Resolution No. JB-2015-3506 of the Banking Board

Banking Board of Ecuador

RESOLUTION No. JB-2015-3506

THE BANKING BOARD

CONSIDERING:

THAT by letter No. IRG-SRASSPG-2010-150-V dated August 12, 2010, the lawyer Roberto Vargas Romero, Regional Intendant of Guayaquil, exercising the powers delegated in Resolutions Nos. ADM-2006-7617 of May 16, 2006 and ADM-2007-8181 of December 5, 2007, and in accordance with what is established in articles 37 and 40 of the Codification of the General Insurance Law, for having failed to deliver and substantiate up to this date with the respective documentation, a series of information requested by the audit commission of the Superintendence of Banks and Insurance, the pending details to be supplied were reminded to the general manager by memorandum No. IRG-RS-PCG-2010-012 of July 30, 2010, imposed the following fines:

• Lawyer Pedro Zapac Quevedo, as legal representative, a fine of US$1,200.00;
• Engineer Emily Pincay, Technical Manager of the insurance company, a fine of US$800.00;
• Leonardo Suárez, Head of Reinsurance, a fine of US$600.00;

THAT by document entered on September 8, 2010, at the Regional Intendant of Guayaquil, the sanctioned individuals, whose names are indicated in the preceding paragraph, with the professional sponsorship of lawyer Manuel Cornejo Iglesias, have filed an appeal before the Banking Board against the administrative act contained in letter IRG-SRASSPG-2010-150-V of August 12, 2010;

THAT with resolution No. SBS-IRG-SRLSSP-G-2010-148 of September 15, 2010, the Regional Intendant of Guayaquil, granted the appeal;

THAT by letter No. IRG-SRLSSP-G-2010-457-R of September 17, 2010, the lawyer Roberto Vargas Romero, Regional Intendant of Guayaquil, forwarded to the Secretariat of the Banking Board, the corresponding file;

THAT the second and following subsections of article 37 of the General Insurance Law establish:

"When in a controlled entity, its directors, administrators or officials violate the laws or regulations governing their operation, or in cases where they infringe statutory provisions or norms and instructions issued by the Superintendence of Banks and Insurance, and especially when they fail to comply with the provisions of this Law; when they refuse to receive the visit of auditors or officials duly accredited by the Superintendence of Banks and Insurance or refuse to supply the documents or data that are necessary for the practice of the audit; when they do not timely present the balances, accounts and other documents related to their business, or do not present the special reports requested of them; when they report deficiencies in reserves, investments and solvency margin; if they do not pay the

---

Banking Board of Ecuador

Resolution No. JB-2015-3506 Page No. 2

contribution for the maintenance of the Superintendence of Banks and Insurance within the deadline that has been set, when they make investments without subjecting themselves to legal norms; the Superintendence of Banks and Insurance, depending on the gravity of the infringement, will impose one of the following sanctions:

a) To the controlled entity:

1. Reprimand.
2. Fine.
3. Suspension of authorization certificates or withdrawal of credentials, as appropriate; and, b) To the directors and administrators of the entity of the private insurance system:
4. Reprimand.
5. Fine.
6. Removal.

In any case and without prejudice to what is established in this article, the Superintendent of Banks and Insurance will adopt measures aimed at restoring compliance with the violated norm. The fines imposed on directors and administrators will be paid with their own resources.

If a director, administrator, official or employee or likewise the external auditor of a controlled entity, is designated or exercises their functions, in contravention of what is provided in article 17 of this Law, they will be removed from their functions by resolution issued by the Superintendent of Banks and Insurance, if the nominating body has not done so beforehand, or if they have not resigned."

THAT article 40, ibidem, establishes:

"The fines imposed by the Superintendent of Banks and Insurance in no case will be less than two hundred sixty-two with 89/100 United States dollars, nor more than two thousand one hundred three with 12/100 United States dollars; in cases where the damage caused by the infringement can be quantified, the amount of the fine must be related to it. The Superintendence of Banks and Insurance will issue the norms that are necessary for its application according to the gravity of the offense and the type of infringement.

The Superintendence of Banks and Insurance may exercise coercive jurisdiction for the collection of owed values";

THAT the norms previously transcribed determine the causes by which the Superintendence of Banks and Insurance, depending on the gravity of the infringement, must sanction the controlled entities and the directors and administrators of the private insurance system, among which it notes, refusing to supply the documents or data that are necessary for the practice of the audit;

---

Banking Board of Ecuador

Resolution No. JB-2015-3506 Page No. 3

THAT by letter No. IRG-SRASSPG-2010-091-V dated July 7, 2010, addressed to lawyer Pedro Zapac Quevedo, "(...) issues a written reprimand to the Insurance Company due to the request made in the letter of the first day and in memorandum No. IRG-SRASSPG-2010-003, with which the reminder was made (...)" which denotes the lack of attention from the initial requests of the audit commission, and disproves the assertion of the appellants that priority attention was instructed to the requests of the controlled entity;

THAT as evidenced by the appeal file, by memorandum RS-G-TC-RE-2010-199 dated August 16, 2010, lawyer Pedro Zapac, Executive President of Rocafuerte Seguros S.A, after the imposition of the fine, responds to memorandum No. IRG-RSPCG-2010-012 of July 30, 2010, by which the audit commission reminded the appellants of the immediate delivery of information, attached to which they say they send via annexes, copies of letters sent to the control body as documentary proof of attention to the information requests, which does not disprove the fact that they did not timely comply with the delivery of the documents and data necessary for the practice of the audit;

THAT from the technical report contained in letter No. IRG-SRASSPG-2010-065-Q of October 15, 2010, it can be established that for partial compliance or non-compliance with the information requests made by the control body, the Regional Intendant of Guayaquil, by letter No. IRG-SRASSPG-2010-150-V of August 12, 2010, imposed the monetary sanction on the appellants, duly founded on article 37 of the General Insurance Law;

THAT article 40 of the General Insurance Law empowers the control entity to impose sanctions on controlled entities, in attention to the gravity of the infringement, so the Regional Intendant of Guayaquil considered it appropriate to apply the economic fine for the concepts and values indicated, all the more so that the gradation of the offense occurs due to the previous reprimand issued to Seguros Rocafuerte S.A, when the requirements made by the Superintendence of Banks through the audit commission have not been fulfilled, which leaves without factual and legal basis the objection of the appellants;

THAT the National Legal Intendant, by memorandum INJ-SAL-201-01203 of November 18, 2010 and the National Intendant of the Private Insurance System, by memorandum INSP-2015-00509 of June 11, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Executive President, the Technical Manager and the Head of Reinsurance of Rocafuerte Seguros S.A.; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by the gentlemen lawyer Pedro Zapac Quevedo, Executive President; engineer Emily Pincay Martínez, Technical Manager; and, Leonardo Suárez Quirumbay, Head of Reinsurance of Rocafuerte Seguros S.A. and, CONFIRM the letter IRG-

---

Banking Board of Ecuador

Resolution No. JB-2015-3506 Page No. 4

SRASSPG-2010-150-V of August 12, 2010, by which the Regional Intendant of Guayaquil proceeded to fine Lawyer Pedro Zapac Quevedo, as legal representative, with a fine of US$1,200.00; to engineer Emily Pincay Martínez, Technical Manager of the insurance company, a fine of US$800.00; and to Mr. Leonardo Suárez, Head of Reinsurance, with a fine of US$600.00, for failure to deliver information requested by the audit team of the Superintendence of Banks and Insurance.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on July 1, 2015.

(Signature) Econ. Rodrigo Landeta Parra GENERAL INTENDANT (S) PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on July 1, 2015.

(Signature) Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD