Banking Board of Ecuador

RESOLUTION No. JB-2015-3497

THE BANKING BOARD

CONSIDERING:

THAT according to the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332, of September 12, 2014, the Banking Board will continue to act until it resolves all appeals that were under its jurisdiction at the date of entry into force of this Code, for a period of one hundred and eighty days; extendable at the discretion of the Monetary and Financial Policy and Regulation Board.

THAT the Corporation "LAS CÁMARAS CORPOCÁMARAS" contracted the Industrial Multirisk Insurance Policy No. 200048, annex 3646, with BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A., to cover the business building of two towers located in the Nueva Kennedy citadel, Francisco de Orellana Avenue next to the Hilton Colón Hotel, with the following coverages: documents and models, allied lines, first absolute risk, all risks including: earthquake, fire and/or lightning, explosion, riot and strike, water damage, rain and flooding, extended broad coverage, collapse (covered only as a consequence of an event originating in a coverage contracted by the policy, excludes inherent vice), malicious damage, according to the particular conditions of the policy. The validity period is established as 366 days, counted from November 1, 2011. The insured amount amounts to US$18,025,000.00;

THAT according to the documentation on file, and as it was public knowledge, on July 2, 2012, the insured building suffered a fire, which resulted in various economic damages, a loss that, as indicated by BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A., was notified on July 3, 2012;

THAT the insurance company, via letter of July 5, 2012, communicated to the insured that the company GP Ajustadores Asociados S.A., representatives in the country of the company MC Larens Young International – MYI, was assigned as an expert to carry out the respective inspection, and additionally requested varied documentation to facilitate the analysis thereof;

THAT the insured, via letter of December 5, 2012, indicated to the insurance company that the quantification of the loss amounts to US$ 450,000.00, with the budget for air conditioning remaining pending. On the other hand, through communication of the same date, it requests that an advance of 350,000.00 be paid to initiate the repairs of the damages caused by the fire that occurred at the "Las Cámaras" Business Center building.

THAT via letter AA-13.702.13 of January 9, 2013, GP Ajustadores Asociados S.A. issued the "Third Interim Report," which states:

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"PAYMENT ON ACCOUNT

On December 5, 2012, the Insured sent two communications, one informing of the partial quantification of the claim for US$ 450,000, with the air conditioning item remaining solely at the discretion of the Insured to be quantified, and the second communication requesting a payment on account of the claim (advance), for the amount of US$ 350,000.

(...)

Based on the aforementioned regarding the estimation of the loss and what was stated in the present and previous report regarding the coverage of the claim presented by the Insured, save for your better judgment, a payment on account of the Insured's claim is recommended for the amount of US$ 250,000, net of deductible.

RESERVE

(...)

Thus and as detailed above, it is estimated that the Insured's final claim would be related to the approximate figure of US$ 680,000 (US$ 680,160.75), to which, based on the last documentation provided and applying the estimated underinsurance of 35% and the deductible agreed upon in the Policy, a new net reserve of approximately US$ 400,000 (US$ 397,894.04) is obtained.

Now, in view of the advance payment requested by the Insured and analyzed above, we determine that the "net reserve of advances" would remain at US$ 150,000.00 (US$ 147,894.04). (Fojas 41 and 42)";

THAT BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. pronounced itself accepting the insured's claim, and therefore proceeded to indemnify the insured company with two partial payments of US$ 175,000.00 and US$ 70,000.00 made on February 21 and June 21, 2013, respectively, totaling US$ 245,000.00, this is within the legal term of forty-five days established by Article 42 of the General Insurance Law;

THAT the engineer Francisco Febres-Cordero Grunauer, Executive Director of the Corporation "LAS CÁMARAS, CORPOCÁMARAS", by virtue of the letters received by the insurer on September 12 and 25, 2013, formally delivers the invoices to settle the balance of the loss;

THAT on February 24, 2014, BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. presented to the insured Corporation "LAS CÁMARAS, CORPOCÁMARAS", a "SETTLEMENT AGREEMENT", in which it proposes an indemnifiable balance of US$ 113,788.46, indemnifiable value at 100% of US$ 363,788.46; which was not accepted;

THAT on March 24, 2014, the engineer Francisco Febres-Cordero Grunauer, Executive Director - Legal Representative of the Corporation "LAS CÁMARAS,

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CORPOCÁMARAS" presented a complaint against the insurance company before this Superintendency;

THAT via letter No. DAEU-SSP-REQ-2014-183, of April 4, 2014, the Regional Intendancy of Guayaquil, transferred the complaint to the insurer so that it presents the pertinent explanations and defenses, a requirement that was attended via communication of April 15, 2014, entered in said Intendancy on May 2, 2014;

THAT the Regional Intendancy of Guayaquil through resolution No. IRG-DAYEU-SSP-2014-089 of May 15, 2014, resolved the complaint, in the following terms:

ARTICLE FIRST.- ORDER, in accordance with what is provided in the third paragraph of Article 42 of the (...) General Insurance Law, that BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. pay in favor of the Corporation "LAS CÁMARAS, CORPOCÁMARAS", as indemnification for the loss occurred at the business building (of two towers) (...) the sum of... (US$419,986.51), minus the advances paid by the insurer and the deductibles that correspond according to what was agreed by the policy, together with the interests calculated at the maximum conventional rate fixed according to the Law, from November 10, 2013, the day following the date on which the forty-five days that the insurer had to pay the loss expired. It should be clarified that said calculation must be made on the pending values, once the advances delivered by the insurer to the claimant are discounted.

ARTICLE SECOND.- DISPOSE that BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A., comply with what is established in the previous article, within a period of fifteen days, counted (sic) from the date it is notified with this Resolution...";

THAT via writing entered in the Regional Intendancy of Guayaquil on May 23, 2014, the lawyer Fabián Ortega Trujillo, Executive President of BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A., with the professional sponsorship of the lawyer Jessica Vergara Letamendi, filed an appeal before the Banking Board against the administrative act contained in resolution No. IRG-DAYEU-SSP-2014-089 of May 15, 2014, arguing in principal that:

• "...According to the communications of September 11 and 25, 2013, almost a year after the loss occurred and time after the advance payments were made charged to the indemnification for the claim, the Insurer itself, as is also stated, in letters a) and b) of number 5 of the appealed resolution, quantified the loss at US$401,822.15 of which US$245,000.00 had already been paid by the insurer.

• It is worth mentioning, that these items were not objected to by any of the parties, reason why, the advance payment was made with the greatest naturalness charged to the indemnification of the claim.

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• "With these antecedents, the pending balance to be cancelled by Seguros Bolívar is US$ 156,822.15 and not US$174,986.51, as the appealed resolution suggests when ordering Seguros Bolívar to pay the sum of US$419,986.51, instead of US$401,822.15, for the loss, minus the deductible advances, and with interests.

• (...) the correct sum that my represented party must pay, and which was quantified by the Insured itself, is US$156,822.15, a sum to which, once the deductibles agreed upon in the subscribed policy are calculated, and without the value corresponding to the interests – since the calculation thereof does not apply, and in accordance with Art. 42 of the General Insurance Law if the payments for the indemnification of the loss have not been made late but in an anticipatory manner, demonstrating once again, the good faith of the Insurer-, resulting in an indemnifiable balance of US$118,788.46, a value that Seguros Bolívar and the Reinsurer are willing to cancel, if ordered by Usia." (sic);

THAT with resolution No. SBS-IRG-DASSP5-2014-017 of June 2, 2014, the Regional Intendant of Guayaquil, granted the appeal filed and disposed of the sending of the file to the Banking Board;

THAT via letters Nos. JB-2014-1504 and JB-2014-1505, both of June 12, 2014, addressed to the lawyer Fabián Ortega Trujillo, Executive President, of BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. and to Mr. Francisco Febres Cordero Grunauer, respectively, the Secretary of the Banking Board sent certified copies of resolution No. SBS-IRG-DASSP5-2014-017 of June 2, 2014. Attached to letter No. JB-2014-1505, a photocopy of the appeal writing was additionally sent;

THAT Article 42 of the General Insurance Law provides:

"Art. 42.- Every insurance company has the obligation to pay the contracted insurance or the corresponding part of the duly proven loss, as the case may be, within forty-five days following that in which the insured or the beneficiary presents in writing the corresponding claim attached with the documents that, according to the policy, are necessary, unless the insurance company formulates founded objections to such claim, which must be immediately brought to the knowledge of the Superintendent of Banks and Insurance.

If the insured or the beneficiary agrees to the objections, the insurance entity will immediately pay the agreed indemnification.

If in this case or in which the forty-five day term fixed in the first paragraph expires, the insurance company does not make the payment, the insured or the beneficiary will put this fact in the knowledge of the Superintendent of Banks and Insurance, who, upon verifying this situation, will order the payment within a term not greater than fifteen days, together with the interests calculated from the forty-five days previously indicated, at the maximum conventional rate fixed according to the law. If not

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pay within the granted term, it will dispose of the forced liquidation of the insurance company.

If the insurance company formulates objections to the claim and no agreement is reached with the insured or beneficiary, the Superintendency of Banks and Insurance will verify the existence of the foundations of said objections and if there are none, it will order the payment, otherwise it will reject it.

The insured or beneficiary may resort to summary verbal trial before competent judges or submit to commercial arbitration or mediation, as the case may be.";

THAT according to the cited norm, once the forty-five days following that in which the insured or beneficiary presents in writing the corresponding claim attached with the documents that, according to the policy, are necessary, have passed, without the insurance company having made the payment of the claimed insurance, or in its defect, formulated objections to such claim, the insured can go to the Superintendency of Banks and Insurance to ask it to order the insurance company to pay the loss, and if there are foundations for the denial of said payment, it will analyze them to determine their pertinence or lack of legal pertinence;

THAT Article 22 of Supreme Decree 1147 establishes:

"Art. 22.- It is incumbent on the insured to prove the occurrence of the loss, which is presumed to have been produced by fortuitous event, unless proof to the contrary. Likewise, it is incumbent on the insured to prove the amount of the indemnification due from the insurer. It is incumbent on the latter, in both cases, to demonstrate the facts or circumstances excluding its responsibility.";

THAT in this case, the insured Corporation "LAS CÁMARAS, CORPOCÁMARAS" has proven the occurrence of the loss and its respective quantification, which in turn was fixed according to the report of the adjusting expert, contained in the "Third Interim Report" of January 9, 2013;

THAT on its part, BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. pronounced itself accepting said claim within the legal term of forty-five days established by Article 42 of the General Insurance Law; since on February 21 and June 21, 2013, it made two advance payments charged to the indemnification for the claim, as a sign of acceptance thereof, for the amounts of US$ 175,000.00 and US$ 70,000.00, respectively, which sum a total of US$ 245,000.00;

THAT the Regional Intendancy of Guayaquil in the dispositive part of the appealed resolution No. IRG-DAYEU-SSP-2014-089 of May 15, 2014, ordered BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. to pay the Corporation "LAS CÁMARAS, CORPOCÁMARAS", as indemnification for the loss occurred in the business building (of two towers) the sum of US$ 419,986.51, minus the advances paid by the insurer and the deductibles that correspond according to what was agreed in the policy, together with the interests calculated at the maximum conventional rate fixed according to the law, from November 10, 2013, the day following the date on which the forty-five days that the insurer had to pay the loss expired;

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THAT from the documents that make up the case file, it is clear that the Regional Intendancy of Guayaquil, ordered said payment to the insurance company based on a quantity established in the "SETTLEMENT AGREEMENT" of February 24, 2014, which is backed by the invoices delivered by the insured to the insurance company on September 12 and 25, 2013, in order, by virtue of which it quantified the total loss in the aforementioned sum of US$ 419,986.51. However, it is observed that said invoices do not appear in the file and the mentioned agreement is not signed by the insured as a sign of rejection thereof, so it should not have been used as a basis to fix the quantity of the claim;

THAT regarding this, it is important to specify what is established in Article 6 of the General Insurance Law, regarding who are the insurance experts:

"Art. 6.- (...)

b) Loss adjusters, natural or legal persons, whose professional activity is to examine the causes of losses and value the amount of losses in an equitable and fair manner, according to the clauses of the respective policy. The adjuster will have the right to request the insured to present books and documents that they deem necessary for the exercise of their activity." (sic). (Emphasis added).

According to the cited legal norm, the insurance expert, in the case at hand, GP Ajustadores Asociados S.A., is authorized to examine the causes of the loss and value the amount of losses in an equitable and fair manner, according to the clauses of the respective policy;

THAT in the "Third Interim Report" of January 9, 2013, GP Ajustadores Asociados S.A. determined as the final figure of the claim, the sum of US$ 400,000, concluding:

"(...) Now, in view of the advance payment requested by the Insured and analyzed above, we determine that the 'net reserve of advances', would remain at US$ 150,000.00...". (Fojas 41 and 42)

THAT from what has been stated, by virtue of the two conditions provided in the transcribed article 22 having been met, that is, that the insured has proven the occurrence of the loss and its respective quantification, which in turn has been duly quantified by itself and the adjusting expert; and, that BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. has not made the total payment in favor of the beneficiary; the protection provided in the third paragraph of Article 42 of the General Insurance Law corresponds, ordering the same but based on the adjuster's report and the liquidation made by him, but without interest, in reason that the insurance company paid the advances to the insured, within the forty-five day term established by law;

THAT consequently, in accordance with the cited legal norms and what is indicated in the preceding considerations of this report, what was ordered by the Regional Intendancy of Guayaquil in resolution No. IRG-DAYEU-SSP-2014-089 of May 15, 2014, object of the present appeal, is not procedent, that is, it does not correspond to the payment of the sum of US$ 419,986.51, minus the

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advances paid by the insurer and the corresponding deductibles according to what was agreed in the policy, plus the interests fixed at the maximum conventional rate determined according to the law;

THAT the National Legal Intendancy, via memorandum INJ-DNU-SAL-2015-061 of January 26, 2015, recommended to the Banking Board to accept the claim contained in the appeal filed;

IN exercise of its legal attributions,

RESOLVES:

ARTICLE 1.- ACCEPT the claim contained in the appeal filed by the lawyer Fabián Ortega Trujillo, Executive President of Bolívar Compañía de Seguros del Ecuador S.A., currently in liquidation; and consequently, PARTIALLY CONFIRM what is established in resolution No. IRG-DAYEU-SSP-2014-089 of May 15, 2014, with the clarification, that BOLÍVAR COMPAÑÍA DE SEGUROS DEL ECUADOR S.A. must pay in favor of the Corporation "LAS CÁMARAS, CORPOCÁMARAS", the sum of ONE HUNDRED AND FIFTY-FIVE THOUSAND DOLLARS OF THE UNITED STATES OF AMERICA (US$ 155,000.00), minus the deductibles that correspond according to what was agreed in the policy, and without interest, since the insurance company on February 21 and June 21, 2013, made two advance payments charged to the indemnification for the claim, for the amounts of US$ 175,000.00 and US$ 70,000.00, respectively.

ARTICLE 2.- ORDER that the insurance company comply with what is established in the previous article within a period of fifteen days, counted from the date it is notified with this resolution, under legal warnings.

NOTIFY.- Given in the Superintendency of Banks, in Quito, Metropolitan District, on June 24, two thousand fifteen.

Econ. Rodrigo Zandeta Parra
GENERAL INTENDANT, S
PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on June 24, two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD