2019-03-04 | DOF 5551735

Added

Modifying Circular 3/19 of the Single Insurance and Surety Circular

This circular modifies Annex 6.5.7 of the Single Insurance and Surety Circular by updating the measurement interval k for the capital requirement for asset-liability mismatch to 27 years. This change reflects the maximum maturity of investments available to pension insurance institutions for covering their investment base. The modification enters into force the day following its publication in the Official Gazette of the Federation.

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DOF: 04/03/2019

MODIFYING CIRCULAR 3/19 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

At the margin, a seal with the National Coat of Arms, which says: United Mexican States.- SHCP.- Ministry of Finance and Public Credit.- National Commission of Insurance and Sureties.

MODIFYING CIRCULAR 3/19 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Annex 6.5.7.)

The National Commission of Insurance and Sureties, based on the provisions of articles 366, fraction II, 372, fractions VI and XLII, 373 and 381 of the Law of Insurance and Surety Institutions, and

CONSIDERING

That in accordance with the provisions of articles 232, 233 and 234 of the Law of Insurance and Surety Institutions, Insurance Institutions must calculate monthly a solvency capital requirement, and in particular, for the insurance referred to in fraction II of article 27 of said Law, the calculation of said requirement shall only be carried out in accordance with the general formula determined for this purpose by the National Commission of Insurance and Sureties.

That article 235, fraction VI, subsection b), of the Law of Insurance and Surety Institutions establishes that the solvency capital requirement will cover the risk of mismatch between assets and liabilities, which will reflect the potential loss derived from the structural lack of correspondence between assets and liabilities, due to the fact that a position cannot be covered by establishing an equivalent opposite position, and will consider, at least, duration, currency, interest rate, exchange rates, price indices, among others.

That Provision 6.5.6. of the Single Insurance and Surety Circular states that the calculation of the asset-liability mismatch capital requirement ( ) must be determined considering up to the measurement interval for which there is any asset available in the market that offers a guaranteed yield equal to or higher than inflation, through which the Insurance Institution can hedge its liabilities.

That in order to facilitate the timely update of the measurement interval k referred to, so that Insurance Institutions maintain an adequate hedging position between assets and liabilities, the National Commission of Insurance and Sureties periodically reviews this parameter.

That as a result of said review, the investments affected to cover the investment base to which institutions practicing pension insurance derived from social security laws currently have access, are considered to have a maximum maturity of 27 years, so it is necessary to update the value of the measurement interval k established in Annex 6.5.7. of the Single Insurance and Surety Circular, so that it takes this value.

For the aforementioned reasons, the National Commission of Insurance and Sureties has resolved to issue a Modifying Circular to the Single Insurance and Surety Circular in the terms set forth below:

MODIFYING CIRCULAR 3/19 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Annex 6.5.7.)

SINGLE.- Annex 6.5.7. of the Single Insurance and Surety Circular is modified.

TRANSITIONAL

SINGLE.- This Modifying Circular shall enter into force the day following its publication in the Official Gazette of the Federation.

The above is made known to you, based on articles 366, fraction II, 372, fractions VI and XLII, 373 and 381 of the Law of Insurance and Surety Institutions.

Sincerely

Mexico City, February 22, 2019. - The President of the National Commission of Insurance and Sureties, Ricardo Ernesto Ochoa Rodríguez.- Signature.

ANNEX 6.5.7.

MEASUREMENT INTERVAL k FOR THE PURPOSES OF THE CAPITAL REQUIREMENT FOR

MISMATCH BETWEEN ASSETS AND LIABILITIES ( )

k=27


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