Compilation of Insurance and Reinsurance Regulations - Adjustments pursuant to Law No. 20.130 of 2/5/2023 and Regulatory Decree No. 413/023 of 19/12/2023

Montevideo, March 8, 2024 Ref: COMPILATION OF INSURANCE AND REINSURANCE REGULATIONS - Adjustments pursuant to Law No. 20.130 of 2/5/2023 and Regulatory Decree No. 413/023 of 19/12/2023.

The market is informed that the Superintendent of Financial Services adopted the following resolution on March 1, 2024:

1. REPLACE in Chapter II – Property Damage Insurance and Non-Pension Insurance, of Title III – Investments, of Book II – Stability and Solvency, Article 49 with the following:

ARTICLE 49 (PERMITTED INVESTMENTS).

Non-pension obligations shall consist of technical reserves, debts with insured parties, premiums -net of commissions- payable for retrocession liabilities, and guarantee deposits for retrocession liabilities corresponding to property damage insurance and non-pension insurance contracts. The minimum capital and non-pension obligations must be fully covered by investments in the following assets:

A. Securities issued by the Uruguayan State and by the Central Bank of Uruguay. Securities issued by the Uruguayan State shall be considered to include those issued by the Central Government and by Departmental Governments.

B. Securities issued by Public or Private Enterprises, Financial Trusts, and Investment Funds, in Uruguay. The instruments provided for in this subsection must meet the following requirements: a. Be registered in the Securities Market Registry. b. Trade on some local formal market registered in the Securities Market Registry or on some formal foreign market, and must have information about their public quotation without restrictions for access to the same, on a daily basis. c. Have a risk rating issued by rating agencies registered in the Securities Market Registry. The rating cannot be lower than that corresponding to Category 2 according to the definition given in Article 50. The existence of a minimum rating does not exempt insurance companies from their responsibilities and obligations regarding the good administration of their assets.

C. Deposits, including certificates of deposit, in national or foreign currency, at the Central Bank of Uruguay and at financial intermediation institutions installed in the country.

D. Placements in foreign institutions and foreign securities. The following instruments will be admitted, which must have a rating not lower than Category 2 according to the definition given in Article 50:

• Securities issued or guaranteed by foreign governments.
• Securities issued by international credit organizations.
• Deposits, including certificates of deposit, in banks abroad.
• Bonds and shares issued by foreign companies, including banks.
• Other instruments, previously authorized by the Superintendent of Financial Services.

International credit organizations shall be considered to be those supranational institutions whose shareholding structure is composed of sovereign states or governmental organizations.

Securities issued by foreign governments shall be considered to be those issued by National Governments, Central Banks, and State or Municipal Administrations of third countries.

E. Financial instruments issued by Uruguayan or foreign institutions of very high credit rating that have as their object the coverage of financial risks. For these purposes, insurance companies must proceed in accordance with the provisions established below: a. (Definition of coverage) Coverage of an observable and measurable risk shall be understood as assuming a position - or combination of positions - in financial instruments, which produce results that vary inversely with the results of the elements whose risks are intended to be covered. b. (Authorization request) Prior authorization from the Superintendent of Financial Services must be requested to the extent that hedging operations require the constitution of guarantees on the assets backing pension obligations. c. (Foreign currency forward operations - Definition of net position) Net forward position shall be understood as the difference between forward purchase operations and forward sale operations. d. For the purpose of investing in financial instruments issued by foreign institutions that have as their object the coverage of financial risks of the insurance company, the aforementioned institutions must have an international risk rating not lower than Category 2, according to the definition given in Article 50.

F. Insurance credits, net of Value Added Tax. Only credits that can be offset against the insurance company's obligations shall be considered for these purposes. They may be used to cover the following reserves:

• For the coverage of mathematical reserves: advances to policyholders for life insurance, up to their surrender value, provided that these policies expressly indicate that the loan may be deducted from the amount of the indemnity to be paid.
• For the coverage of risk in force reserve and unearned and unpaid premiums - net of commissions - payable for retrocession liabilities: unpaid credits granted to insured parties for unearned premiums, arising from insurance contracts with a clause for resolution due to non-payment of premium.
• For the coverage of risk in force reserve: unpaid credits granted to ceding institutions for unearned premiums, under active reinsurance contracts.
• For the coverage of pending claims reserve: unpaid credits granted to ceding institutions for earned premiums under active reinsurance contracts.
• For the coverage of pending claims reserve and unearned and unpaid premiums - net of commissions - payable for retrocession liabilities: unpaid claims to be collected, resulting from cessions made to reinsurers.
• For the coverage of pending claims reserve: credits to be recovered from other insurance companies, provided that: a. There is confirmation of coverage from the other insurance company. b. There is agreement by the insured with the repair made or the indemnified amount and subrogation of claim rights signed. c. There is evidence of the submission of supporting information for the claim to the other insurer by means that allow its verification. The aforementioned credits may be counted for coverage as long as they do not exceed 12 months from their recognition in the financial statements.

G. Real estate investments in Uruguay:

• Urban real estate not intended for housing, which are easy to adapt and transform for different uses.
• Urban real estate housing the company.

These investments will be admitted exclusively to back the minimum capital and mathematical reserves.

Real estate affected by mortgages or other encumbrances that decrease their commercial value or prevent their free availability will not be admitted.

H. Credits with credit card issuers: Such credits may be used to cover the risk in force reserve and unearned and unpaid premiums - net of commissions - payable for retrocession liabilities, provided that the following conditions are met: a. The issuing institution must be a financial intermediation institution installed in the country or a credit administration institution with greater assets. b. The corresponding percentage of VAT on the insurance that is at the origin of the credit shall be deducted from the credit, when applicable.

2. REPLACE in Chapter III – Pension Insurance, of Title III – Investments, of Book II – Stability and Solvency, Article 53 with the following:

ARTICLE 53 (PERMITTED INVESTMENTS AS COVERAGE FOR PENSION OBLIGATIONS).

Pension obligations shall consist of:

• Pension technical reserves.
• Debts with insured parties for pension insurance.
• Other pension obligations (creditor balances of current accounts for retrocession liabilities of pension insurance and guarantee deposits for retrocession liabilities corresponding to pension insurance).

All of them must be fully covered by investments in the following assets:

A. Securities issued by the Uruguayan State and by the Central Bank of Uruguay. Securities issued by the Uruguayan State shall be considered to include those issued by the Central Government and by Departmental Governments.

B. Securities issued by Public or Private Enterprises, Financial Trusts, and Investment Funds, in Uruguay. The instruments provided for in this subsection must meet the following requirements: a. Be registered in the Securities Market Registry. b. Trade on some local formal market registered in the Securities Market Registry or on some formal foreign market, and must have information about their public quotation without restrictions for access to the same, on a daily basis. c. Have a risk rating issued by rating institutions registered in the Securities Market Registry. The rating cannot be lower than that corresponding to Category 2, according to the definition given in Article 50. The existence of a minimum rating does not exempt insurance companies from their responsibilities and obligations regarding the good administration of their assets. d. Be authorized by the Central Bank of Uruguay as an instrument suitable to be acquired by a Pension Savings Fund.

C. Deposits, including certificates of deposit, in national or foreign currency, at the Central Bank of Uruguay and at financial intermediation institutions installed in the country.

D. Fixed income securities issued by international credit organizations or by foreign governments, of very high credit rating. International credit organizations shall be considered to be those supranational institutions whose shareholding structure is composed of sovereign states or governmental organizations. Securities issued by foreign governments shall be considered to be those issued by National Governments, Central Banks, and State or Municipal Administrations of third countries. For the purpose of making investments in fixed income securities issued by international credit organizations or foreign governments, insurance companies must request authorization from the Superintendent of Financial Services, for which purposes they must present the following information: a. documentation accrediting the conditions established by Article 66 of the Compilation of Regulations for the Control of Pension Funds; b. complete information on the terms and conditions of the titles to be acquired, including the market where they are registered, the formal market in which they trade, term, currencies of issuance, yield, eventual guarantees, and other characteristics established in the corresponding issuance document; c. risk rating opinion of the securities. The Superintendent of Financial Services may request additional documentation and information to that indicated above when deemed pertinent, for the purpose of adopting a reasoned decision on the authorization request. Additionally, the instruments provided for in this subsection must meet the following requirements: a) trade on some local or foreign formal market, and must have information about their public quotation without restrictions for access to the same, on a daily basis, b) in the case of fixed income securities issued by foreign governments, have a risk rating not lower than Category 1, according to the definition given in Article 50. The existence of a minimum rating does not exempt insurance companies from their responsibilities and obligations regarding the good administration of their assets.

TRANSITIONAL PROVISION: For the purpose of complying with these requirements, securities acquired prior to the entry into force of this resolution will not be considered.

E. Financial instruments issued by Uruguayan or foreign institutions of very high credit rating that have as their object the coverage of financial risks. For these purposes, insurance companies must proceed in accordance with the provisions established below: • (Definition of coverage) Coverage of an observable and measurable risk shall be understood as assuming a position - or combination of positions - in financial instruments, which produce results that vary inversely with the results of the elements whose risks are intended to be covered. • (Authorization request) Prior authorization from the Superintendent of Financial Services must be requested to the extent that hedging operations require the constitution of guarantees on the assets backing pension obligations. • (Foreign currency forward operations - Definition of net position) Net forward position shall be understood as the difference between forward purchase operations and forward sale operations. • For the purpose of investing in financial instruments issued by foreign institutions that have as their object the coverage of financial risks of the insurance company, the aforementioned institutions must have an international risk rating not lower than Category 2, according to the definition given in Article 50.

F. Placements in personal loans to affiliates and beneficiaries of the social security system, up to two years term and interest rate not lower than the evolution of the Average Salary Index over the last twelve months, plus 5 (five) percentage points. The maximum of the loan under these conditions cannot exceed six salaries of activity or passivity. Such loans will be granted through public or private institutions selected by the insurance company for this purpose, who must guarantee the fulfillment of the obligations assumed by the borrowers. In cases where the established minimum interest results in a rate higher than the maximum interest set by Law No. 18.212 of December 5, 2007, the latter shall prevail. For insurance companies to be able to make the investments detailed above, they must proceed in accordance with the provisions established in Article 54.

JUAN PEDRO CANTERA Superintendent of Financial Services 2023-50-1-01182