Technical Standards for the Control of Investment Diversification of Insurance Companies

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Approval: 05/06/2024 Validity: 20/06/2024 THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING: I. That Article 34 of the Insurance Companies Law establishes that the net technical reserves and the minimum net equity of insurance companies must be backed at all times by investments made seeking the effective fulfillment of the obligations they have contracted, the security of the operations carried out, adequate liquidity, and the diversification of risks of their assets. Likewise, it establishes the instruments and assets in which insurance companies may make such investments. II. That Article 35 of the Insurance Companies Law establishes the limits for the sums of investments made by an insurance company per issuer, individual debtor, or business group. III. That Article 35 of the Financial System Supervision and Regulation Law establishes that directors, managers, and other officials holding positions of direction or administration in the members of the financial system must conduct their business, acts, and operations complying with the highest ethical standards of conduct and acting with the due diligence of a good merchant in their own business. IV. That Article 99, third clause, literal d) of the Financial System Supervision and Regulation Law establishes that it corresponds to the Committee of Standards of the Central Reserve Bank of El Salvador the approval of technical standards for the establishment and monitoring of technical and mathematical reserves, investments, and reinsurance of insurance companies.

THEREFORE, by virtue of the regulatory powers conferred by Article 99 of the Financial System Supervision and Regulation Law, AGREES to issue the following:

TECHNICAL STANDARDS FOR THE CONTROL OF THE DIVERSIFICATION OF INVESTMENTS OF INSURANCE COMPANIES

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Approval: 05/06/2024 Validity: 20/06/2024 CHAPTER I OBJECTIVE, SUBJECTS, AND TERMS Objective Art. 1.- These Standards aim to regulate the minimum requirements that insurance companies must observe in the submission of information on investment diversification to the Financial System Superintendence. Subjects Art. 2.- The subjects obliged to comply with the provisions established in these Standards are: a) Insurance Companies constituted in El Salvador; b) Branches of Foreign Insurance Companies, established and authorized in El Salvador; and c) Cooperative Associations providing insurance services constituted in El Salvador. Terms Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: a) Central Bank: Central Reserve Bank of El Salvador; b) Law: Insurance Companies Law; c) Entity(ies): Subjects referred to in Article 2 of these Standards; and d) Superintendence: Financial System Superintendence. CHAPTER II ON THE CONTROL OF INVESTMENT DIVERSIFICATION On information regarding investment diversification Art. 4.- Entities must present to the Superintendence the information referred to in Articles 5, 6, 7, and 9 of these Standards, on a monthly basis within the first six business days following the month being reported, except for the month of December, which will be presented within the first twenty business days of January, and June within the first ten business days of July. Eligible instruments or assets for investment Art. 5.- Entities must identify their investments in eligible instruments or assets in accordance with what is established in Article 34 of the Law, according to Annex No. 1 of these Standards, considering the following information:

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Approval: 05/06/2024 Validity: 20/06/2024 a) The eligible instruments or assets for investment, in which the diversification of eligible investment instruments and assets will be presented; b) Balance according to records of each investment instrument, in accordance with the accounting records of the insurance company; c) Legal limit, in which the application of the percentage of the investment limit per instrument on the investment base will be presented, the latter according to [reference to previous norms, likely NRP-52], approved by the Central Bank through its Committee of Standards. The result will be the maximum value that the insurance company can maintain invested in each instrument; d) Computable investment, which will be the permissible investment per instrument. The maximum value per instrument to be computed will be the result of applying the respective percentage to the investment base; and e) Investment excess, which will be the result of comparing the value per instrument of the balance according to Records with the Legal Limit. The investment excess will not be considered as computable investment. Investment limits Art. 6.- Entities must identify the investment limits by investment diversification grouped by eligible instruments or assets in accordance with what is established in clauses third to fifth of Article 34 of the Law, according to Annex No. 2 of these Standards, detailing the following information: a) Investment limits, detailing the groupings of investment instruments established in the Law; b) Balance according to computable investment, which must be the values reported in Annex No. 1 of these Standards. It refers to the permissible investment per instrument, and the maximum value per instrument to be computed will be the result of applying the respective percentage to the investment base; c) Legal limit, in which the application of the investment limit percentage of each group to the investment base will be presented. The result will be the maximum value that the insurance company can maintain invested for each group of instruments; d) Computable investment, which will be the permissible investment per each grouping of investment instruments. The maximum value per each grouping of investment instruments will be the result of applying the respective percentage to the investment base; and e) Investment excess, which will be the result of comparing the value of each grouping of instruments of the balance according to Records with that of the Legal Limit. The investment excess will not be considered as computable investment.

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Approval: 05/06/2024 Validity: 20/06/2024 Diversification by issuer and by issuance Art. 7.- Entities must identify the limits by diversification by issuer and by issuance, according to Annex No. 3 of these Standards, which must detail the following information: a) Diversification by issuer and by issuance, detailing the investment instruments, specifying the issuing society and/or debtor. For each instrument, the issuing institutions or societies and/or debtors must be specified; b) Balance according to records of each investment instrument, in accordance with the accounting records of the insurance company; c) Legal limit, in which the application of the established percentage to the corresponding calculation base for each investment instrument (investment base, issuer's asset, value of the same issuance, etc.) will be presented; d) Computable investment, which will be the permissible investment per issuer and per issuance in accordance with the established percentages. The maximum permissible value will be the result of applying the respective percentage to the calculation base of each investment instrument; and e) Investment excess, which will be the result of comparing the value per investment instrument of the balance according to Records with that of the Legal Limit. The investment excess will not be considered as computable investment. Art. 8.- The investment instruments with their respective permitted percentages in accordance with the diversification by issuer and by issuance established in Article 35 of the Law are presented in Annex No. 4 of these Standards. Investment summary Art. 9.- Entities must report a summary of the information on investments made, in accordance with Annex No. 5 of these Standards, indicating the investment excess or deficiency, the result of which will be obtained as follows: a) To the total of Eligible Instruments or Assets for Investment [present Standards], the totals of investment excesses from the Investment Limits and Diversification by Issuer and by Issuance [Annex No. 3 of these Standards] will be deducted; and b) As a result, the Total Computable Investment will be obtained, to which the base for Investment will be subtracted, to determine the investment excess or deficiency. In the event of an investment deficiency, the regularization process referred to in Articles 53 and 54 literal a) of the Law will be proceeded with.

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Approval: 05/06/2024 Validity: 20/06/2024 CHAPTER III OTHER PROVISIONS AND VALIDITY Sanctions Art. 10.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Financial System Supervision and Regulation Law. Repeal Art. 11.- [Reference to previous norms, likely NRP-02], approved by the Board of Directors of the Financial System Superintendence in Session No. CD-19/1997 of April 23, 1997, whose Organic Law was repealed by Legislative Decree No. 592 containing the Financial System Supervision and Regulation Law, published in the Official Diary No. 23, Volume No. 390, dated February 2, 2011.

Unforeseen aspects Art. 12.- Aspects not provided for in regulatory matters in these Standards will be resolved by the Central Bank through its Committee of Standards. Validity Art. 13.- These Standards will enter into force as of June 20, two thousand twenty-four.

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Approval: 05/06/2024 Validity: 20/06/2024 ELIGIBLE INSTRUMENTS OR ASSETS FOR INVESTMENT Annex No. 1 NAME OF THE COMPANY _______________________________________________ INVESTMENTS AS OF ____ OF _________________ OF 20__ Balance s/ Investment Excess Records Legal Limit Computable Investment CONCEPT $ $ % $ % $ % Eligible Instruments or Assets for Investment 01 Securities issued by the State 30 02 Securities issued by the Central Reserve Bank of El Salvador 30 03 Securities issued or guaranteed by state-owned companies and autonomous official institutions, excepting those of the Development Bank of the Republic of El Salvador and the Social Housing Fund 10 04 Securities issued by the Development Bank of the Republic of El Salvador 30 05 Negotiable obligations with a term of more than one year, issued by Salvadoran joint-stock companies 40 06 Securities issued to finance the acquisition of housing 40 01. Social Housing Fund 02. Other Institutions 07 Shares in Salvadoran companies 20 08 Participation certificates of investment funds 20 09 Foreign Investments 20 01. Securities issued or guaranteed by foreign states and central banks 02. Quotas of foreign investment funds 03. Deposits and securities of first-rank foreign banks 1/ 04. Debt securities issued or guaranteed by financial institutions and foreign companies 05. Shares of foreign companies 10 Time deposits, savings accounts, and securities issued or guaranteed by Salvadoran banks, cooperative banks, and savings and credit companies 60 11 Credits and discounts (Loans and Repo Operations) 35 12 Premiums Receivable (Up to the value of Reserves for Risks in Course) 01. Direct Insurance 02. Reinsurance taken by property insurance 13 Claims receivable by cessions to reinsurers (Up to the value of the Claims Reserve) 14 Loans secured by life insurance policies (Up to the Surrender Value) 15 Organization expenses and investments in furniture and equipment 15 16 Non-residential urban real estate 10 17 Other public offer instruments 2/ 10 Totals 1/ Registered in the Registry kept by the Superintendence 2/ Those instruments not described in the previous subdivisions will be considered, for example: Securitizations, etc. RRC : Reserves for Risks in Course RS : Claims Reserve VR : Surrender Value

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Approval: 05/06/2024 Validity: 20/06/2024 Annex No. 2 INVESTMENT LIMITS NAME OF THE COMPANY_______________________________________________ INVESTMENTS AS OF ____ OF _________________ OF _____ Balances s/Investment Computable, established in Annex No. 1 Legal Limit Investment computable Excess of Investment CONCEPT $ $ % $ % $ % Investment Limits 01 The investments indicated in items 1, 2, 3, and 4 must not exceed together 60% of the Net Technical Reserves and the Minimum Net Equity: 01. Securities issued by the State 02. Securities issued by the Central Reserve Bank of El Salvador 03. Securities issued or guaranteed by state-owned companies and autonomous official institutions, excepting those of the Development Bank of the Republic of El Salvador and the Social Housing Fund 04. Securities issued by the Development Bank of the Republic of El Salvador 02 The investments indicated in items 5, 7, 8, 9, and 16 must not exceed together 60% of the Technical Reserves and the Minimum Net Equity: 01. Negotiable obligations with a term of more than one year, issued by Salvadoran joint-stock companies 02. Shares in Salvadoran companies 03. Participation certificates of investment funds 04. Foreign Investments i. Securities issued or guaranteed by foreign states and central banks ii. Quotas of foreign investment funds iii. Deposits and securities of first-rank foreign banks iv. Debt securities issued or guaranteed by financial institutions and foreign companies v. Shares of foreign companies 05. Non-residential urban real estate 03 The investments indicated in items 4, 6 (less Social Housing Fund), and 10 must not exceed together 60% of the Net Technical Reserves and the Minimum Net Equity: 01. Securities issued by the Development Bank of the Republic of El Salvador 02. Securities issued to finance the acquisition of housing i. Other institutions 03. Deposits and securities issued or guaranteed by Banks, Cooperative Banks, and Savings and Credit Companies Totals

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Approval: 05/06/2024 Validity: 20/06/2024 DIVERSIFICATION BY ISSUER AND BY ISSUANCE NAME OF THE COMPANY _________________________________ INVESTMENTS AS OF ____ OF _________________ OF 20__ Annex No. 3 Balance s/ Investment Excess Records Legal Limit Computable Investment CONCEPT $ $ % $ % $ % Diversification by Issuer and by Issuance 01 Securities issued or guaranteed by autonomous official institutions (Art. 34, literal c of the Law): A- Name Institution _______________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Value per Issuance 20 B - Name Institution _______________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Value per Issuance 20 02 Negotiable obligations with a term of more than one year, issued by Salvadoran joint-stock companies (Art.34, literal of the Law): A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 03 Securities issued to finance the acquisition of housing - Other Institutions (Art. 34, literal f) of the Law): A - Name of Institution ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 B - Name of Institution ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20

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Approval: 05/06/2024 Validity: 20/06/2024 DIVERSIFICATION BY ISSUER AND BY ISSUANCE NAME OF THE COMPANY __________________________________ INVESTMENTS AS OF ____ OF _________________ OF 20__ Annex No. 3 Balance s/ Investment Excess Records Legal Limit Computable Investment CONCEPT $ $ % $ % $ % Diversification by Issuer and by Issuance 04 Shares in Salvadoran Companies (Art.34, literal g) of the Law): A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 v - Capital of the Issuer 5 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 v - Capital of the Issuer 5 05 Participation certificates of investment funds (Art.34, literal h) of the Law): A - Name of Institution ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 v - Value of the same fund 5 B - Name of Institution ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 v - Value of the same fund 5 06 Foreign Investments (Art.34, literal i) of the Law): A - Name of Institution ____________________________ i - Investment Base 2 B - Name of Institution ____________________________ i - Investment Base 2

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Approval: 05/06/2024 Validity: 20/06/2024 DIVERSIFICATION BY ISSUER AND BY ISSUANCE NAME OF THE COMPANY __________________________________ INVESTMENTS AS OF ____ OF _________________ OF 20__ Annex No. 3 CONCEPT Balance s/ Records Legal Limit Investment Computable Excess of Investment $ $ % $ % $ % Diversification by Issuer and by Issuance 07 Time deposits, savings accounts, and securities issued or guaranteed by Salvadoran banks, cooperative banks, and savings and credit companies (Art.34, literal j) of the Law): A - Name of Institution ____________________________ i - Investment Base - 5 % - 10 % (The 10 % only if they do not possess investments in other companies of the business group) 10 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 B - Name of Institution ____________________________ i - Investment Base - 5 % - 10 % (The 10 % only if they do not possess investments in other companies of the business group) 10 ii - Issuer's Asset 10 iii - Business Group's Asset 10 iv - Value per Issuance 20 08 Credits and discounts (Loans and Repo Operations) (Art.34, literal k) of the Law): 1/ A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 09 Premiums Receivable (Up to the value of the Reserves for Risks in Course) (Art.34, literal l) of the Law): 2/ A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 DIVERSIFICATION BY ISSUER AND BY ISSUANCE

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Approval: 05/06/2024 Validity: 20/06/2024 NAME OF THE COMPANY _______________________________________________ Annex No. 3 INVESTMENTS AS OF ____ OF _________________ OF 20__ Balance s/ Investment Excess Records Legal Limit Computable Investment CONCEPT $ $ % $ % $ % Diversification by Issuer and by Issuance 10 Claims receivable by cessions to reinsurers (Up to the value of the Claims Reserve) (Art.34, literal m of the Law): A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 11 Loans secured by life insurance policies (up to the Reserve Value) (Art.34, literal n of the Law): A - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10 B - Name of Company ____________________________ i - Investment Base 5 ii - Issuer's Asset 10 iii - Business Group's Asset 10