Circular CBFA_2009_14/ Reporting Obligations for Mutual Guarantee Societies

rue du Congrès 12-14 | 1000 Bruxelles t +32 2 220 53 42| f +32 2 220 54 93 | www.cbfa.be Circular CBFA_2009_14 of 13 March 2009 Reporting Obligations for Mutual Guarantee Societies Scope:
Mutual guarantee societies subject to the provisions of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies.
Summary/Objectives:
This circular provides an overview of the documents that mutual guarantee societies must transmit to the CBFA each year. It also specifies the applicable transmission deadlines and provides, in point II, details on certain of the documents to be transmitted.

Madam,
Sir,

The annual reporting obligation incumbent on mutual guarantee societies is governed by Articles 32, 41, 42, 44 and 46 of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies.

The Banking, Finance and Insurance Commission has established a series of practical instructions to standardize the reporting procedure. This circular lists, in point I, the documents that must be transmitted to the CBFA each year. It provides, in point II, details on certain of these documents. It then specifies, in point III, the applicable transmission deadlines and sets out, in point IV, various provisions concerning reporting.

I. Nature of Documents to be Sent
Documents marked with a " * " are communicated to the CBFA on computer media (floppy disk or any other means made available to mutual guarantee societies by the CBFA).
The paper printout of the content of this computer media must be transmitted to the CBFA at the same time.

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1.* The annual accounts as well as the list of directors.
2. The annual management report of the board of directors to the general meeting.
3. The report of the auditor or the board of auditors to the general meeting (to be sent to the CBFA at the latest fifteen days before the date of the general meeting).
4. The auditor's report intended for the CBFA; this report must be sent to the CBFA by the auditor himself.
5. The minutes of the general meeting (to be sent within the month following the date of the general meeting).
6.* The solvency ratio statement.
7. The detailed lists of representative assets by investment category.
8.* A summary statement of representative assets.
9. The list of exemptions provided for by the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies, to which the mutual guarantee society appeals.
10. The reinsurance plan.

II. Form and Content of Documents
A. Annual Accounts
1.- The "annual accounts" proper
These are the annual accounts established in application of the Royal Decree of 30 January 2001 implementing the Companies Code, Book II, Title I - Annual Accounts (former Royal Decree of 8 October 1976) and which are deposited with the National Bank of Belgium. They form a set comprising the following elements:
a) the balance sheet; b) the income statement; c) the notes.
The CBFA draws the particular attention of mutual guarantee societies to the importance of the content of statement no. 5.7 of the notes relating to off-balance sheet rights and commitments, the amounts of which must serve as the basis for the calculation of the solvency ratio. This notes section will necessarily include the mutual guarantee society's own commitments gross of reinsurance and the ordinary commitments of Crédit Professionnel, Waarborgbeheer NV, Sowalfin SA, Socamut SA, the Brussels guarantee fund and other reinsurers.

2.- The detailed balance sheet and the detailed income statement These are the detailed accounting schemes to be established pursuant to communication F.4 of 3 October 2000.
All mutual guarantee societies are requested to complete the "detailed balance sheet" and "detailed income statement" schemes found on the computer media made available by the CBFA to the societies (files "F13 - 20xx -Aa Detailed Balance Sheet.xls" and "F13 - 20xx -Ab Detailed Income Statement.xls"), as well as the list of directors (file "F13 - 20xx -A Ident.+Liste adm.-(A1).xls"1). These schemes are to be presented in euros, without decimals. For information, a model of these schemes is attached in Annex A.

1 The fields that cannot be filled in within the 3-week period before the date of the general meeting are left blank.

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B. Auditor's Report to the General Meeting
This is the report of the statutory auditor (or the board of auditors) which is part of the annual report of mutual guarantee societies and is intended for the general meeting of partners.
The attention of mutual guarantee societies is drawn to the fact that a photocopy of the signed document must be transmitted to the CBFA.

C. Auditor's Report Intended for the CBFA
This is the report within the meaning of Article 44, § 2, of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies, which makes Article 40 of the Law of 9 July 1975 on the supervision of insurance undertakings applicable by analogy. The form and content of the auditors' reports intended for the CBFA are the subject of communication F.2 of 26 January 2000 addressed to mutual guarantee societies. This report is to be sent by the auditor himself.

D. Solvency Ratio Statement
1.- All mutual guarantee societies are requested to complete the table named thus found on the computer media (file "F13 - 20xx -B Solvency Ratio.xls").
The ratio calculation is done in euros, without decimals2.

2.- Mutual guarantee societies are required to strictly observe the cross-references appearing on the solvency ratio statement as the accuracy of the ratio calculation depends on their compliance. The accuracy of the ratio calculation also depends on the amounts taken into consideration. To this end and for the items where it is possible, this statement indicates the locations where, in the detailed accounting schemes imposed by the aforementioned communication F.4, certain amounts necessary for the aforementioned calculation must be sought. For information, a model of the solvency ratio statement is attached in Annex B.

3.- All mutual guarantee societies must constitute a solvency ratio in accordance with Article 26 of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies.

E. Detailed Lists of Representative Assets by Investment Category Mutual guarantee societies must establish the detailed lists of assets allocated to the coverage of technical provisions by investment category. The detailed lists by investment category must contain the following information:
1° For each of the securities referred to in Article 34, 1°, 2°, 3°, 4°, 5° and 6° (real estate certificates) of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies:

• the name;
• the nominal value or number of shares;
• the unit market value;
• the currency;

2 The rates and results of operations carried out with these rates may however be expressed with decimals.

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• the exchange rate;
• the balance sheet asset value;
• the real rights and privileges encumbering them;
• the allocation value;
• the mention that the allocation value is influenced by the use of derivatives if this is the case;
• for securities eligible for deposit, the identification of the depositary institution, as well as the account number;
• for securities not eligible for deposit, the account number of the accounting plan;
• the accrued and unpaid interest related thereto.

2° For each of the demand or time accounts provided for in Article 34, 10°, of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies:

• the identity of the credit institution;
• the account number;
• the amount in the original currency;
• the currency;
• the exchange rate;
• the balance sheet asset value;
• the real rights and privileges encumbering them;
• the allocation value;
• the mention that the allocation value is influenced by the use of derivatives if this is the case;
• the accrued and unpaid interest related thereto.

3° For each of the real estate properties (other than real estate certificates) referred to in Article 34, 6°, of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies:

• the location;
• the estimated value in the original currency;
• the currency;
• the exchange rate;
• the balance sheet asset value;
• the real rights and privileges encumbering them;
• the allocation value;
• the account number of the accounting plan;
• the accrued and unpaid rents related thereto.

The detailed lists whose content has not been specified above must comprise at least:
the complete identification, the number of shares or the nominal value, the balance sheet asset value, the debts incurred for their acquisition, the real rights and privileges encumbering them, the exchange rate used for the calculation of the allocation value, the allocation value and, if applicable, a reference to the written agreement of the CBFA. The share of reinsurers and claims on reinsurers provided for in Article 34, 7° and 8°, of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies cannot be admitted to the coverage of technical provisions and debts, unless prior agreement of the CBFA. Only the detailed lists concerning securities, cash and real estate must be sent to the CBFA. The other detailed lists must be kept available to the CBFA within the society. The attention of mutual guarantee societies is drawn to the fact that the detailed lists must bear a formula signed by a person who can validly bind the society and similar to the formula below:

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"The undersigned declares that the content of this detailed statement is accurate and corresponds entirely to the permanent inventory status as of 31 December 20..".

With regard more particularly to the detailed list of securities, the CBFA requests that the classification of values be carried out respecting the order of investment categories listed on the summary statement of representative assets and that a total per investment category be indicated with mention of its code. For information, models of detailed lists are attached in Annex C. These models are not to be filled in as such. Mutual guarantee societies are requested to establish, on paper, the detailed lists of their representative assets by drawing inspiration from the aforementioned models and following the indications contained therein.

F. Summary Statements of Representative Assets of Technical Provisions and Debts Mutual guarantee societies are requested to complete the table named thus found on the computer media (file "F13 - 20xx - D Summary Statement of Rep. Assets.xls"). The amounts appearing by investment category in Part I of the table must correspond to the totals of the detailed lists (see point II. E above) and must be indicated in euros, without decimals. The gross technical provisions and technical debts of reinsurance relating to the commitments of mutual guarantee societies (Part II of the table) must be represented by values complying with the provisions of Articles 32 to 39 of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies. For information, a model of the summary statement of representative assets is attached in Annex D.

Remark:
Claims whose administrative file is closed and whose guarantee payment procedure has been initiated by the society must also be covered by regulatory representative assets as long as the credit institution has not received the amount of the guarantee due to it, whether this amount is considered as a technical provision or as a technical debt vis-à-vis the credit institution.

G. List of Exemptions Provided for in Article 69 of the Royal Decree of 30 April 1999 Regulating the Status and Supervision of Mutual Guarantee Societies, Which the Mutual Guarantee Society Wishes to Benefit From Mutual guarantee societies are requested to mention on a separate document the list of exemptions provided for in Article 69 of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies, from which they wish to benefit. For information, mutual guarantee societies will no longer be able, from 6 August 2009, to rely on the exemptions provided for in Article 69 of the aforementioned Royal Decree of 30 April 1999. They must therefore ensure that all representative assets are, by this date at the latest, compliant with the provisions of Articles 35 to 40 of the Decree.

H. Reinsurance Plan
Mutual guarantee societies communicate to the CBFA their current reinsurance plan for the current financial year.
This plan will mention in particular the names and addresses of the reinsurers and the reinsurance rate.

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III. Transmission Deadlines for Documents
Pursuant to Article 46, § 1, of the Royal Decree of 30 April 1999 regulating the status and supervision of mutual guarantee societies, mutual guarantee societies must communicate to the CBFA at least three weeks before the meeting of the general meeting of partners, the draft annual accounts and amendments to the statutes, as well as the decisions they intend to take during this meeting which are likely to have an impact on guarantee acts in general. In application of Articles 32, 41, 42, 44 and 46 of the aforementioned Royal Decree of 30 April 1999, the CBFA requests that all documents be transmitted to it, in a single copy, at least three weeks before the general meeting of partners, except for the documents cited in points I.3 and I.5 (see these points). Mutual guarantee societies that, for one reason or another, are unable to send the requested documents are requested to notify the CBFA at least one week before the deadline for sending.

IV. Various Provisions
A. Date of the General Meeting
The CBFA reminds mutual guarantee societies each year of the annual reporting obligation incumbent on them. It also transmits to them the necessary information concerning the use of the computer media containing the Excel tables for the financial year in question. Mutual guarantee societies are requested to acknowledge receipt of this reminder and of the computer media within fifteen days. Mutual guarantee societies communicate on their acknowledgment of receipt the date of the next general meeting of partners. If, for one reason or another, the communicated date is changed, mutual guarantee societies are requested to notify the CBFA.

B. Identification and Signature of Documents
In order to sufficiently identify the documents, the name of the society and its code must be indicated on each document or on the first page if the annex comprises several sheets.
In the Excel annexes, Aa, Ab, B and D, found on the computer media, mutual guarantee societies are requested to enter these indications in the "custom header/left section" zone3.

3 Cf. in Excel: menu "File" / "Page Setup" / ...

All documents, or the last page, if a document comprises several, must be signed by a responsible representative of the company. To this end, the mutual guarantee society will print on paper the tables found on the computer media, once these have been duly filled in.

C. Cover Letter
The documents requested in point I will be addressed to the CBFA, in electronic version (computer media) and in paper version, accompanied by a letter listing the contents of the shipment.

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The entire set is sent to the following address:
CBFA
CPP-PVA-LD Department
Rue du Congrès 12-14
1000 Brussels

D. Mention of the Name of a CBFA Collaborator
Mutual guarantee societies must in no case mention the name of a collaborator on the envelope containing documents intended for the CBFA.

E. Electronic Reporting
Mutual guarantee societies must make the necessary IT arrangements to be able to complete the tables created in Excel on the aforementioned computer media.
The cell references of these tables must in no case be modified.
The tables have been designed in such a way that all calculation formulas operate automatically.
Consequently, societies are requested to fill in only the cells that do not contain a calculation formula.

We ask you to accept, Madam, Sir, the assurance of our distinguished consideration.
The President,
Jean-Paul SERVAIS

Annexes