Resolution No. 1141-99: Approves Rules for the Accounting Identification of Operations Conducted by Insurance Companies

Lima, December 31, 1999
SBS Resolution
No. 1141-99
The Superintendent of Banking and Insurance

CONSIDERING:

That, the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance, Law No. 26702, modified by Laws No. 27008 and No. 27102, hereinafter the General Law, authorizes insurance companies established in the country to operate simultaneously in life insurance and non-life insurance lines, complying with the requirements established therein;

That, life insurance and non-life insurance correspond to activities of a different nature and risk;

That, consequently, it is required that companies operating simultaneously in life insurance and non-life insurance present separate accounting information in order to adequately identify and differentiate the operations corresponding to each of the aforementioned lines, to improve the administration and control of such operations;

That, by SBS Resolution No. 348-95 of May 11, 1995, the Chart of Accounts for Insurance System Companies, hereinafter the Chart of Accounts, was approved, with subsequent modifications made by SBS Resolutions No. 015-96 of January 10, 1996 and No. 582-98 of June 17, 1998;

Given the opinion of the Deputy Superintendencies of Insurance and Legal Advice; and,

In exercise of the powers conferred by items 12 and 13 of Article 349 of the General Law;

RESOLVES:

First Article.- Approve the rules for the accounting identification of life and non-life operations of insurance companies, which form an integral part of this Resolution.

Second Article.- This Resolution enters into force the day following its publication in the official newspaper "El Peruano".

Register, communicate and publish.

MARTÍN NARANJO LANDERER
Superintendent of Banking and Insurance

RULES FOR THE ACCOUNTING IDENTIFICATION OF LIFE AND NON-LIFE OPERATIONS OF INSURANCE COMPANIES

1. SCOPE
   This Resolution is applicable to insurance companies that have operating authorization to simultaneously operate in life and non-life lines, hereinafter the companies.

2. DEFINITIONS
   2.1 Life lines: They include risks conditioned by the existence and age of the insured when they constitute the main coverage of an insurance policy. In this category, accident and illness risks that form part of life insurance policies as additional or complementary coverages are included.
   2.2 Non-life lines: All other lines or risks not included in the definition of life lines.
   2.3 Main coverage: That whose portion of risk implies a premium greater than those corresponding to the additional or complementary coverages of the same insurance policy.
   2.4 Technical obligations: The total of technical reserves, deferred premiums, unearned premiums, solvency capital, guarantee fund, the requirement for effective capital to cover credit risk, and the additional requirement for effective capital by economic cycle.

3. GENERAL PROVISIONS
   3.1 Companies must prepare separate Balance Sheets and Income Statements for insurance operations corresponding to life and non-life lines, in addition to those established in the Chart of Accounts.
   To this effect, companies must adapt their accounting and system procedures so that the accounting recording of life insurance operations is carried out in separate accounts from other operations, with all provisions contained in the Chart of Accounts being applicable. For this purpose, the risk codes corresponding to life lines indicated in the attached Annex must be used, and these must correspond to the main coverage offered in the insurance policy. For non-life lines, the risk codes indicated in the Concordant Risk Table of the Chart of Accounts will be used.
   3.2 Companies must prepare an Accounting Identification Plan, hereinafter the Plan, which includes the policies, procedures, and deadlines required for the differentiation of life and non-life operations and the dates of the reporting tests of the financial statements for each of the aforementioned lines.
   3.3 The Plan and its subsequent modifications must be approved by the Board of Directors and submitted to this Superintendence for its approval. Said Plan and its subsequent modifications cannot be implemented until they are approved by this Superintendence.

1 Item modified by SBS Resolution No. 2904-2014, dated May 15, 2014. Subsequently modified by SBS Resolution No. 1041-2016, dated February 26, 2016.

3.4 The initially approved Plan cannot be modified for a minimum period of one year; likewise, its modifications will have a minimum validity of one year. Both periods will be calculated from their respective approvals by this Superintendence.

4. MINIMUM CRITERIA APPLICABLE TO ACCOUNTING IDENTIFICATION
   The minimum criteria described below will be applied in the preparation of the Plan referred to in item 3.2 above:
   4.1 Accounts, sub-accounts, and analytical accounts that have risk code identification must be distributed according to whether they correspond to life or non-life insurance operations.
   4.2 Accounts, sub-accounts, and analytical accounts that do not have risk code identification must be separated considering the analysis of their origin in insurance contracts, or their corresponding cost centers.
   4.3 As a complement to what is stated in the previous item, for accounting identification:
   4.3.1 Of assets, the matching between assets and liabilities in terms of term, yield, and liquidity, or the analysis of cash flows, must be considered.
   4.3.2 Of financial obligations, the analysis of the financing needs of life and non-life insurance operations will be considered.
   4.3.3 Of equity, the solvency capital corresponding to each line will be taken into account.
   4.3.4 Of income or expenses from investments, their origin will be identified once the separation of assets has been made.

5. SUBMISSION OF SEPARATE FINANCIAL STATEMENTS
   5.1 The information from the Balance Sheets and Income Statements of life and non-life lines will have a monthly periodicity and will be delivered together with the accounting, financial, and statistical information established by this Superintendence. The presentation format will be that contained in the Chart of Accounts.
   5.2 Without prejudice to what is provided in the previous item, the financial statements indicated in the Chart of Accounts that consolidate both operations must continue to be submitted to this Superintendence in accordance with the relevant rules.

6. SUBMISSION OF DIFFERENTIATED INFORMATION ON INVESTMENTS AND CAPITAL REQUIREMENTS
   In addition to what is required in the previous item, companies must submit by life and non-life lines the following information:
   6.1 The annexes of the Regulations on eligible investments of insurance system companies, approved by SBS Resolution No. 165-98 and its modifications.
   6.2 The annexes of the Regulations for the determination of minimum capital requirements that insurance system companies must demonstrate, approved by Resolution No. 813-97 and its modifications.

7. APPLICATION OF PRUDENTIAL LIMITS
   Starting from June 30, 2000, the prudential limits fixed by this Superintendence on the information required in the previous item will be enforceable separately for the life and non-life lines in which the company operates.

8. DEADLINE FOR SUBMISSION OF INFORMATION
   8.1 The Plan approved by the Board of Directors must be presented to this Superintendence for evaluation by February 15, 2000.
   8.2 Companies must submit, under the terms and deadlines indicated in the Chart of Accounts, starting from information corresponding to June 30, 2000, the Balance Sheets (Form A) corresponding to life and non-life lines, following the guidelines established in the Plan.
   8.3 Companies must submit the Income Statements (Form B), corresponding to life and non-life lines, starting from information corresponding to January 31, 2001, under the terms and deadlines indicated in the Chart of Accounts, following the guidelines established in the Plan.
   8.4 Starting from June 30, 2000, companies must submit by life and non-life lines the information referred to in item 6, together with the relevant consolidated information.

9. FINAL PROVISION
   Insurance companies that, after the entry into force of this Resolution, decide to split into non-life and life insurance companies, must maintain the criteria approved in the Plan.

10. TRANSITORY PROVISION
    To monitor the gradual adjustment of asset allocation, companies must submit Annex No. 2 of SBS Resolution No. 165-98, starting from information corresponding to February 29, 2000.

ANNEX
RISK CODES /1
LIFE LINES
ASSETS AND LIABILITIES INCOME AND EXPENSES
61 Accidents /2 61 Personal accidents /2
62 Work accidents /2
63 Schoolchildren /2
64 Medical assistance /2 64 Medical assistance /2 65 Funeral insurance 65 Funeral insurance 71 Life 71 Individual life 72 Group life particular 73 Life Law workers 74 Mortgage de-risking 75 Annuity 75 Particular annuity 76 Retiree annuity 77 Complementary insurance for work risk 77 Complementary insurance for work risk 91 Pension insurance 91 Disability 92 Survivorship 93 Funeral expenses 94 Disability pension 94 Disability pension 95 Survivor pension 95 Survivor pension

/1 According to the Chart of Accounts for Insurance System Companies, approved by SBS Resolution No. 348-95 of May 11, 1995 and its modifications /2 Risks that correspond to complementary coverages of the insurance included in the definition of Life Lines established by this Resolution.