, 2013

SIGNED: THE GENERAL DIRECTOR Mario Giannini

REGULATION ON LIFE INSURANCE ACTIVITIES UPDATE NO. I REGULATION ON THE PREPARATION OF THE FINANCIAL STATEMENTS OF INSURANCE COMPANIES EXERCISING LIFE INSURANCE ACTIVITIES UPDATE NO. I year 2013 / number 02

Central Bank of the Republic of San Marino Regulation No. 2013-02: Update I to Reg. No. 2008-01 and Update I to Reg. No. 2009-01 1

Article 1 – Amendments to Regulation No. 2008-01 on life insurance activities.

1. Paragraph 2 of Article 16 is replaced as follows: “2. Within thirty days from the date of receipt of the application, the CENTRAL BANK, having assessed the consistency of the modifications with the provisions of the LISF and its implementing measures, as well as with the sound and prudent management of the INSURANCE COMPANY and with the effective exercise of supervision, issues an authorization or denial measure.”
2. The following paragraph is added to Article 16: “3. The aforementioned term is interrupted and suspended in the cases provided for in the previous Article 3, paragraphs 8 and 9.”
3. Letter d) of Article 84, paragraph 1, is replaced as follows: “ d) bank deposits with San Marino banks or having their headquarters in a Member State of the European Union or belonging to the “Group of Ten” (G-10), within the limit of 20 percent of the total gross amount of assets considered collectively for coverage, provided that:

1. they do not have a maturity exceeding twelve months;
2. they are repayable on demand or with a notice period of less than fifteen days;”

4. Paragraph 3 of Article 84 is replaced as follows: “3. The debt securities referred to in paragraph 1 and the counterparties of transactions carried out in financial derivative instruments must have a rating of at least “BB” or equivalent, attributed by at least one primary agency, provided that no other agency has attributed a lower rating. Investments in assets with a rating lower than “BB” or “not rated” are permitted within the overall limit of 5 percent of the total gross amount of assets considered collectively for coverage. Unlisted and “not rated” debt securities issued by entities authorized in the Republic of San Marino to exercise the activity referred to in Letter A of Annex 1 of the LISF are excluded from this limit, to which the limit of 20 percent of the total gross amount of assets considered collectively for coverage applies. The limits provided for in Article 87, paragraph 1, letter b) and the provisions of the subsequent 4th paragraph, letter a), remain unchanged.”
5. Paragraph 4 of Article 94 is replaced as follows: “4. The debt securities referred to in paragraph 2 and the counterparties of transactions carried out in financial derivative instruments must have a rating of at least “BB” or equivalent, attributed by at least one primary agency, provided that no other agency has attributed a lower rating. Investments in assets with a rating lower than “BB” or “not rated” are permitted within the limits of 5 percent of the total assets of the internal fund. Unlisted and “not rated” debt securities issued by entities subject to prudential supervision for stability on an individual basis in the Republic of San Marino are excluded from this limit, to which the limit of 20 percent of the total assets of the internal fund applies, subject to the provisions of the subsequent Article 95, paragraph 1.”

Central Bank of the Republic of San Marino Regulation No. 2013-02: Update I to Reg. No. 2008-01 and Update I to Reg. No. 2009-01 2

Article 2 – Amendment to Annex C of Regulation No. 2009-01 on the preparation of the financial statements of insurance companies exercising life insurance activities.

1. Tables No. 1 titled “Assets covering Class C technical reserves” and No. 2.1 titled “Assets covering the reserves of the INTERNAL FUND” of Annex C to Regulation No. 2009-01, concerning the statement demonstrating assets covering technical reserves, are replaced by the models attached to this Regulation.

Article 3 – Entry into force.

1. This Regulation enters into force on July 18, 2013.

Article 4 – Consolidated texts.

1. The texts of Regulations Nos. 2008-01 and 2009-01, consolidated with the modifications introduced by this Regulation, will be made available on the website of the Central Bank of the Republic of San Marino (www.bcsm.sm).

San Marino, July 15, 2013

Central Bank of the Republic of San Marino Regulation No. 2009-01 on the preparation of the financial statements of life insurance companies

• ANNEXES - Annex C

ANNEX C Statement of assets covering technical reserves

1. Assets covering Class C technical reserves 1 39 % % TOTAL ASSETS COVERING TECHNICAL RESERVES 2 40 INVESTMENTS 3 41 a. Financial instruments quoted on a regulated market 100% 4 42 Equities and other capital instruments 5 43 Debt securities 6 44 of which money market instruments 7 45 b. Financial instruments not quoted on a regulated market 10% 8 46 Equities and other capital instruments 9 47 Debt securities 10 48 of which money market instruments 11 49 c. Unlisted and "not rated" debt securities issued by entities authorized to exercise the activity referred to in Lett. A of Annex 1 of the LISF 20% 12 50 d. Units of UCITS III OIC 100% 13 51 e. Bank deposits 20% 14 52 f. Repurchase agreements with obligation to repurchase and deposit of securities with a bank 20% 15 53 g. Land and buildings for the free-from-mortgage portions 30% 16 54 Land 17 55 Buildings 18 56 CREDITS 19 57 h. Credits after deduction of debts towards the debtor: towards reinsurers 20 58 against insured persons and intermediaries 21 59 against insured persons arising from policy loans 22 60 against the State (tax credits) 23 61 OTHER ASSETS 24 60 i. Other assets: Tangible fixed assets instrumental to the operation of the company other than land and buildings 25 61 Tangible fixed assets non-instrumental to the operation of the company other than land and buildings 26 62 Acquisition commissions to be amortized 27 63 Accrued income on interest on eligible securities for covering technical reserves 28 64 TECHNICAL RESERVES TO BE COVERED TECHNICAL RESERVES Amount at closing of financial year Amount at closing of previous financial year (euro) (euro) Limit max Amount at closing of financial year Amount at closing of previous financial year (euro) (euro)

2.1. Assets covering the reserves of the INTERNAL FUND (No. Ord.) 1 32 % % TOTAL ASSETS COVERING TECHNICAL RESERVES 2 33 a. Financial instruments quoted on a regulated market 100% 3 34 Equities and other capital instruments 4 35 Debt securities 5 36 of which money market instruments 6 37 b. Financial instruments not quoted on a regulated market 10% 7 38 Equities and other capital instruments 8 39 Debt securities 9 40 of which money market instruments 10 41 c. Unlisted and "not rated" debt securities issued by entities subject to prudential supervision for stability on an individual basis in the Republic of San Marino 20% 11 42 d. Units of UCITS III OIC 100% 12 43 e. Units of NON UCITS III OIC 30% 13 44 f. Units of closed quoted OIC 20% 14 45 g. Units of closed unquoted OIC 5% 15 46 h. Alternative investment funds referred to in Article 94, paragraph 2, letter g) of Central Bank Regulation No. 2008 - 01 10% 16 47 i. Bank deposits referred to in Article 94, paragraph 2, letter h) of Central Bank Regulation No. 2008 - 01 100% 17 48 j. Repurchase agreements with obligation to repurchase and deposit of securities with a bank 20% 18 49 k. Liquidity 19 50 l. Quoted financial derivative instruments referred to in Article 94, paragraph 2, letter k), of Central Bank Regulation No. 2008 - 01 20 51 m. Unquoted financial derivative instruments referred to in Article 94, paragraph 2, letter l), of Central Bank Regulation No. 2008 - 01 21 52 TECHNICAL RESERVES TO BE COVERED Limit max Amount at closing of financial year Amount at closing of previous financial year (euro) (euro) (denomination of internal fund) TECHNICAL RESERVES Amount at closing of financial year Amount at closing of previous financial year (euro) (euro)