Lima, 30 March 2010.

S.B.S. Resolution No. 3028-2010 The Superintendent of Banking, Insurance and Private Administrators of Pension Funds

WHEREAS:

That, in accordance with article 345 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments, hereinafter General Law, it is the purpose of the Superintendency to protect the interests of the public in the field of the financial and insurance systems;

That, in accordance with the provisions of article 318 of Law No. 26702, insurance and/or reinsurance companies may carry out all operations, acts and contracts necessary to, among others, issue surety bonds linked to obligations to do or not to do;

That, by means of the State Contracting Law, Legislative Decree No. 1017 and its amendments, and the General Customs Law, Legislative Decree No. 809 and its amendments, it has been provided that surety bonds may serve as guarantees for the performance of certain operations indicated in said provisions;

That, this Superintendency has considered it necessary to develop a regulatory framework in order to establish conditions for the adequate use of these insurances with the purpose of promoting their development, as occurs in other experiences;

That, additionally, in order to promote compliance with the provisions of this Superintendency for the issuance of insurance policies and attention to coverage requests, as well as for the execution of surety bonds, it is necessary to amend the Regulations of Sanctions, approved by SBS Resolution No. 816-2005, insofar as it concerns Annex 3 "Specific Infractions of the Insurance System", in observance of the principle of typicity set forth in numeral 4 of article 230 of the General Administrative Procedure Law, approved by Law No. 27444;

In accordance with the opinion of the Deputy Superintendencies of Insurance and Legal Advisory and the Management of Products and Services to the User; and having complied with the dissemination period of the draft legal norms of a general nature referred to in article 14 of the Regulation that establishes provisions relating to publicity, publication of normative projects and dissemination of legal norms of a general nature, approved by Supreme Decree No. 001-2009-JUS; and, In use of the powers conferred by numeral 18 of article 349 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments;

RESOLVES:

Article One.- To approve the Regulation of Surety Bonds, as indicated below, which is applicable to the insurance companies referred to in article 16 literal D of the General Law, which issue surety bonds, hereinafter companies.

REGULATION OF SURETY BONDS

1. Definitions

For purposes of this Regulation, the following definitions must be considered:

a) Insured: Natural or legal person who, in case of non-compliance by the contractor or policyholder of the legal or contractual obligations provided in the surety bond or in the guarantee certificate, has the right to receive the indemnification.

b) Guarantee Certificate: Document by means of which the insurer materializes before the insured or beneficiary, the guarantee resulting from the surety bond contracted by the policyholder or contractor, when so required by the applicable legal provisions or the contractual stipulations whose compliance is guaranteed. This document is delivered to the insured and contains the specific information on the insurance conditions in accordance with the requirements of the Superintendency.

c) Contractor or policyholder: Natural or legal person who signs the Surety Bond with the insurer and to whom corresponds the payment of the premium and the compliance with the legal and contractual obligations provided in the policy or in the guarantee certificate. Requests from the insurance company the issuance of the surety bond and/or guarantee certificate to present it as guarantee before the insured.

d) Insurance Contract: Agreement of wills by which the company undertakes, through the payment of a premium, to indemnify the insured, within the limits and conditions stipulated in the insurance policy, in case the event whose risk is the object of coverage occurs, in accordance with the conditions that have been agreed.

e) General Law: General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance.

f) Surety bond: Document in which the insurance contract is recorded, made up of the general, particular, special conditions, additional clauses, endorsements, as well as the documents containing declarations made by the contractor on the occasion of the contracting of the surety insurance.

g) Superintendency: Superintendency of Banking, Insurance and Private Administrators of Pension Funds.

h) Users: The contractors, insured and beneficiaries of insurances.

i) Counter-guarantees of immediate realization: The following shall be considered as counter-guarantees of immediate realization or self-liquidating:

• Cash deposits in national currency and foreign currency constituted in the companies of the financial system, which have been encumbered as guarantee.

• Cash deliveries as guarantee, both in national currency and in foreign currency.

2. Nature of the obligation

In accordance with the provisions of article 318 of the General Law, companies may issue surety bonds in order to guarantee compliance with obligations to do or not to do, in charge of the applicants or policyholders of the insurance in favor of the insured.

Accordingly, companies must require from the contracting parties or policyholders, prior to the issuance of the surety policy, the supporting documentation that proves the nature of the guaranteed obligation. The information contained in said documentation has the status of a sworn statement under the terms set forth in article 179° of the General Law and shall form part of the respective file of the applicant or guaranteed policyholder.

3. Transparency in the issuance of policies

Surety policies must be issued for determined amounts and terms, and the minimum content established in the Regulation of Insurance Policies and Technical Notes, approved by SBS Resolution No. 1420-2005, must be observed.

The relevant stipulations under which the surety policies are issued must be detailed therein, and must be communicated to the insured or beneficiary through the corresponding guarantee certificate, which forms an integral part of the policy. Among said minimum stipulations, the following must be considered:

a) Validity until the expiration of the established term. If the validity is indefinite, it shall be maintained until the date on which the insured authorizes its cancellation. 1

b) Description of the subject matter of the insurance.

c) Characteristics of the coverage, indicating whether or not it is an independent and autonomous guarantee, in accordance with the provisions of numeral 4,

d) Insured amount.

e) The term to request the renewal of the policy, if applicable, as well as for its timely delivery to the insured or beneficiary, or to the policyholder if so required by the insured or beneficiary. Notwithstanding the foregoing, provided there is a renewal request, within a maximum of three (3) days from the expiration of the policy or of the renewal request, whichever occurs later, companies must inform the insured or beneficiary about the outcome of said request.

f) The term for processing claims payment requests, when applicable.

g) If the company and the contracting party or policyholder agree that proof of damages is required for the indemnity due for the breach of the guaranteed contractual or legal obligations to proceed, said obligation must be stated in the guarantee certificate in highlighted characters. In the case of surety policies where the insured or beneficiary is a public entity or company, and in that sense the surety policy operates as a guarantee in the public administration, said agreement shall only be admissible provided that the applicable regulatory framework permits it, without contravening the conditions and requirements demanded for said insurance 2

[1] Item amended by SBS Resolution No. 3200-2013 of 24-05-2013

[2] Item incorporated by SBS Resolution No. 3200-2013 of 24-05-2013

In case of discrepancy between what is stated in the guarantee certificate and the surety policy, the latter is not enforceable against the insured or beneficiary.

Additionally, companies are obliged to send a communication to the insured, attached to the guarantee certificate, in which the procedure for the renewal of the policy is established, as well as the detailed procedure for the execution and processing of claim payment requests.

4. Autonomous guarantees

Companies, in exercise of their contractual freedom, may issue surety policies under the characteristics of unconditional, joint and several, irrevocable and automatically enforceable upon mere request of the insured, or other similar clauses; such policies shall be considered independent and autonomous guarantees, in which case they must not contain conditions or prior requirements for payment to proceed, and said characteristics must be expressly specified in the respective surety policy and in the guarantee certificate.

However, when the surety policy is issued in favor of an entity that is subject to a particular regime, as insured or beneficiary, the agreed modalities and conditions must observe the regulations in force applicable to the obligation subject to the guarantee, and the rules that affect its execution must be specified in the policy and its respective guarantee certificate, such as the State Contracting Law, Legislative Decree 1017 and its amendments, and the General Customs Law, Legislative Decree No. 809 and its amendments, or the rules that replace them, as well as their implementing regulations. Said circumstance must be highlighted in the policy, and the insured or beneficiary must be informed thereof in detail through the complementary communication indicated in numeral 3.

5. Knowledge of the contracting party

Companies, before granting the requested guarantee, must evaluate the background and characteristics of the contracting party, mainly its economic solvency, as well as its experience in the business, in order to establish the risk assumed, according to the obligation being guaranteed.

In the case of consortiums, said evaluation shall include each of the parties comprising the consortium.

6. Identification of the insured or beneficiary

The company must request from the policyholder the name, address and telephone number of the insured or beneficiary or of its representative, with whom the coordination and communications that may be necessary shall be established.

7. Monitoring of the guaranteed risk

Companies must have updated information on the guaranteed risk, and the respective policy must contemplate, among the obligations of the contracting party, the periodic submission of information on any circumstance that could aggravate the guaranteed risk and that could prevent compliance with the obligation guaranteed by the policyholders or contracting parties vis-à-vis the insured or beneficiaries, in addition to the sending of periodic information that is timely for adequate monitoring of the guaranteed risk.

8. Counter-guarantees

In the event that the companies request counter-guarantees, these must be consistent with their underwriting policies, as well as with the coverages granted through the surety bond policy. In such cases, for the constitution of said counter-guarantees, the current regulatory framework must be observed, such as the provisions of the Civil Code, the Movable Guarantees Law and the Securities Law.

In any case, regardless of the constitution and/or enforcement of the counter-guarantees, the companies must comply with the payment of the coverage, in accordance with the conditions that had been established in the corresponding surety bond policy.

9. Enforcement of Surety Bond Policies

The enforcement of the guarantees granted through surety bond policies must be carried out in accordance with the conditions that had been established therein, in accordance with the documentation in the respective file at the time said enforcement is required, if applicable. It shall be the responsibility of the contracting party to keep the necessary documentation permanently updated by sending the corresponding documentation to the insurance company.

When the surety bond policy establishes that damages must be proven, the payment of indemnification due to the breach of the guaranteed contractual or legal obligations, the insured or beneficiary must prove them, in accordance with the provisions of the guarantee certificate. The requirement to prove damages must be consistent with the nature of the coverage granted and in accordance with the applicable regulatory framework for said guarantee. 3

10. Files

The companies must have an orderly filing system that allows for all the information and documentation subject to this Regulation to be available, organized by policy, where the receipt records of their renewals must be included, as well as the communications exchanged with the contracting party and beneficiary or insured.

11. Renewal of the policy

Renewal requests must be answered in writing within the period established in the respective guarantee certificate, in accordance with the policies and procedures established by the company for such purpose, and in accordance with what is required in this regulation.

In addition to the provisions of numeral 3 of this regulation, the policy and the respective guarantee certificate must include the following obligations:

a) The insured or beneficiary or the policyholder or contracting party must request the renewal of the policy within the period established for such purpose in the policy and guarantee certificate, in accordance with the current regulatory framework, even when any dispute resolution mechanism is being processed, such as arbitration, conciliation or judicial proceedings.

b) The company must send the respective renewal directly to the insured or beneficiary, attaching the original of the renewal of the renewed certificate, informing the contracting party or policyholder in writing of such fact, sending a copy of the renewed certificate; except in those cases in which the insured or beneficiary expressly requires that the contracting party or policyholder be the one to submit the renewal.

[3] Paragraph incorporated by SBS Resolution No. 3200-2013 of 24-05-2013

12. Rejection of claims

In the event the company rejects the coverage request, said situation must be communicated in writing to the insured or beneficiary, attaching the pertinent supporting documentation, within the period mentioned in the policy and corresponding certificate, in accordance with current regulations. The record of the response provided to the insured must be incorporated into the policy file.

Regarding claims that the companies determine do not meet the conditions for their coverage, they must be reported to this Superintendency in accordance with the provisions of Circular No. S-610-2004 and its amending regulations.

13. Risk Management of Surety Bonds

The companies must establish strategies, policies and procedures (i) for the underwriting and monitoring of surety bonds; (ii) for the evaluation, rating, monitoring and recovery of counter-guarantees; which must be approved by the Board of Directors and evaluated at least once a year. Said evaluation shall be supported by the Report that must be issued by the Risk Unit.

Likewise, it must have manuals, approved by the Board of Directors, containing the aforementioned policies and procedures, as well as the criteria on the limits of assumed liabilities. The aforementioned manuals must cover at least the following aspects:

a) Issuance: (i) Policies to define risk acceptance (ii) Limits or priorities for risk acceptance based on hierarchical structure (iii) Suitable mechanisms that allow determining the existence or materialization of the claim (iv) Policies and Procedure for the constitution of counter-guarantees

b) Monitoring: (i) Policies for monitoring the assumed risk (ii) Procedure for requesting information from the policyholder or contracting party to carry out the required monitoring.

c) Renewal: Policies and Procedure for timely communication with the insured or beneficiary.

d) Payment: Policies and Procedure for the attention and payment of the claim

e) Complaint: (i) Policies for handling complaints, establishing the independence of functions of the complaints handling area with respect to the claims handling area. (ii) Procedure for filing information in a documented file.

f) Recovery: Procedures for the enforcement of counter-guarantees or other means of recovery of receivables.

Additionally, insurance companies must have computer systems that allow adequate registration and control of issued and renewed policies, with security mechanisms that prevent registering information with a backdated value date or making modifications without keeping the corresponding history.

14. Accounting record of claims and information on rejected claims

Companies must record in their accounting the requests for enforcement of guarantees on the date of submission by the insured or beneficiaries, accompanied by the supporting documentation. The quantification of the amount to be recorded must be supported by studies that allow reasonably determining the amount payable generated by the presumed breach of the contractor or policyholder.

The counter-guarantees delivered by the contractor may be deducted from the amount provisioned in the liability as indicated above, to the extent that they are immediately realizable. For such purposes, the estimate of the realization amount of said counter-guarantees must be adequately supported, taking into account the provisions of the preceding numeral.

If the payment of the claim is affected by any dispute resolution mechanism or litigation in the Judiciary, the record of the payment obligation by the company must remain in force, based on legal reports that prove the status of the dispute or litigation, a situation that may determine the adjustment of the initial amount, under the responsibility of the company.

Article Second.- Make the following modifications to the Sanctions Regulation approved by SBS Resolution No. 816-2005, as indicated below

a) Incorporate the following infractions in sections I and II of Annex 3 "Specific infractions of the Insurance System":

Section I: Minor Infractions

• Issue surety bonds without having previously required from the contractors or policyholders the supporting documentation that proves the nature of the guaranteed obligation and/or without having evaluated the background and characteristics of the contractor, in accordance with the provisions of the Surety Bond Regulation.

• Not communicate to the insured or beneficiary, as applicable, the relevant conditions under which the surety bonds are issued, through the corresponding guarantee certificate and/or complementary letter, as applicable.

• Not enforce the surety bonds in accordance with the agreed conditions and/or disregarding the current regulatory framework.

• Not having an orderly filing system for the files corresponding to the bonds they have issued, which allows having all the information and documentation subject to the Surety Bond Regulation.

• Breach the requirements established in the rules issued by the Superintendency for the renewal of bonds.

• Not establish policies and/or procedures for the renewal of insurance bonds, in accordance with the requirements and demands established in the rules issued by the Superintendency.

Section II: Serious Infractions

• Reject requests for enforcement of insurance coverage without complying with sending the respective rejection communications supporting such decision and/or within the term established in the bond or guarantee certificate, in accordance with current regulations.

• Not establish strategies, policies and procedures for the risk management of sureties and/or not having the respective manuals duly approved, in both cases, in accordance with the requirements established in the rules issued by the Superintendency.

• Not record in accounting, as claims, the requests for enforcement of surety bonds, in accordance with the requirements of the rules issued by the Superintendency.

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b) Modify numeral 14 of Section II of Annex 3 "Specific infractions of the Insurance System" with the text indicated below:

14) Issue insurance bonds and/or guarantee certificates and/or insurance certificates that do not comply with the minimum information and characteristics requirements established in the General Law and the corresponding regulations issued by this Superintendency.

c) Modify numeral 1 of Section III of Annex 3 "Specific infractions of the Insurance System" with the text indicated below:

1) Require from the insured or beneficiaries of insurance contracts the compliance with conditions not legally or contractually provided for the payment of indemnities, as well as using practices that seek to avoid or unjustifiably delay the fulfillment of obligations arising from the insurance contract. Specific Sanction: Revocation of the company's authorization to operate in the line of business in which the infracting conduct is proven. If said infraction is identified in the operation of a particular risk, the performance of operations in said risk will be prohibited for the term established by the Superintendency.

Article Third.- This resolution will enter into force 60 days after the day following its publication in the Official Gazette El Peruano.

Register, communicate and publish.

FELIPE TAM FOX
Superintendent of Banking, Insurance and
Private Pension Fund Administrators