Norm Reforming Articles 20 and 21 of the Standard on Investment Limits for Insurance, Reinsurance, and Surety Companies

RESOLUTION CDMF-VII-3-25
Dated March 5, 2025
STANDARD REFORMING ARTICLES 20 AND 21 OF THE STANDARD ON INVESTMENT LIMITS FOR INSURANCE, REINSURANCE, AND SURETY COMPANIES

The Monetary and Financial Board,

CONSIDERING

I
That by Resolution No. CD-SIBOIF-908-1-SEPT22-2015, dated September 22, 2015, the "Standard on Investment Limits for Insurance, Reinsurance, and Surety Companies" was approved, published in La Gaceta, Official Gazette No. 208, of November 3, 2015.

II
That Article 156 of Law No. 1232 "Law on the Administration of the Monetary and Financial System" (hereinafter, Law No. 1232), published in La Gaceta, Official Gazette No. 241, of December 30, 2024, establishes that "...all those faculties, competencies, powers, attributions, and duties established in other laws, prior to the effectiveness of this Law, attributed to the Board of Directors of the Central Bank and the Board of Directors of the Superintendence of Banks..." are transferred to the Monetary and Financial Board.

III
That Article 40 of Law No. 733, "General Law of Insurance, Reinsurance, and Surety" (hereinafter, Law No. 733), published in La Gaceta, Official Gazette Nos. 162, 163, and 164, of August 25, 26, and 27, 2010, respectively, contained in Law No. 1175, "Law of the Nicaraguan Legal Digest on the Subject of Banking and Finance," published in La Gaceta, Official Gazette No. 153, of August 20, 2024 (hereinafter, Law of the Legal Digest), in conjunction with Article 156 of Law No. 1232, referred to in the previous consideration, empowers the Monetary and Financial Board, following the guidelines established in Article 39 of Law No. 733, to establish by means of general standards, among other aspects, the minimum requirements that insurance companies must comply with in the investment of their assets.

IV
That, in accordance with the aforementioned faculty, it is necessary to reform Articles 20 and 21 of the "Standard on Investment Limits for Insurance, Reinsurance, and Surety Companies," in order to update the table of risk rating categories, adapting it to the methodological changes made by rating agencies.

V
That, in accordance with the considerations previously stated and based on the faculties provided for in Articles 4 and 5, numeral 1), of the aforementioned Law No. 733, contained in the Law of the Legal Digest; and Article 17, subsection a), numeral 1), and subsection c), numerals 1), 7), and 9) of Law No. 1232.

In exercise of its faculties,
HAS ISSUED,
The following:
STANDARD REFORMING ARTICLES 20 AND 21 OF THE STANDARD ON INVESTMENT LIMITS FOR INSURANCE, REINSURANCE, AND SURETY COMPANIES

FIRST: Articles 20 and 21 of the "Standard on Investment Limits for Insurance, Reinsurance, and Surety Companies," contained in Resolution CD-SIBOIF-908-1-SEPT22-2015, dated September 22, 2015, published in La Gaceta, Official Gazette No. 208, of November 3, 2015, are hereby reformed, which shall read as follows:

"Article 20. Selection of rating agencies.- For the purposes of local or international rating, only ratings issued by the risk rating agencies established in the table of the following Article 21 shall be considered.

Article 21. First-tier entities.- Entities shall be determined as first-tier entities if their obligations are rated within the following ranges:

Risk Rating Agency	Rating Categories
	Issuer Obligations	Short-term Obligations	Long-term Obligations	Sovereign Risk
Fitch IBCA	Rating BBB or higher	Rating F3 or higher	Rating BBB or higher	Rating BBB or higher
Moody's Investors Services	Rating Baa or higher	Rating P-3 or higher	Rating Baa or higher	Rating Baa or higher
Standard & Poor's Corporation	Rating BBB or higher	Rating A3 or higher	Rating BBB or higher	Rating BBB or higher
Dominion Bond Rating Services Limited	Rating BBB or higher	Rating A3 or higher	Rating BBB or higher	Rating BBB or higher
AM Best Company, Inc.	Rating B+ or higher	Rating AMB-3 or higher	Rating BBB or higher
Centroamericana Rating Society, S.A. (Moody's Local)	Rating BBB- or higher	Rating ML A-3 or higher	Rating BBB- or higher

Risk Rating Agency	Rating Categories
	Issuer Obligations	Short-term Obligations	Long-term Obligations	Sovereign Risk
Pacific Credit Rating, S.A. de C.V.	Rating BBB or higher	Rating 3 or higher	Rating BBB or higher

In the event that there is more than one risk rating, the lower rating shall apply.
The current rating shall be the one available on the website of the respective rating agency. For these purposes, the rating must be available to the public on the website of the respective rating agency, as well as on the website of the rated financial institution, permanently."

SECOND: This standard shall enter into force upon notification by the Superintendence of Banks and Other Financial Institutions, without prejudice to its subsequent publication in La Gaceta, Official Gazette.

(f) legible, Ovidio Reyes R. President of the Board of Directors; (f) illegible, Luis Ángel Montenegro Espinoza, Vice President of the Board of Directors; (f) illegible, Bruno Gallardo, Minister of Finance, Proprietary Member; (f) illegible, Roberto Rivas, Non-executive Proprietary Member; (f) illegible, Hugo Ortega, Non-executive Proprietary Member. The undersigned Ruth Elizabeth Rojas Mercado, Secretary of the Monetary and Financial Board, certifies that it conforms to its original, which was duly compared.