JPRF-S-2023-069 — Reform to the Standard on Maximum Investment Segments and Percentages

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Yellow Block, 5th floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-S-2023-069 THE FINANCIAL POLICY AND REGULATION BOARD

CONSIDERING:

That Article 226 of the Constitution of the Republic of Ecuador prescribes that State institutions, their agencies, dependencies, public servants, and persons acting under a state authority shall exercise only the competencies and powers attributed to them in the Constitution and the law;

That Article 13 of the Organic Monetary and Financial Code, Book I, reformed by the Organic Reforming Law to the Organic Monetary and Financial Code for the Defense of Dollarization, published in the Official Register Supplement No. 443 of May 3, 2021, created the Financial Policy and Regulation Board, part of the Executive Function, as a public law legal entity, with administrative, financial, and operational autonomy, responsible for formulating credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation;

That Article 14 of the Organic Monetary and Financial Code, Book I, which refers to the scope of the Financial Policy and Regulation Board, determines that this collegiate body is responsible for formulating credit, financial, including insurance policy, prepaid comprehensive health care services, and securities policies; issuing regulations that allow maintaining the integrity, solidity, sustainability, and stability of the national financial, securities, insurance, and prepaid comprehensive health care services systems; and, additionally, issuing micro-prudential regulations for the national financial, securities, insurance, and prepaid comprehensive health care services sectors;

That numbers 1, 7, 17, and 25 of Article 14.1 of the aforementioned Organic Code establish that the Financial Policy and Regulation Board is responsible for fulfilling the duty and exercising the faculty to regulate the creation, constitution, organization, activities, operation, and liquidation of insurance entities; issuing the prudential regulatory framework to which insurance entities must adhere, a framework that must be coherent and not give rise to regulatory arbitrage; issuing norms that regulate insurance, reinsurance, and the securities market; as well as applying the provisions of the Organic Monetary and Financial Code;

That General Provision Twenty-Ninth of the Organic Monetary and Financial Code, Book I, added by the Organic Reforming Law to the Organic Monetary and Financial Code for the Defense of Dollarization, which mentions the "Monetary and Financial Policy and Regulation Board," shall be replaced by "Financial Policy and Regulation Board";

That Transitory Provision Fiftieth-Fourth of the aforementioned Organic Code, added by the Organic Reforming Law to the Organic Monetary and Financial Code for the Defense of Dollarization, establishes that resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies shall maintain their validity until the Monetary and Financial Policy and Regulation Board and the Financial Policy and Regulation Board...

That Articles 22 and 23 of the Organic Monetary and Financial Code, Book III (General Insurance Law) establish the regulatory regime to which insurance and reinsurance companies are subject regarding general solvency requirements, which must consider, among others, mandatory investments;

Resolution No. JPRF-S-2023-069 Page 2 of 3

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Yellow Block, 5th floor | Postal Code: 170507 | Quito - Ecuador |

That the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2023-0044-M of June 13, 2023, submits to the President of the Board the following reports, which conclude:

i) Technical Report No. JPRF-CTVS-2023-002 of June 12, 2023, states that insurance companies must manage their liquidity risk optimally and efficiently, with sufficient liquid assets to meet their obligations. From the analysis performed, the portfolio of Investment Funds shows diversification and a growing trend in resources placed in both the financial and non-financial sectors, even in a context characterized by the absence of the 25% restriction on securities issued, backed, or guaranteed by the national financial system.

ii) Legal Report No. JPRF-CJF-2023-0018 of June 12, 2023, in which it is determined that the Financial Policy and Regulation Board is competent to reform Article 3 of the Standard on Maximum Investment Segments and Percentages, under the title "On the Surveillance, Control, and Information of the Private Insurance System," as provided in Articles 14 and 14.1 number 17 of the Organic Monetary and Financial Code, Book I;

That the Financial Policy and Regulation Board, in an ordinary session held via technological means, convened on June 14, 2023, and carried out via video conference on June 16, 2023, reviewed Memorandum No. JPRF-ST-2023-0044-M of June 13, 2023, issued by the Board's Technical Secretary, as well as Technical Report No. JPRF-CTVS-2023-002 and Legal Report No. JPRF-CJF-2023-0018 of June 12, 2023, issued by the Technical Coordination of Policy and Regulation of the Securities and Insurance System, and the Legal Coordination of Policy and Financial Norms of the aforementioned Board, respectively, and the corresponding draft resolution;

That the Financial Policy and Regulation Board, in an ordinary session held via technological means, convened on June 14, 2023, and carried out via video conference on June 16, 2023, reviewed and approved the following Resolution; and,

In exercise of its functions,

RESOLVES:

SINGLE ARTICLE.- Delete the second paragraph of number 2 of Article 3 of Chapter VII of the Monetary, Financial, Securities, and Insurance Resolutions.

SINGLE TRANSITORY PROVISION.- Within a term of two (2) days from the issuance of this Resolution, the Superintendency of Companies, Securities, and Insurance shall publish its content on its website and inform controlled entities about it.

Resolution No. JPRF-S-2023-069 Page 3 of 3

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Yellow Block, 5th floor | Postal Code: 170507 | Quito - Ecuador |

FINAL PROVISION.- This Resolution shall enter into force as of the present date, without prejudice to its publication in the Official Register. This Resolution shall be published on the website of the Financial Policy and Regulation Board within a maximum term of two (2) days from its issuance.

COMMUNICATE.- Given in the Metropolitan District of Quito, on June 16, 2023.

THE PRESIDENT, Mgs. María Paulina Vela Zambrano

The resolution above was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on June 16, 2023.- I CERTIFY.

TECHNICAL SECRETARY Dr. Nelly Arias Zavala