Resolution SBS No. 7034-2012: Approves the Regulation on Classification and Valuation of Investments of Insurance Companies

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Nº 7034 -2012

The Superintendent of Banking, Insurance and Private Pension Fund Administrators

CONSIDERING:

That numeral 13 of article 349 of the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Securities, Law No. 26702 and its amendments, hereinafter General Law, states that the Superintendence has the authority to issue general norms to specify the preparation, presentation, and publication of financial statements, and any other complementary information, ensuring that the real economic-financial situation of the companies under its supervision is reflected;

That, by Resolution SBS No. 513-2009 of January 30, 2009 and its amending norms, the Regulation on the Classification and Valuation of Investments of Insurance Companies was approved;

That, article 311 of the General Law states that the Superintendence regulates the investment categories and the limits to which the assets destined to back the obligations associated with the insurance business are subject, and such assets must comply with the specific provisions indicated by the Superintendence;

That, by Resolution SBS No. 0039-2002 of January 16, 2002 and its amending norms, the Regulation on the Eligible Investments of Insurance Companies was approved;

That, by Resolution SBS No. 514-2009 of January 30, 2009 and its amending norms, the Regulation for the Trading and Accounting of Financial Derivative Products in Insurance Companies was approved;

That, the Superintendence has considered it convenient to harmonize its accounting regulations with International Financial Reporting Standards (IFRS), which determines the need to adapt the accounting provisions applicable to investments and financial derivative products;

That, in order to collect opinions from the general public regarding the proposed modifications to the aforementioned regulations, the draft resolution was pre-published on the Superintendence's electronic portal, under the provisions of Supreme Decree No. 001-2009-JUS;

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That, in the case of the Regulation on the Classification and Valuation of Investments of Insurance Companies, it has been considered convenient to issue a new Regulation consolidating the amending norms;

Being in accordance with the opinions of the Deputy Superintendencies of Private Pension Fund Administrators and Insurance, of Risks, of Economic Studies, and of Legal Advice; and,

In exercise of the powers conferred by numerals 7, 9, and 13 of article 349 of the General Law;

RESOLVES:

Article First.- Approve the new Regulation on the Classification and Valuation of Investments of Insurance Companies, hereinafter Regulation, which forms part of this Resolution, under the following terms:

“REGULATION ON THE CLASSIFICATION AND VALUATION OF INVESTMENTS OF INSURANCE COMPANIES

CHAPTER I
GENERAL ASPECTS

Article 1°.- Scope
This norm applies to the companies included in letter D of article 16 of the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Securities, Law No. 26702, hereinafter Companies.

Article 2°.- Definitions
For the purposes of this Regulation, the following definitions shall be considered:

a) Associate: An entity over which the investor has significant influence, that is, the power to intervene in the financial and operational policy decisions of the investee without having control over it, in accordance with the provisions of IAS 28 “Investments in Associates”.

b) Commodities: Primary or basic goods consisting of physical products, which can be exchanged in a secondary market, including precious metals but excluding gold, which is treated as a currency.

c) Amortized cost: The amount at which a financial asset or a financial liability was initially measured, less principal repayments, plus or minus, as appropriate, the cumulative amortization of the difference between that initial amount and the maturity amount using the effective interest method, and, for financial assets, less any reduction for impairment recognized directly as a decrease in the carrying amount of the asset or through a valuation allowance account.

d) Transaction costs: Incremental costs directly attributable to the acquisition, issue, sale, or disposal of a financial asset or financial liability by another means. An incremental cost is one that would not have been incurred if the entity had not acquired, issued, or disposed of the financial instrument. They include fees and commissions paid to agents (including employees acting as sales agents), advisors, brokers, and intermediaries, fees established by regulatory agencies and stock exchanges, as well as taxes and other duties. Transaction costs do not include premiums or discounts on debt, financial costs, internal administration costs, or maintenance costs.

e) Custody: Service provided by specialized institutions that includes physical safekeeping, correct allocation of investment instruments, verification of settlements and compensations, “settlement”, collection of benefits, valuation of the instruments in custody, payment of taxes, and others related to these services.

f) Delivery versus payment: A modality through which the “settlement” of traded investment instruments is effected through their delivery in exchange for the receipt of cash according to the terms agreed upon in the transaction.

g) Days: Calendar days.

h) Free access price sources: Those provided through Bloomberg, Reuters, Datatec, or similar information systems.

i) Economic group: A set of national or foreign legal entities, composed of at least two legal entities, when any of them exercises control over the others, or when control over the legal entities corresponds to one or more natural persons acting as a single decision-making unit, in accordance with the provisions of the Special Norms on Linkage and Economic Group approved by Resolution SBS No. 445-2000.

j) Recoverable amount: The higher of fair value less costs to sell and value in use.

k) Intermediaries: Institutions duly authorized by the regulatory authorities of the securities and/or financial markets to provide the service of intermediation of investment instruments for their own account or for third parties, by virtue of compliance with the respective registration requirements in the corresponding registers and the respective minimum capital requirements.

l) Custody institutions: Institutions duly authorized by the regulatory authorities of the financial and/or securities markets to provide custody services.

m) Depositary institutions: Institutions authorized by the regulatory authorities of the securities and/or financial markets to provide centralized deposit services for investment instruments. Such services include the registration of investment instruments issued by book entry, the physical safekeeping activities of investment instruments, the clearing and settlement of transactions, and the collection and payment of benefits, on a scale that involves a significant portion of the assets in circulation in the securities markets.

n) Debt representative instrument: A value that represents an obligation on the part of the issuer, has a nominal value, and may be amortizable. The yield of these values is associated with an interest rate, another value, a basket of values, or an index of debt representative values.

o) Equity representative instrument: Those instruments representing rights to equity participation. Includes instruments where the magnitude of their expected partial or total return is not certain, fixed, or determinable at the time of their acquisition.

p) Investment instrument: Debt representative instruments, equity representative instruments, and other instruments determined by the Superintendence.

q) General Law: General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Securities, Law No. 26702 and its amendments.

r) Securities Market Law: Unified Text of the Securities Market Law, approved by Supreme Decree No. 093-2002-EF and its amendments.

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s) Active market: Corresponds to that in which quotation prices are easily and regularly available through a stock exchange, financial intermediaries, a sectoral institution, a pricing service, or a regulatory body, and those prices reflect market transactions that occur regularly, between parties acting in a situation of mutual independence.

t) Effective interest method: A method of calculating the amortized cost of a financial asset or liability and of allocating financial income or expense over the relevant period.

u) Equity method: An accounting method according to which the investment is initially recorded at cost, and is subsequently adjusted based on changes experienced, after acquisition, in the portion of the net assets of the investee that corresponds to the investor. The investor’s result for the period includes the portion corresponding to the investee’s results.

v) IAS: International Accounting Standard.

w) IFRS: International Financial Reporting Standard.

x) Chart of Accounts: Chart of Accounts for Companies of the Insurance System approved by Resolution SBS No. 348-95 of May 11, 1995 and its amending norms.

y) Superintendence: Superintendence of Banking, Insurance and Private Pension Fund Administrators.

z) Settlement: Clearing and settlement resulting from the trading of an investment instrument that is carried out within generally pre-established timeframes. The successful conclusion of clearing and settlement determines the transfer of ownership of such instruments between the participants in the trading.

aa) Effective interest rate: The discount rate that exactly equates the estimated cash flows to be received or paid over the expected life of the financial instrument with the net book amount of the financial asset or financial liability. For this calculation, the entity will estimate cash flows taking into account all contractual conditions of the financial instrument, and must not consider future credit losses. The calculation of the effective interest rate will include all commissions and interest paid or received by the parties in the contract, which make up the effective interest rate, as well as transaction costs and any other premium or discount.

ab) 1Fair value: The amount for which an investment instrument can be exchanged between a willing buyer and a willing seller, both well-informed, in a condition of mutual independence.

ac) 2Value in use: The present value of estimated future cash flows expected to be obtained from an asset or cash-generating unit.

ad) Asset and Liability Management Regulation: Asset and liability management regulation for insurance companies, approved by Resolution SBS No. 1660-2025 and its amendments. 3

Article 3°.- Information on investments
Companies must keep the following information regarding their investments available to the Superintendence:

a) Updated policies and procedures manuals; b) Models, assumptions, formulas, and others used for the determination of fair value; c) Operational register of the market valuation of investments; d) Custody contracts for investment instruments, as well as the reports and information that custody companies send them;

1 Reference modified by Resolution SBS No. 3872-2021, published on 22.12.2021.
2 Reference modified by Resolution SBS No. 3872-2021, published on 22.12.2021.
3 Literal incorporated by Resolution SBS No. 1660-2025, published on 09.05.2025, effective from 01.01.2026.

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e) Statements of account and contracts related to their investments; and, f) Any other information that the Superintendence considers necessary.

CHAPTER II
CLASSIFICATION

Article 4°.- Classification 4
The investments or operations carried out by companies, in accordance with the guidelines established in the policies and procedures manuals, must be classified into the following categories:

a) Investments at fair value through profit or loss; b) Available-for-sale investments; c) Held-to-maturity investments; d) Investments in subsidiaries, associates, and joint ventures; e) Investments in real estate; and, f) Real estate credits.
The provisions established in Chapters III and IV of this Regulation are not applicable to investments in real estate and real estate credits.

Article 5°.- Investments at fair value through profit or loss
The category investments at fair value through profit or loss comprises investment instruments that meet any of the following conditions:

a) It is a trading instrument that:
i. Is acquired principally with the objective of selling it in the near future; or,
ii. Is part of a portfolio of identified financial instruments that are managed jointly, and for which there is evidence of a recent pattern of short-term profit-taking.

b) Since the moment of its initial accounting recognition, it has been designated by the company to be accounted for at fair value through profit or loss. Such designation can only be made if this allows obtaining more relevant information due to:
i. Eliminating, or significantly reducing, inconsistencies or asymmetries in recognition or valuation (also known as accounting asymmetries) that would arise from the valuation of assets or liabilities or from the recognition of their gains or losses, under different criteria.
ii. A group of financial assets, or of financial assets and liabilities, is managed and its performance is evaluated based on its fair value, in accordance with documented risk or investment management.

The following cannot be considered in this category:

a) Subject to article 15°, investment instruments delivered as collateral, reported, or transferred through a repo operation or a repurchase agreement, which represents a secured loan; b) Investment instruments used as hedging mechanisms or those whose availability is restricted; c) Investment instruments issued by entities of the company’s economic group;

4 Article modified by Resolution SBS No. 2904-2014, dated 15.05.2014.

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d) Equity representative instruments that do not have a quoted market price in an active market and whose fair value cannot be estimated reliably; and, e) Other investment instruments that the Superintendence determines through a norm of general application.

Article 6°.- Available-for-sale investments
The category available-for-sale investments will include all investment instruments that are not classified as investments at fair value through profit or loss, held-to-maturity investments, or investments in subsidiaries, associates, and joint ventures. Likewise, investment instruments that are expressly indicated by regulation shall be included.

Article 7°.- Held-to-maturity investments
Held-to-maturity investments comprise debt instruments whose collections are of fixed or determinable amounts and whose maturities are fixed, and which also meet the following requirements:

a) They have been acquired or reclassified with the intention of holding them until their maturity date. Such intention is considered to exist only if the company’s investment policy provides for the holding of these instruments under conditions that prevent their sale, transfer, or reclassification, except in the cases described in article 16°. b) Companies must have the financial capacity to hold investment instruments until their maturity. c) They are instruments other than: i) those that the company has designated at initial recognition to be accounted for at fair value through profit or loss; ii) those that the company has designated as available-for-sale assets. d) Others that the Superintendence may establish in due course via a norm of general application.

Companies, to classify their investments in this category, must evaluate whether they have the financial capacity to hold investment instruments until their maturity each time they decide to classify an instrument and at the close of each annual fiscal year.

The following cannot be classified in this category:

i) Investment instruments that the company plans to hold for an indefinite period; ii) Investment instruments issued by entities of the company’s economic group; iii) Instruments that have an issuer’s redemption option, unless the conditions of the instrument determine that the exercise of the option allows the company to substantially recover the amortized cost of the referenced instruments, understood as the recovery of at least 90% of the amortized cost, and provided that the company has the intention and capacity to hold it until its redemption or maturity. iv) Those that have a redemption option on the part of the company; v) Perpetual debt instruments that provide for interest payments for an indefinite time; and vi) Others that the Superintendence communicates via a norm of general application.

Article 8°.- Investments in subsidiaries, associates, and joint ventures
Investments in subsidiaries, associates, and joint ventures comprise equity representative instruments acquired by the company with the purpose of:

i. Participating in equity; and,
ii. Having control in accordance with the Special Norms on Linkage and Economic Group, joint control as stated in IAS 31 “Interests in Joint Ventures” and/or possessing significant influence in other entities taking into account what is stated in IAS 28.

For an investment to qualify as an investment in a joint venture, it must be evaluated whether the definition established in IAS 31 is satisfied, which states that a joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Likewise, joint control is the contractual agreement to share control over an economic activity, which occurs only when the strategic, both financial and operational, decisions of the activity require the unanimous consent of the parties sharing the control.

CHAPTER III
INITIAL RECOGNITION, SUBSEQUENT MEASUREMENT, AND VALUATION

Article 9°.- Initial accounting recognition
Transactions of investment instruments, classified in any of the categories described in article 4°, must be accounted for using the “trade date” methodology referred to in IAS 39 “Financial Instruments: Recognition and Measurement”, that is, the date on which reciprocal obligations are assumed that must be consummated within the timeframe established by the regulations and market practices in which the operation is carried out.

In the initial accounting recognition of investments, they will be recorded at fair value, which will correspond to the transaction price, unless proof to the contrary is provided. If at the time of acquisition the investment instrument incorporates accrued interest pending payment by the issuer, a premium, or a discount, these must be incorporated into the initial recognition of the investment. Likewise, when dividends proceed from net profits obtained before the acquisition of the instruments, they will be deducted from their cost.

Likewise, the following must be considered:

a) Investments at fair value through profit or loss The initial accounting recognition of investments at fair value through profit or loss will be effected at fair value without considering transaction costs, registering such costs as expenses.

b) Available-for-sale investments and held-to-maturity investments The initial accounting recognition of available-for-sale and held-to-maturity investments will be effected at fair value including transaction costs that are directly attributable to the acquisition of said investments.

c) Investments in subsidiaries, associates, and joint ventures The initial accounting recognition of investments in subsidiaries, associates, and joint ventures will be effected at fair value.

In the initial accounting recognition of investments in subsidiaries, associates, and joint ventures, the difference between the cost of the investment and the portion corresponding to the investor in the net fair value of the identifiable assets and liabilities of the investee will be accounted for in accordance with the provisions established in the Chart of Accounts.

Article 10°.- Subsequent measurement of investments

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After initial registration, companies must account for their investments taking into consideration the category in which the investment instruments are classified, as indicated below.

For the purpose of determining fair value, the guidelines established in Article 11 of this regulation must be followed.

Investments at fair value through profit or loss
a) Valuation at fair value
The valuation of investments at fair value through profit or loss shall be carried out at fair value.

In the case of debt instruments, prior to valuation at fair value, companies must account for the amortized cost by applying the effective interest rate methodology, and from the obtained amortized cost, gains and losses due to the variation in fair value must be recognized.

b) Gains and losses
When the fair value exceeds the book value, a gain due to value fluctuation will be recognized. When the fair value is lower than the book value, a loss due to value fluctuation will be recognized. In both cases, such fluctuation will affect the results of the period.

Investments available for sale
a) Valuation at fair value (or at cost) 5
The valuation of investments available for sale shall be carried out at fair value, in accordance with the guidelines established in Article 11°. Equity instruments that do not have quoted prices in active markets and whose fair value cannot be reliably estimated must be measured at cost.

b) Gains and losses
The gain or loss arising from the fluctuation in the fair value of the investment instrument classified in this category shall be presented in Other Comprehensive Income until the instrument is sold or realized, at which point the unrealized gain or loss will be reclassified from equity to the period's result.

c) Impairment losses 6
5 Literal modified with Resolution SBS No. 2608-2018, dated 04.07.2018.
6 Literal modified with Resolution SBS No. 2608-2018, dated 04.07.2018.

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When one or more investment instruments classified as investments available for sale have suffered an impairment of value, in accordance with Article 12°, the loss must be recognized in the results of the period.

The amount of the impairment loss for debt instruments shall be calculated as the difference between their amortized cost and their fair value determined in accordance with Article 11 of the Regulation, minus any impairment loss previously recognized in the results of the current or previous periods.

For equity instruments, the amount of the impairment loss shall be calculated as the difference between their acquisition cost and their fair value determined in accordance with Article 11 of the Regulation, minus any impairment loss previously recognized in the results of the current or previous periods.

For equity instruments not traded in an active market that are measured at cost, the amount of the impairment loss shall be calculated as the difference between their acquisition cost and the present value of expected future cash flows, discounted at the market yield rate for other similar securities. The methodology and assumptions used to estimate the cash flows must be periodically reviewed by the company itself and its respective control bodies.

In the estimation of impairment for equity instruments, it must be taken into consideration that the book value shall not exceed the proportional share in the accounting equity of the investee.

The amount of the loss that was previously recognized in Other Comprehensive Income must be reclassified to the results of the period.

d) Reversal of impairment losses 7
Impairment losses recognized in the results of the current or previous periods, which correspond to investments in debt instruments, shall be reversed through the results of the period, provided that the increase in the fair value of said instrument can be objectively and demonstrably associated with a favorable event that occurred after the loss. Companies must document all objective evidence of the subsequent favorable event that justifies the increase in the value of the instrument, which must be available to this Superintendency.

Impairment losses recognized in the results of the current or previous periods, which correspond to investments in equity instruments, shall not be reversed through the results of the period, but rather through Other Comprehensive Income.

For equity instruments measured at cost, impairment losses cannot be reversed.

Investments held to maturity
a) Valuation at amortized cost
7 Literal modified with Resolution SBS No. 2608-2018, dated 04.07.2018.

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The company shall value its portfolio of investments held to maturity at amortized cost using the effective interest rate method.

Interest shall be recognized using the effective interest rate methodology, which incorporates both the interest to be collected and the amortization of any premium or discount existing in their acquisition.

The results of the period shall not be affected by the recognition of gains or losses due to increases or decreases in the fair value of instruments classified within this category.

Without prejudice to the provisions of the preceding paragraph, when the investment instrument has been derecognized or impaired, the corresponding gains or losses shall be recognized in the results of the period.

b) Impairment losses 8
When one or more investment instruments classified as investments held to maturity have suffered an impairment of value, in accordance with Article 12°, the loss must be recognized in the results of the period.

The amount of the impairment loss shall be calculated as the difference between its book value (amortized cost) at the time the impairment is identified and the present value of future cash flows expected to be recovered given the risk conditions that have been identified, discounted at the original effective interest rate (purchase IRR) if it is an investment instrument with a fixed rate, or the current effective interest rate for the period (the rate as of the date to which the financial statements refer), determined according to the contract, if it is an investment instrument with a variable rate. The book amount of the instrument shall be reduced and the amount of the loss shall be recognized in the results of the period.

Regarding the above, the company must consider that the amount of the loss to be recognized for impairment shall not be less than the difference between the amortized cost and the fair value at the date of assessment.

c) Reversal of impairment losses
After the impairment loss is detected and recorded in accordance with the indication in the previous subsection, said loss shall be subsequently adjusted according to the evaluations performed and shall remain until favorable events are proven.

In this sense, if the amount of the impairment loss of the investment instrument decreases and the decrease is objectively related to an event subsequent to the recognition of the impairment, such as an improvement in the risk classification of the instrument or the issuer, the recorded impairment loss shall be reversed. However, the reversal shall not result in a book amount of the investment instrument that exceeds the amortized cost that would have been accounted for had the impairment loss not existed on the date of reversal. The amount of the reversal is recorded in the results of the period.

8 Literal modified with Resolution SBS No. 2608-2018, dated 04.07.2018.

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Investments in subsidiaries, associates, and joint venture interests
a) Valuation (equity method)
Investments registered in this category shall be valued applying the equity method. Under this method, the investment is initially recorded at cost, separating, in the case of investments in subsidiaries, associates, and joint venture interests, the excess paid for the portion corresponding to the investor in the net fair value of the identifiable assets and liabilities of the investee.

b) Gains and losses and other adjustments
The gain or loss arising from the recognition of the portion corresponding to the investor in the results of the period obtained by the investee entity after the acquisition date shall be recognized in the results of the period. When variations in the equity of the investee are due to variations in Other Comprehensive Income, the portion corresponding to the investor shall be recognized in Other Comprehensive Income and accumulated in equity accounts.

Distributions received from the investee shall reduce the book value of the investment.

As stated in IAS 28, gains and losses arising from "upstream" and "downstream" transactions between the investor and the subsidiary or associate shall be recognized in the financial information of the former only to the extent that they correspond to the participations of other investors in the subsidiary or associate not related to the investor.

c) Impairment losses
When it is identified that one or more investments in subsidiaries, associates, and joint venture interests have suffered an impairment of their value, in accordance with Article 12°, such impairment shall correspond to the difference between the book value and the recoverable amount of the investment, following the guidelines of IAS 36 "Impairment of Assets". The book value of the investment shall be reduced until it reaches its recoverable amount. The impairment loss shall be recognized immediately in the results of the period.

d) Reversal of impairment losses
The company shall evaluate whether there is any indication that the impairment loss recognized in previous periods no longer exists or may have decreased. If such an indication exists, the company shall re-estimate the recoverable amount of the investment. The reversal of the impairment loss shall be recognized in the results of the period. In no case shall the reversal result in exceeding the value that the investment would have if the equity method had always been applied.

Article 11°.- Valuation at fair value of investment instruments
Fair value is associated with the value observed in market transactions under "normal" situations and mutual independence. It should be noted that fair value takes into account the credit quality of the instrument. In this sense, the general criteria for determining fair value are as follows:

a) When instruments are quoted in active markets, fair value is determined by the price observed in said markets. It should be indicated that a financial instrument is considered quoted in an active market if quotation prices are easily and regularly available through a centralized trading mechanism and those prices reflect current market transactions that occur regularly between parties acting in a situation of mutual independence. The market price of equity instruments traded in centralized trading mechanisms shall be the closing price. For the case of debt instruments, the market price shall be the "bid" price, that is, the purchase price representing firm offers.

b) If the observed quotation on prices in an active market does not refer to the financial instrument in its entirety, but there is an active market for its components, fair value shall be determined based on the relevant market prices of said components.

c) When dealing with instruments quoted in non-active markets, fair value is determined using valuation techniques or models that use, to the greatest extent possible, data from the market and minimize the use of data provided by the company. It should be noted that a market is considered non-active when it does not have sufficient quotations from freely accessible price sources for a period of no less than 30 calendar days.

d) When dealing with unquoted instruments, fair value shall be determined using valuation techniques or models.

However, in the case of instruments included in the Price Vector, this source of information shall be taken into account, in accordance with what is established in the Price Vector Regulation approved by Resolution SBS No. 945-2006 of July 25, 2006, and its amendments. The Superintendency, at the request of the company, may define certain valuations granted by entities providing asset valuation services or price provider companies as valid.

Among the valuation techniques includes the use of recent market transactions between interested and duly informed parties acting under conditions of mutual independence, if available.

Companies must have adequate valuation methodologies and techniques that allow obtaining the fair value of said instruments, which must incorporate all factors that market participants would consider to establish a market price and be consistent with accepted economic methodologies for establishing prices of investment instruments. Companies must periodically calibrate their valuation models and examine their validity using observable current transaction prices in the market on the same instrument. Such methodologies and models must observe the guidelines that the Superintendency may issue through general application norms. Changes incorporated in the models must be validated and documented.

When fair value is determined using valuation techniques or models other than the price vector, the Superintendency may request adjustments to those models that in its opinion do not meet minimum technical robustness requirements or are based on insufficient market information. The models must be previously approved by the Company's Board of Directors and must be available to the Superintendency. Likewise, the Superintendency may require the hiring of a company providing asset valuation services with recognized experience for the estimation of market prices of certain investment instruments.

Equity instruments that do not have quoted prices in active markets and whose fair value cannot be reliably estimated must be measured at cost. Such instruments must be registered in the Available for Sale category.

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Article 12°.- Evaluation of impairment evidence 9
Companies shall evaluate, on the date of preparation of quarterly financial statements, whether there is evidence that an instrument classified as an investment available for sale, investment held to maturity, or investment in subsidiaries, associates, and joint venture interests, records an impairment of value. An impairment of value is considered to exist if there is objective evidence of impairment as a consequence of an event that occurred after the initial registration of the investment instrument and said event, causing the loss, has an impact on the future cash flows of the instrument that can be reliably estimated.

The accounting recording of the impairment and its reversal shall follow the guidelines established in Article 10 of this Regulation.

The identification and quantification of the impairment of value shall be the responsibility of the Risk Unit.
The results of the impairment analysis shall be collected in a Report, which must be brought to the attention of the Risk Committee or whoever performs that function, and be available to the Superintendency.

For the purpose of the impairment evaluation, the following shall be taken into account:

a) Instruments classified as investment available for sale and investment held to maturity The identification of impairment for instruments classified as investments available for sale and investments held to maturity shall be carried out applying the "Standard Methodology for the Identification of Impairment of Investments Available for Sale and Investments Held to Maturity", which is detailed in Annex I which forms part of this norm.

In case a company wishes to apply an internal methodology for the identification of impairment of value more sophisticated and different from the methodology of the referred Annex I, it must request prior authorization from this Superintendency, submitting the following documentation:

i) Authorization request signed by the General Manager. ii) Internal methodology for the identification of impairment of value. iii) "Report supporting the internal methodology for the identification of impairment of value", which must contain, at a minimum, the following:

Detail of qualitative and quantitative criteria for the identification of impairment of value of investments available for sale and investments held to maturity.
Support for the choice of each criterion.
Information sources to collect qualitative or quantitative criteria.
Justification for the use of the methodology (reasons why the proposed methodology is considered to identify impairment of value more precisely).
Other relevant aspects for the impairment methodology.
iv) Copy of the Risk Committee minutes where the approval of the methodology indicated in point ii is recorded.

Any updates, modifications, or changes that the entity wishes to make to the internal methodology must also be authorized prior to their application. For this purpose, the company must attach the following documentation:

i) Authorization request signed by the General Manager.
9 Article modified by Resolution SBS No. 2608-2018, dated 04.07.2018.

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ii) Update, modification, or changes in the Internal Methodology for the identification of impairment of value. iii) "Report supporting the update, modification, or changes in the internal methodology for the identification of impairment of value", which must contain, at a minimum, the following:

Detail of the modifications in the qualitative and quantitative criteria for the identification of impairment of value of investments available for sale and investments held to maturity.
Support for the modification of each criterion.
Information sources to collect the qualitative or quantitative criteria that have been modified.
Justification for the modification of the methodology (reasons why it is considered that the changes in the methodology will serve to identify impairment of value more precisely).
Other relevant aspects referred to the modifications in the impairment methodology.
iv) Copy of the Risk Committee minutes where the approval of the changes indicated in point ii is recorded.

The Risk Unit shall be responsible for documenting the impairment evaluation under the standard methodology or the methodology that has been authorized by the Superintendency.

b) Investments in subsidiaries, associates, and joint venture interests The company shall evaluate whether there is any indication that an investment in subsidiaries, associates, and joint venture interests may have been impaired, considering the guidelines established in IAS 36.

Companies must document the aforementioned evaluation and keep it available to the Superintendency.

Article 13°.- Exchange differences 10
For the case of investments at fair value through profit or loss, gains or losses due to exchange differences shall be recognized in the results of the period.

Regarding investments available for sale, gains or losses due to exchange differences related to the amortized cost of debt instruments shall affect the results of the period, provided that they are not instruments used for hedging purposes.

For this effect, the following procedure shall be followed:

First, the difference must be determined between:
i. The amortized cost in national currency on the reporting date, using the closing accounting exchange rate; and,
ii. The amortized cost of the previous period at the closing exchange rate of the previous period, plus the accrued interest from the previous reporting date to the reporting date, at the average or closing exchange rate of the period, minus the interest collected from the previous reporting date to the reporting date, at the exchange rate of the date of the transaction.

Such difference must be recognized as a gain or loss due to exchange difference, in results of the period accounts.

10 Article modified by Resolution SBS No. 2608-2018, dated 04.07.2018.

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Second, the fair value of the investment must be determined as of the reporting date and expressed in local currency at the closing accounting exchange rate, where the difference between the fair value in local currency and the amortized cost in national currency (resulting from the adjustment in the previous point) as of the reporting date must be recognized as a gain or loss from value fluctuation, as appropriate, in equity accounts (unrealized gain or loss), presented in other comprehensive income.

In the case of capital-representative instruments classified in the category of available-for-sale investments, gains or losses from exchange differences will be presented in other comprehensive income, accounted for in equity accounts, provided that they do not constitute hedging operations.

For investment instruments classified as held-to-maturity investments, gains or losses from exchange differences will be recognized in the period's earnings, provided that they do not constitute hedging operations.

For investments in subsidiaries, associates, and joint ventures, the guidelines established in IAS 21 "The Effects of Changes in Foreign Exchange Rates" will apply.

In all the cases described, the recording of gains or losses from exchange differences of operations for hedging purposes will be carried out in accordance with the provisions on the matter issued by the Superintendency.

Article 14th.- Interest, dividends, and other adjustments

The recognition of interest and dividends is subject to the following:

a) Regardless of the category in which debt-representative instruments are classified, value adjustments made by readjustment factors, as well as interest calculated according to the effective interest rate method, must be recognized in the period's earnings.

b) Dividends will be recognized when the company's right to receive payment is established.

c) Dividends corresponding to capital-representative instruments classified in the categories of fair value with changes in earnings or available for sale, will be recognized in the period's earnings.

d) Dividends received in shares must be recognized at an acquisition cost of zero, and the average unit cost of the share (not the total) must be modified, and subsequent valuation will be recorded according to the category of the instrument.

CHAPTER IV
CHANGES IN CATEGORY AND SALE OF INVESTMENTS

Article 15th.- Changes in classification category

Investment instruments that companies hold may be subject to reclassification within the framework of the provisions of this article.

a) Fair value investments with changes in earnings

The company is prohibited from reclassifying an investment instrument from the category of fair value investments with changes in earnings or to it. However, in the case that a capital-representative instrument ceases to have market quotations and it is not possible to obtain a reliable estimate of its fair value, it must be reclassified to the category of available-for-sale investments.

Exceptionally, those investment instruments classified as fair value investments with changes in earnings that: i) are delivered as collateral; and, ii) are reported or transferred through a repo or repurchase agreement operation, which represent a secured loan; must be reclassified to available for sale. Upon completion of these operations, the aforementioned instruments must be reclassified to their initial category, transferring the unrealized results to period earnings.

b) Held-to-maturity investments to other categories

Held-to-maturity investments cannot be moved to another category, unless as a result of a change in the financial capacity to hold an investment, the classification as held to maturity ceases to be adequate. In this case, it will be reclassified as an available-for-sale investment and measured at fair value. The difference between its book value and fair value will be accounted for according to the valuation criteria for that category of investments. This reclassification is subject to the restriction described in Article 17th.

c) Available-for-sale investments to held-to-maturity investments

If it is appropriate to account for an investment at amortized cost, rather than at its fair value, due to a change in the company's financial capacity, or when the period in which companies cannot classify as "held-to-maturity investment" referred to in Article 17th has elapsed, the book value of the fair value of the investment instrument on that date will become its new amortized cost. Any previous result of that instrument, which had previously been recognized directly in equity, will be recorded as follows:

i. In the case of an investment instrument with a fixed maturity, the gain or loss will be carried to the period's earnings over the remaining life of the investment held to maturity, using the effective interest rate method. Any difference between the new amortized cost and the amount at maturity will also be amortized over the remaining life of the investment instrument using the effective interest rate method, in a manner similar to the amortization of a premium or a discount. If the investment instrument subsequently suffers a value impairment, any gain or loss that had been recognized directly in equity will be transferred and recognized in the period's earnings.

ii. In the case of an investment instrument that does not have a fixed maturity, the gain or loss will remain in equity until the investment instrument is sold or disposed of by another means, at which point it will be recognized in the period's earnings. If the investment instrument subsequently suffers a value impairment, any previous result that had been recognized directly in equity will be transferred and recognized in the period's earnings.

Changes in the category of investment instruments carried out in accordance with the provisions of this Regulation must be communicated to the Superintendency within the deadline established for the submission of the respective information to the Regulation on Eligible Investments of Insurance Companies corresponding to the period in which such transfer occurred.

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Article 16th.- Sales or transfer of held-to-maturity investments 11

The sale, transfer, or reclassification of an instrument classified in this category before its maturity does not contradict the company's intention and capacity to hold them until their term, in any of the following circumstances:

a) They occur on a date very close to maturity, that is, less than three (03) months from maturity, such that changes in market rates would not have a significant effect on the fair value, or when ten percent (10%) or less of the principal of the investment to be amortized remains according to the instrument's amortization plan;

b) They respond to isolated, uncontrollable, or unexpected events, such as:

i) The existence of financial difficulties of the issuer,

ii) A significant deterioration in the issuer's solvency or significant variations in the issuer's credit risk;

iii) Changes in legislation or regulation;

iv) By being in investment portfolios that support homogeneous groups of obligations that are in run-off;

v) Other external events that could not be foreseen at the time of initial classification.

c) They improve the asset-liability matching through the acquisition of new debt financial instruments indexed to the Constant Acquisition Value (CAV) or with maturity terms equal to or greater than ten (10) years.

Nor does it contradict the company's intention and capacity to hold until maturity those investment instruments classified as held-to-maturity investments, when such instruments are delivered as collateral, transferred through a repurchase agreement of the same, or delivered in loan under the condition of returning an identical instrument, provided that, in all these cases, the company maintains the intention and remains contractually and financially in a position to hold the investment until maturity.

In any of the cases described, the company must maintain information of each of the sales or transfers, which must be sent to the Superintendency within the deadline indicated in the previous article and must contain the reasons for the sale or transfer of the investment instruments classified as held-to-maturity investments; as well as, if applicable, a detailed description of the instruments in which the total amount obtained as a result of the sale is reinvested.

For cases of sales of held-to-maturity investments for reasons of matching improvement indicated in letter c) of this article, companies must include in the information indicated in the previous paragraph the analysis supporting that such sales and the acquisition of the respective instruments generated a reasonable improvement in the analysis of asset sufficiency or in the indicators for measuring interest rate risk, established in Chapter VI (Asset Sufficiency Analysis) and in Chapter VII (Interest Rate Risk Management) of the Asset and Liability Management Regulation, respectively. Additionally, the company must verify that the aforementioned sales have not generated any breach of regulatory or legal limits, such as liquidity indicators, global position, investment limits, among others. Such verification must also be included in the information indicated in the preceding paragraph.

Article 17th.- Consequences of the sale, transfer, or reclassification of held-to-maturity investments

Any sale or transfer, as well as the transfer to the available-for-sale category, of any held-to-maturity investment instrument, that does not comply with what is established in this Regulation, 11 Article modified by Resolution SBS No. 1660-2025, published on 09.05.2025, effective from 01.01.2026.

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will oblige the company to reclassify all instruments in the held-to-maturity investment category to the category of available-for-sale instruments.

Likewise, the company will not be able to use the "held-to-maturity investments" classification if during the current period or in the two (02) preceding periods it has sold, transferred, or reclassified an instrument classified in this category without adjusting to what is established in Articles 15th and 16th.

However, if the sale of these instruments was originated by financial difficulties of the issuer, a significant deterioration in its solvency, or significant variations in its credit risk described in letter b) of Article 16th, and the company reacquires instruments from the same issuer, these cannot be registered in the held-to-maturity investment category, unless there is prior and express authorization from the Superintendency.

Upon completion of the period indicated in the second paragraph, the company may use the aforementioned category and reclassify the investment instruments it holds, provided that they meet the requirements established in Article 7th.

Article 18th.- Corrective measures

Companies that make category changes with the purpose of hiding losses and/or showing gains, or any use that the Superintendency considers inadequate, will be prohibited from distributing dividends as provided in Article 354th of the General Law.

CHAPTER V
CUSTODY

Article 19th.- Custody of local investment instruments 12

The custody of investment instruments represented by book entries (dematerialized) can be carried out by the companies or they can hire the services of a local custody institution. Regarding the custody of investment instruments represented by physical titles (non-dematerialized), companies must hire an institution from the financial system for their physical safekeeping. The different options must comply with the requirements detailed in Articles 19Ath, 19Bth, or 19Cth, as applicable.

In each of the cases mentioned above, there must be insurance protection or a risk transfer scheme that covers the company against risks of dishonesty, forgery or adulteration, assault and theft, as well as other critical risks identified by its Risk Unit, arising from the selected custody scheme. The provider of this protection must be an entity different from the company and have a financial strength risk classification of "B" or lower risk or, alternatively, its long-term debt must have a risk classification of "BBB-" or lower risk. The levels of protection or risk transfer must have the approval of the company's Risk Committee.

Regardless of the requirements indicated in the following articles, the Risk Unit must evaluate compliance with the requirement of insurance protection or a risk transfer scheme at the start of the contract(s) and, subsequently, at least once a year. The evaluations must be brought to the attention of the Risk Committee for the timely adoption of corrective measures, if necessary. Likewise, this evaluation must be documented, including copies of Risk Unit reports, minutes of Risk Committee meetings, 12 Article modified by Resolution SBS No. 5027-2017 of 27.12.2017, compliance deadline until 30.06.2018.

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Fax: (511) 6309239 18/48

as well as contracts and associated support. All these documents must in turn be available to this Superintendency.

Article 19Ath.- Custody of investment instruments represented by book entries, by the insurance company itself 13

The company that decides to assume the custody of local dematerialized securities must be registered as an indirect participant by a Securities Clearing and Settlement Institution (ICLV). Likewise, for the purposes of the settlement of funds and values of the transactions carried out, the company must hire the service of a direct participant of the same ICLV (hereinafter, the direct participant), or hire the service of the settlement of these operations to the ICLV. The direct participants with whom it carries out the settlement of funds and values, if they are companies of the local financial system, must possess a financial strength risk classification of "A" or lower risk, in accordance with what is provided in the Regulation for the classification of financial system companies and insurance companies, approved by Resolution SBS No. 18400-2010 and its modifying norms. In case a direct participant is not a financial system company, the following requirements must be met:

i) The direct participant must be authorized to carry out the settlement of the funds and values of the transactions carried out by the company.

ii) The company must define and implement a methodology for evaluating the direct participant, prior to its selection, which considers at least its financial strength, its operational capacity to fulfill its obligations, its level of experience, its ability to provide information on the operations carried out, as well as its level of exposure and capacity to manage conflicts of interest. The Risk Unit must evaluate whether the selected direct participant meets the requirements indicated in the methodology. Likewise, it must include the identification and analysis of risks associated with the direct participant and the services it will offer (including, at least, operational and credit risks), and the measures contemplated to mitigate such risks. The evaluation must be summarized in a report with a global opinion, which summarizes and concludes whether the participant is eligible or not. The selection of the direct participant must have the approval of the company's Risk Committee.

When the company assumes custody, it must assign this task to an area within its own organizational structure, which must be subject to the requirements indicated in Article 21Ath and those detailed below:

a) Have an adequate organization, infrastructure, as well as human and material resources.

b) Develop organization and function manuals, as well as detailed policies and procedures manuals.

c) Implement contingency plans.

d) Have adequate security systems, considering the provisions of Circular G140-2009 and its modifying norms.

e) Have a centralized documentation archive for support.

f) Other requirements that the Superintendency communicates through a norm of general application.

Likewise, the company must inform this Superintendency that it will assume custody and declare compliance with the aforementioned requirements. In this communication, it must describe the scheme, the contracts signed, and the participants involved in the custody process, whether internal or external. The company must send this communication to the Superintendency, within a period not exceeding 13 Article incorporated by Resolution SBS No. 5027-2017 of 27.12.2017, compliance deadline until 30.06.2018.

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fifteen (15) calendar days after signing the respective contracts, with a copy of the record of its registration as an indirect participant in the respective ICLV.

When a company does not meet the conditions indicated for it to assume the custody of its investments in local dematerialized securities itself, it must hire the services of a custody institution, following the requirements established in Article 19Bth, for it to carry out the custody of said instruments. Likewise, the company may request the authorization of a custody scheme, following what is established in Article 21Bth of this Regulation.

Article 19Bth.- Custody of investment instruments represented by book entries, by a local custody institution 14

When the company hires a local institution for the custody of local dematerialized securities, it must inform this fact to the Superintendency within a period not exceeding fifteen (15) calendar days after signing the respective contracts, and declare compliance with the requirements established in this article. Additionally, it must have available to the Superintendency a report from the Risk Unit evaluating the suitability of the contracted entity, as well as a copy of the Risk Committee minutes, where the approval of said contract is recorded.

Likewise, it must have available to the Superintendency the following documents regarding the contracted entity, which must have been signed and/or formalized prior to the start of the respective services:

a) Certified copy of the authorization resolution as a custody institution, issued by the Securities Market Superintendency. In the case that the local custody institution is a financial system company, it must be authorized for such purpose.

b) Copy of the risk classification reports of the custody institution, issued in the twelve (12) months prior to the signing of the contract. When the custody institution is a financial system company, it must have a financial strength classification of "A" or lower risk, granted by a rating company registered in the Registry of risk rating companies under the Superintendency, in accordance with what is provided in the Regulation for the classification of financial system companies and insurance companies, approved by Resolution SBS No. 18400-2010 and its modifying norms. In case the local custody institution is not a financial system company, it must comply analogously with the requirements indicated in Article 19Ath, for direct participants that are not financial entities. In the same way, the company must document its evaluation of said requirements, as provided in Article 19Ath of this Regulation. Likewise, in case the local custody institution does not have a financial strength risk classification, it must have a credit rating in the Normal category, in accordance with the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by Resolution SBS No. 11356-2008 and its modifying norms.

c) Copy of the contract certifying the custody institution as a direct participant of an ICLV, if applicable.

d) Contract between the company and the local custody institution.

e) In case the company decides to maintain a delegated mandate of investment management with the same company that exercises local custody, a policy of disclosure and resolution of conflicts of interest must be established, which contributes to mitigating the exposure to the risks involved.

f) Other relevant documentation.

14 Article incorporated by Resolution SBS No. 5027-2017 of 27.12.2017, compliance deadline until 30.06.2018.

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Fax: (511) 6309239 21/48 The company must ensure that the local custodian institution assumes the obligation to send it written and/or any electronic means confirmations, regarding any movement produced in relation to financial investments, such as: income and outflows of securities, coupon cuts, interest collections, redemptions, prepayments, maturities or any other movement not previously indicated, which implies a change in ownership of the securities or of the company's funds in the registry of the custodian institution or in the registry of an ICLV.

Article 19C°.- Custody of investment instruments represented by physical titles 15
For the physical storage of investment instruments represented by physical titles, the services of a company from the financial system that satisfactorily meets the following requirements must be contracted:
a) Have authorization to provide physical custody services. b) Guarantee the operation of a centralized electronic archive, with daily update of the detailed information of the physical titles representing the company's investments. c) Possess a financial strength classification of "A" or lower risk, in accordance with what is provided in the Regulation for the classification of companies in the financial system and insurance companies, approved by Resolution SBS No. 18400-2010 and its modifying norms. d) Be the only entity responsible for the transport of the corresponding physical titles. The company must inform the Superintendency about the contracting of this service within a period not greater than fifteen (15) calendar days from the signing of the respective contracts and declare compliance with the requirements established in this article. Likewise, it must have available to the Superintendency a report from the Risk Unit in which the suitability of the contracted entity is evaluated (including, at least, operational risks and credit risks, an evaluation of Risk Management and of the treatment of potential conflicts of interest), the contracts and the copy of the minutes of the risk committee meeting in which the subscription of these contracts was approved.

Article 20°.- Custody of investment instruments abroad 16
Companies will keep their investments capable of being custodied in custody institutions and/or depositary institutions abroad. For this, companies must previously evaluate that the custody institution and/or depositary institution meets the following requirements:
a) Be a global custody institution or depositary institution duly registered and authorized by the corresponding regulatory body. b) In the case of a custody institution, be a participant, directly or through a sub-custodian, in the depositary institutions of foreign investment instruments, except those that by the nature of their issuance are not registered in the depositary institutions. c) The custody institution and/or depositary institution must satisfy, at the same time, the following requirements: (i) possess experience of no less than five (5) years providing custody services in the financial and insurance systems; (ii) possess at least one risk rating of no less than "A" for its long-term debt, in accordance with the classification equivalences indicated in Annex No. 2 of the Regulation on Investments of insurance companies; and, (iii) have audited financial statements by an independent audit firm, which has international experience and operates in more than ten (10) countries that have risk classifications of at least "A" for their respective long-term debt titles. d) Guarantee the execution of the corresponding credits and charges for the rights and obligations of the investment instruments that are the object of custody. e) Report at least weekly the value of the investment instruments object of custody (nominal value and units). f) Supply the Superintendency, at the time and in the manner it determines, all information concerning the services provided to the companies. g) In case the company decides to maintain a delegated mandate for investment management with the same company that exercises the custody abroad, a policy for the disclosure and resolution of conflicts of interest must be established, which contributes to mitigating the exposure to the risks involved. h) Others established by the Superintendency. At the same time, there must be insurance protection or a risk transfer scheme that covers the company against risks of dishonesty, forgery or adulteration, assault and theft, and other critical risks identified by its Risk Unit, arising from the selected custody scheme. The provider of this protection must be an entity different from the company and must have a financial strength classification of "B" or lower risk or, alternatively, its long-term debt must have a risk classification of "BBB-" or lower risk. The levels of protection or risk transfer must have the approval of the company's Risk Committee. Likewise, local clearing and settlement entities authorized by the Superintendency of the Securities Market can also effect the custody of instruments abroad, being the responsibility of the insurance company to evaluate that the custody services to be contracted with the local clearing and settlement entity do not contravene the regulations where the foreign investment instruments are issued or traded. The evaluation of compliance with the requirements performed by the company must be duly documented. Likewise, the company
must have available to this Superintendency the contract signed with each custody institution and/or depositary. The company must inform the Superintendency of the contracting of each of these services, within a period not greater than fifteen (15) calendar days after the signing of the respective contracts. Likewise, it must have available to the Superintendency the report from the Risk Unit in which the suitability of the contracted entity was evaluated, the contracts and the copy of the minutes of the risk committee meeting in which the subscription of said contracts was approved.

Article 21°.- Information on contracting and resolution of contracts with custody institutions, depositary institutions and direct participants 17
Companies must communicate to the Superintendency the contracting of custody institutions, depositary institutions and direct participants, indicating the name or corporate name of this, country of incorporation, experience and compliance with the requirements indicated in articles 19A°, 19B°, 19C° or 20°, as applicable.
When a company resolves the contract with any custody institution, depositary institution or direct participant of the ICLV, it must communicate this to the Superintendency, indicating the causes that motivated such resolution, within a period not greater than fifteen (15) calendar days of having resolved the contract. Likewise, in said communication it must describe the action plan approved by the company so that the custody or settlement of the operations of the investment instruments under the scope of the resolved contract is transferred to a modality that complies with what is established in Chapter V of this Regulation. The action plan must include the estimated deadlines and the degree of progress achieved. Companies must document these situations and the measures adopted, and keep this documentation available to the Superintendency.

Article 21A°.- Obligations of the insurance company 18
Without prejudice to hiring a third party for the custody of its investments, the insurance company must comply with the following obligations regarding the custody of its investment instruments:
a) The person in charge and/or area designated for custody tasks must be independent of the area in charge of investment management. b) Verify the compensation and settlement process of transactions carried out with investment instruments, respecting the delivery versus payment modality. c) Implement the operation of a centralized, virtual and/or physical archive, with daily update of the detailed information of the investment instruments and their transactions. d) Verify the credits and charges corresponding to the rights and obligations of the investment instruments, in terms of values and payment dates established. e) Guarantee the conservation and integrity of the investment instruments. f) Others that are inherent to the functions of a custody area. The company must carry out the corresponding procedures with custody institutions, depositary institutions, physical custody institutions, among others, local and/or foreign, so that the Superintendency can verify the existence of the investment instruments directly, when it considers it pertinent. At the time of subscribing service contracts with the custody institution, the company must ensure that these do not contain clauses or measures that allow using the assets backing the technical obligations as collateral to back other obligations of the company, generated by financial services other than custody. In the event of non-compliance with any of the requirements by the custody institution or depositary institution, companies must resolve the contract, and contract or implement the custody of the investment instruments under the scope of the resolved contract. In this sense, a period of no more than thirty (30) calendar days is established for the custody of said instruments to be transferred to a modality that complies with what is established in Chapter V of this Regulation. The company's Risk Unit must evaluate the compliance of the functions and the suitability of the services provided by each contracted custody institution, depositary institution or direct participant, as well as, if applicable, update its evaluation regarding the company's capacity to comply with its responsibilities as an indirect participant of the ICLV. Likewise, the Risk Unit must follow up on material events related to each custodian or direct participant. This monitoring must be carried out according to the requirements established in this Regulation and the guidelines and procedure defined by the company. The Risk Unit must present a report with the results of these evaluations, including the support for its observations and recommendations to the company's Risk Committee, with a periodicity of at least annually. The documentation supporting the monitoring and the aforementioned reports must be available to this Superintendency.

Article 21B°.- Authorization of custody with a scheme different from those provided for 19
Companies must request authorization from this Superintendency so that the custody of their investment instruments is carried out under a scheme (or management model) different from those contemplated in articles 19A°, 19B° and 20° of this Regulation. For this, they must present the following documents and comply with the criteria and requirements described below:
a) Request for respective authorization, signed by the general manager. b) Legal report, regarding the review of contract models, as applicable, associated with the custody scheme object of the authorization. c) Report from the Risk Unit, where the involved parties, processes and procedures to be followed, as well as the tools to be employed in the proposed custody scheme are described in detail. Likewise, it is required that in said report the alternative mechanism for compliance with the applicable criteria and requirements established in this chapter is analyzed and supported, and the associated risks are identified and evaluated (including, at least, operational and credit risks), as well as the existing mitigants on said risks. d) Copy of the Risk Committee minutes in which the comprehensive evaluation of the proposed custody scheme is recorded, including the associated risks, and where its approval is accounted for. e) Other information that the Superintendency determines in its authorization process.

CHAPTER VI
INTERMEDIATION AND NEGOTIATION MODALITIES

Article 22°.- Intermediation of investment instruments 20
Prior to contracting the services of intermediation of investment instruments, companies must evaluate that the intermediary is duly authorized, regulated and supervised by the competent authorities of the corresponding markets and that it complies with the requirements indicated in article 22A° of this Regulation. Likewise, companies must document this evaluation, following the requirements indicated in article 22B° of this Regulation. These requirements are also applicable when the intermediary is an entity of the financial system. The company must communicate to the Superintendency the contracting of the services of an intermediary entity, indicating the name or corporate name of this and the result of the evaluation performed, within a period not greater than fifteen (15) calendar days after the signing of the respective contracts.

Article 22A°.- General requirements applicable to intermediaries 21
The company must have documented internal policies and procedures for the evaluation (in the stage prior to selection) and monitoring of the intermediaries of its investment instruments. Such policies and procedures must consider the best practices that a professional manager must employ in said evaluation and monitoring, as well as the following aspects:
a) The adequate financial strength of the intermediary, considering the methodologies employed by the company for the analysis of credit risk of its counterparties. b) The existence of criteria for handling conflicts of interest and dispute resolution. c) The existence of fiduciary obligations on the part of the intermediary agent so that negotiation conditions in favor of its clients are prioritized over its own interests. d) The level of experience of the intermediary, considering, where applicable, the following:
i. Completion of transactions (execution and settlement).
ii. Level of experience of professionals in intermediation and of analysts.
iii. Time of experience in the markets of the instruments or investment operations.
e) The infrastructure of the intermediary, considering:
i. Physical infrastructure.
ii. Communication systems.
iii. Recording systems.
iv. Systems for entry, registration and execution of transactions.
v. Execution reports of transactions with the corresponding details.
vi. Established processes for the compensation and settlement of securities.
vii. Capacity to handle unexpected trading volumes.
f) The ability of the intermediary to provide information and services such as access to reports on analysis and research of issuers, markets, financial products, among others.

Article 22B°.- Documents for the evaluation of intermediaries 22
The company must document the evaluation (prior to carrying out operations) and monitoring of intermediaries, and keep it available to this Superintendency, considering at least the following:

Regarding the evaluation prior to carrying out operations:
1.1. Due diligence questionnaire carried out on the intermediary.
1.2. Report on the analysis of the eligibility of the intermediary, by the Risk Unit, which must include:
a. The evaluation performed by the company of each of the aspects indicated in article 22A° of this Regulation, as well as the criteria and procedures defined by the company. b. The evaluation of possible conflicts of interest identified by the company, which may arise in the event it carries out operations with a related entity, as well as the measures to be implemented to mitigate such conflicts of interest and the documents that support such evaluation.
c. The support of the evaluation on each of the aspects contemplated by the methodology employed by the company, which must include the aspects indicated in article 22A°. Likewise, said support must be linked with the risks identified by the company, the possible impact of these on the operations carried out and the measures it contemplates implementing before such contingencies.
d. A global opinion of the evaluated aspects, which summarizes and generates the result of the analysis performed, according to the methodology employed by the company. e. Description of the operations that will be carried out predominantly with the evaluated intermediary.
1.3. Copy of the document authorizing the provision of securities intermediation services for own account or for third parties, issued by the regulatory authority of the securities or financial markets, insofar as applicable.
1.4. Copy of the intermediation contract signed between the company and the intermediary.
Regarding follow-up and monitoring: Follow-up and monitoring report of the intermediary by the company's Risk Unit, with a periodicity of at least annually, according to the internal procedure defined by the company, which must include the follow-up and evaluation of material events related to the intermediary during the monitoring stage.

Article 23°.- Negotiation
The period for carrying out the "Settlement" corresponding to the transactions carried out with investment instruments shall not exceed the number of days representing the usages and customs established in the corresponding markets. The charges and credits for the payment or collection of purchases or sales, as applicable, of the investment instruments, will be carried out on the date of "Settlement", under the "Delivery versus Payment" modality.

CHAPTER VII
REAL ESTATE INVESTMENTS

Article 24°.- Investments in real estate 23
This type of investment corresponds to real estate that is held to obtain rents, capital gains or both, instead of being destined for the company's own use. Real estate for own use is considered to be those whose use is destined for the production or supply of goods or services of the company, or for its administrative purposes.

Article 25°.- Initial registration and subsequent measurement of investments in real estate
The initial registration, subsequent measurement and valuation will adhere to the following:
a) Initial recognition
In the initial accounting registration of investments in real estate, it will be recorded at fair value, which will correspond to the transaction price, unless proof to the contrary. b) Subsequent measurement Subsequently, each company will choose as an accounting policy between the cost model or the fair value model, and will apply that policy to all its investments in real estate.

Article 26°.- Valuation of investments in real estate - Cost Model
The company that chooses the cost model will measure its investments in real estate applying the requirements established in IAS 16 "Property, Plant and Equipment" for said model, considering additionally the following. a) Impairment loss and reversal of losses, for investments in real estate measured at cost The evaluation of impairment of investments in real estate measured at cost will be carried out on the date of preparation of quarterly financial statements.

23 Article substituted by Resolution SBS No. 3872-2021, published on 22.12.2021.

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Fax: (511) 6309239 27/48 When it is identified that one or more real estate investments measured at cost have suffered an impairment in their value, such impairment corresponds to the difference between the book value and the recoverable amount of the investment.
The recoverable amount must be determined following the guidelines of IAS 36 "Impairment of Assets".
The book value of the investment will be reduced until it reaches its recoverable amount. The impairment loss will be recognized immediately in the result of the period.
The company will assess whether there is any indication that the impairment loss recognized in previous periods no longer exists or may have decreased. If such an indication exists, the company will re-estimate the recoverable amount of the investment. The reversal of the impairment loss will be recognized in the result of the period. b) Disclosure of Fair Value in Notes to Financial Statements For the purpose of disclosing the fair value of the real estate investments referred to in this article, in the notes to the financial statements, the commercial value determined in an appraisal by a qualified appraiser registered in the Register of Qualified Appraisers (REPEV) maintained by the Superintendence will be considered. The update of the commercial value, for disclosure purposes, will be as of the date of preparation of the annual financial statements.

Article 27th.- Valuation of real estate investments - Fair Value Model 24
For the valuation of real estate investments under the fair value model, companies must have the authorization of this Superintendence, as stated in Article 28th of this Regulation. The fair value valuation applies to all real estate investments owned by the company, regardless of whether they back technical obligations or not. In matters not provided for by this Regulation, the guidelines of IAS 40 "Investment Property" must be applied. a) Recording of fair value The fair value to be recorded for each property depends on the use associated with said asset:

For properties that generate rents or periodic flows in favor of the company with contracts in effect at the time of valuation, the fair value corresponds to the commercial valuation value, which must be determined considering the results obtained through the application of at least two approaches: the income approach, using the discounted cash flow methodology, and the market approach, based on comparable values. In the application of the income approach, the conditions of the existing contracts must be taken as the basis for projections, and the guidelines established in Annex II of this Regulation must be complied with.
In the case of properties leased under a lease agreement, usufruct, or surface right contract, with a purchase option in favor of the lessee, the fair value must be obtained in accordance with the aforementioned paragraph and, if applicable, such value must be adjusted so that it does not exceed the present value of the future flows of the respective contract, up to the period of activation of the purchase option, plus the present value of the exercise price of said option; both discounted at the same discount rate used in the valuation of the property. 24 Article substituted by Resolution SBS No. 3872-2021, published on 22.12.2021.

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2. In the case of properties that do not generate rents or periodic flows at the date of valuation (they do not have a contract in effect), the fair value corresponds to the commercial valuation value, which must be determined considering the results obtained through the application of at least two approaches: the cost approach (replacement value) and the market approach (based on comparable values). From this group of properties, only and exceptionally for those properties whose contracts for generating rents or periodic flows ceased to be in effect within the last twelve (12) months prior to the date of valuation, the income approach can be applied as an additional approach to the cost and market approaches. The income approach is applied based on projections based on information from recent contracts or market information that is available (average rents of similar properties, considering the type of property and factors such as size, location, age, and state of conservation), duly substantiated and following the guidelines of Annex II of this Regulation.
Valuations must be carried out by appraisers or valuation entities that meet the requirements set forth in Article 28-Ath of this Regulation, as well as the policies and procedures described in Article 28th of this Regulation.
In the valuation or appraisal reports prepared by appraisers or valuation entities, the support for the criteria applied by them for the determination of fair value (final value) must be included, based on the consideration and representativeness of the results obtained under each valuation approach applied. Likewise, based on what was declared by the company for the hiring of valuation or appraisal services, the introduction of each report must state whether the valuation is related to a revenue-generating property or not and, if so, whether the exception determined in item 2 of this subsection has been applied. b) Update of fair value The company must update the fair value of properties that generate rents or periodic flows with contracts in effect at the date of valuation on a semi-annual basis. In the case of properties that do not generate such rents at the date of valuation, the update must be carried out, at a minimum, on an annual basis. The update must be carried out by an appraiser or valuation entity under the terms set forth in the previous subsection of this article. Without prejudice to what is stated in the previous paragraph, if as part of the company's monitoring of the fair value of its real estate investments, it is estimated that the value of a property has fallen by twenty percent (20%) or more with respect to the last recorded value, or upon the activation of an alert signal described in the company's policies, the company must request the update of the valuation or appraisal of said investment in the shortest possible time. c) Recognition of fair value fluctuations The loss or gain arising from the fluctuation of the fair value of a real estate investment is recognized in the results of the period.

Article 28th.- Authorization for the application of the fair value model 25
For the purpose of applying the fair value model as a subsequent measurement model for their real estate investments, the company must submit an authorization request signed by its General Manager and a copy of the following documents:
25 Article substituted by Resolution SBS No. 3872-2021, published on 22.12.2021.

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Policies and procedures for the valuation of real estate investments at fair value, which include guidelines to comply with the requirements established in this chapter, as well as to monitor fair value valuation. The policies and procedures must consider at least the following aspects:
a. The procedures and information sources for the valuation of properties, as well as for the identification and monitoring of alert signals indicated in the following subsection. b. The indicators for the identification and monitoring of alert signals of real estate market values (independent of the valuations or appraisals carried out), applicable to their own investments.
c. The guidelines and procedures to be followed for the update of valuations or appraisals.
d. The reference to the company's policies and procedures for the selection and monitoring of counterparties in real estate investments that generate rents or periodic flows. e. The criteria, conditions, and procedures to be followed in the face of delays (actual or anticipated) in payments by counterparties of the type of investment indicated in the previous subsection; as well as to evaluate and approve modifications to the respective contracts. f. The description of the accounting dynamics applicable to real estate investments.
Policies and procedures for the selection of appraisers or valuation entities of real estate investments, which must meet the requirements set forth in Article 28-Ath of this Regulation. These must include guidelines for the periodic rotation of appraisers or valuation entities, considering that the same property cannot be valued or appraised by the same appraisers or valuation entities for more than five (5) consecutive years. Once the aforementioned maximum period has concluded, a period of at least two (2) years must elapse before these appraisers or valuation entities can re-value said property.
Policies and procedures for the timely delivery of information and documentation required by appraisers or valuation entities to carry out the valuation of their properties. In the case of real estate investments where the income approach is applied as one of the approaches used to determine their fair value, the company must provide the appraiser or valuation entity with the information and documents that allow them to confirm and use, in their valuation, objective data for the development of projections, establishing confidentiality agreements, as appropriate.
Description of the minimum methodological guidelines that appraisers or valuation entities must apply for the valuation of real estate investments, considering what is established in Annex II of this Regulation, as applicable.
Models of contracts to be signed with appraisers or valuation entities, which include clauses that facilitate the delivery of information on the description and support of the methodologies used, the valuations carried out, as well as compliance with the requirements set forth in Article 28-Ath of this Regulation, to the company, its External Audit Firm, and to the Superintendence or to the person designated by the latter.
Model of sworn statement to be signed by the appraiser or valuation entity, regarding the handling of conflicts of interest.
Legal report of the company on the model contracts to be signed with the appraisers or valuation entities referred to in item 5 and the model of sworn statement referred to in item 6.

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8. Report from the risk unit, where the reasonableness of the policies, procedures, and methodological guidelines set forth in items 1, 2, 3, and 4 of this article is evaluated.
9. Detailed description of the training, experience, and position in the company of the professionals who have under their function the monitoring of the real estate market for the identification of alert signals. The experience applied in the analysis and monitoring of the real estate market by the professional leading this function must not be less than two (2) years. The function of monitoring the real estate market must be carried out by a unit independent of the company's investment unit. The risk unit may assume this function under the terms stated.
10. Training plan, with a horizon of no less than two (2) years, which the company must follow to keep the training of the professionals referred to in the previous item up to date, in matters related to the variables or factors that determine the supply, demand, and values of the real estate market.
11. Minutes of the risk committee meetings, in which it is recorded: i) the approval of the manuals that incorporate the policies and procedures set forth in items 1, 2, and 3, as well as the minimum methodological guidelines referred to in item 4 of this article; and ii) the notification of the legal report and the risk unit report mentioned above.
The authorization of the fair value model for real estate investments may include the application of prudential measures, which are evaluated for each particular case.
The Superintendence approves or denies the authorization within a maximum period of sixty (60) business days.
26
The documentation that has served as support for the compliance with the requirements described above must be available to this Superintendence.
In the event that any of the documents that have served as support for the compliance with the aforementioned requirements are updated or modified, such changes must be brought to the knowledge of this Superintendence, through a letter from the company signed by its General Manager, within five (5) business days of having been approved, attaching the following:

Explanation of the changes made and the reasons supporting them.
Modified and/or updated documents, taking into consideration the following:
a. The changes in documents 1 to 6 mentioned above must be accompanied by the update of the reports referred to in items 7 or 8 mentioned above. b. The changes of the leading professional, described in item 9 mentioned above, must be accompanied by a copy of their curriculum vitae (resume), detailing their experience and training on the real estate market.
Minutes of the risk committee where the modifications are approved and the update of the reports referred to in items 7 or 8 mentioned above or the risk report referred to in subsection 2b) above is notified.
The Superintendence may present observations on the modifications made within sixty (60) business days of having been brought to its knowledge. If the company does not remedy these observations within the period specified by this Superintendence, and considering the gravity or criticality of the risks associated with what was observed, it may revoke the authorization granted to the company to apply the fair value model, and in this latter case, indicate clarifications for the company to resume the cost model, in the valuation of its real estate investments. 26 Paragraph modified by Resolution SBS No. 556-2025, published on 18-02-2025.

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Article 28-Ath.- Requirements applicable to appraisers or valuation entities - Fair Value Model 27
Appraisers or valuation entities hired by companies that apply the fair value model must meet, at least, the following requirements:

Be natural or legal persons who possess no less than two (2) years of experience in the valuation of properties with characteristics similar to those subject to valuation. In the case of a legal person, the professional in charge of the valuation or appraisal must have the capacity and experience mentioned above. Additionally, if it is a qualified appraiser, they must have a current registration in the Register of Qualified Appraisers (REPEV) maintained by this Superintendence.
Demonstrate, in the case of the valuation of properties that generate rents or periodic flows, that the professional in charge of the valuation has carried out at least ten (10) valuations using the income approach, using the discounted cash flow methodology. Of these, at least five (5) valuations must have been carried out in the last two (2) years and on properties with similar characteristics and scales. This requirement can be accredited through a sworn statement signed by the appraiser or professional in charge of the valuation on behalf of the valuation entity, indicating the valuation reports they have carried out using the income approach. The supporting documentation of said reports must be available to this Superintendence when requested.
Use valuation techniques or methods consistent with economic methodologies accepted by market participants to establish market prices, which comply with the guidelines established in this Regulation and are consistent with international real estate valuation standards. The use of relevant observable input data must be maximized, as much as possible, and the use of unobservable input data minimized. When the market approach is applied, actual sales prices must be used. In the event that such values are not available and reference offer values are used, a discount for negotiation factor of at least two percent (2%) must be applied, in accordance with the guidelines established in Annex II.
Sworn statement signed by the appraiser or professional in charge of the valuation on behalf of the valuation entity, indicating having received specialized training in the valuation of properties at least every two years in the last four (4) years. For the valuation of real estate investments that generate rents or periodic flows, the appraiser or valuation entity must indicate having received specialized training in the valuation of this type of property under the income approach, developed by formally constituted institutions with experience in teaching these specialized courses. The supporting documentation of such training must be available to this Superintendence when requested.
Have databases and specialized information analysis on the real estate sector of the respective locality, as well as information on the variables and risk indicators affecting said sector and the valuation of properties.
Have formal criteria for the handling of conflicts of interest and for the resolution of controversies. Likewise, they must sign the sworn statement regarding compliance with these criteria, following the model presented by the company to the Superintendence.
27 Article incorporated by Resolution SBS No. 3872-2021, published on 22.12.2021.

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7. Have controls and/or validations that reduce operational risk in the property valuation process, and provide greater confidence in the valuations provided.
8. Other aspects that the company considers relevant.
The company must have a report on the degree of compliance with the requirements of the appraiser or valuation entity, prior to their hiring; it being necessary for the Risk Unit of the company to pronounce on the compliance with the requirements set forth in items 3 and 7 of this article. Said report must be brought to the knowledge of the Risk Committee.

Article 29th.- Prudential measures - Fair Value Model 28
If, as part of its supervision activities, the Superintendence observes that the valuation or appraisal prepared to determine the fair value of a real estate investment presents significant deficiencies at a technical level, it may require the company to do the following: i) update the valuation or appraisal; ii) carry out a new valuation or appraisal by a different appraiser or valuation entity; and/or, iii) consider prudential discounts on the fair value of the property. The technical evaluation of valuations or appraisals comprises the methods or approaches employed, the consistency of the information and analysis used as support, the availability of data or reliable information sources, the reasonableness of the results obtained with market indicators, among others.

Article 29-Ath.- Properties with different purposes or uses 29
In the event that a property is destined for different purposes or uses, the company must classify its different components into classes, regardless of the participation of each component over the total of the property. The following classes of properties and their valuation models are indicated below:
a) Own use: must be valued according to the cost model, in accordance with what is provided in the Chart of Accounts for companies in the insurance system. b) Real estate investment: must be valued following what is provided in Article 26th or 27th of this Regulation, as applicable.
Common areas corresponding to each component must be classified and valued within the respective class.

Article 29-Bth.- Real estate investment files 30
Companies must maintain a support file for each and every one of their real estate investments, whether valued using the cost model or the fair value model. Said file must contain, at least, the following information:

Description of the property: characteristics, type(s) of use(s) and conditions for the generation of flows, if applicable.
Registry entry. In the case of properties that have undergone some modification during the last year, the registry entry of the property must be updated. For properties that do not present modifications during the last year, the company has the option to update said registry entry or to have a sworn statement, signed by the General Manager or by whom he formally delegates, indicating that there were no changes in the registry information of the property during the last year. This sworn statement can be signed individually or for a group of properties, as long as the necessary information is included.
28 Article substituted by Resolution SBS No. 3872-2021, published on 22.12.2021.
29 Article incorporated by Resolution SBS No. 3872-2021, published on 22.12.2021.
30 Article incorporated by Resolution SBS No. 3872-2021, published on 22.12.2021.

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Fax: (511) 6309239 33/48 the identification of each of them, including the investment code(s) and the respective registry entry number(s). Without prejudice to the above, the Superintendence may require the presentation of the updated registry entry, if it deems it necessary.

Updated Certificate of Liens and Encumbrances from the Property Registry, updated at least annually.
Documentation of investments in improvements associated with the real estate, which have been registered as part of said asset, carried out after its acquisition. If applicable, information and documentation on disbursements in real estate projects associated with the property.
In the case of real estate that generates rents or periodic cash flows: current contracts generating the cash flows and support for the evaluation and/or monitoring at least quarterly of the punctuality of payments made by each counterparty. Likewise, support for compliance with policies and procedures defined to respond to delays (actual or expected) in said payments. In turn, description of modifications made to the original contracts, and support for compliance with policies and procedures defined to evaluate and approve said modifications.
Valuation or appraisal reports prepared by experts or valuation entities on the respective real estate, considering the last ten (10) years, or the number of years in possession of the company, whichever is less.
Analysis and/or monitoring reports at least semi-annually of the risks to which the real estate investment is exposed, which includes monitoring alert signals of real estate market variables, associated with the respective investment. The file must include reports carried out considering the last ten (10) years, or the number of years the real estate has been in the possession of the company, whichever is less.

The company may document the evaluation and/or monitoring required in items 5 and 7 of this article, at the level of each real estate or for a group of real estates, as well as in an internal or complementary section of its investment files in real estate, provided that the detailed data of the scope of said evaluation and/or monitoring are exhibited, including the respective investment code(s).

The information update policies must take into consideration the frequency established in this article.

The files must be available to the Superintendence.

Article 29-C°.- Derecognition of real estate investments 31

In each sale or transfer operation of real estate investments, companies must analyze whether the risks and benefits associated with such assets are effectively transferred. Only if there is a significant transfer of risks and benefits can the company derecognize real estate investments from the accounts.

CHAPTER VII-A 32

REAL ESTATE CREDITS

Article 30°.- Real estate credits 33

Companies may grant and/or invest in the following real estate credits, in accordance with the requirements established in the Regulation on Investments of Insurance Companies, approved by Resolution SBS No. 1041-2016 and its amendments:

a) Negotiable Mortgage Credit Titles (TCHN). b) Real estate credits for the acquisition of future goods initially instrumented in promissory notes and subsequently in a TCHN. c) Mortgage credits granted to their employees for the acquisition of a single home.
Accounts receivable arising from reverse mortgage operations.

Article 31°.- Initial measurement

The initial accounting recognition for the acquisition of TCHN and real estate credits for the acquisition of future goods is carried out at the nominal value of the underlying credit, under the item "accounts receivable for operations subject to credit risk". If the fair value (transaction price, unless proven otherwise) is lower than the nominal value, the difference is recorded in the item "deferred liabilities". Otherwise, it is recorded in the item "other assets". The amounts recorded in the items "deferred liabilities" or "other assets" are recognized as income or expense of the period, respectively, applying the straight-line method over the residual term of the real estate credits.

In the case of mortgage credits that insurance companies grant to their employees, the initial recording of said credit is carried out at the disbursed amount.

Transaction costs, as defined in Article 2° of this Regulation, are recognized as expenses when incurred.

Article 32°.- Subsequent measurement

In the subsequent measurement of real estate credits, the following must be considered:

a. Valuation

The valuation corresponds to the nominal value (principal balance of the underlying credit) plus accrued interest, net of provisions for the underlying credit. Interest and provisions are determined in accordance with the provisions established in the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by Resolution SBS No. 11356-2008 and its modifying norms.

b. Recognition of expenses

The constitution of provisions is carried out on the accounting balance of the nominal value (principal balance of the underlying credit), recognized as expenses, affecting the result of the period.

c. Recognition of income

Interest is recognized as income, affecting the result of the period, except in situations where recognition is suspended, in accordance with what is established in the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions.

Article 33°.- Transactions with related parties

In the case of operations with related parties to the company, in accordance with Article 202° of the General Law and the Special Norms on Linkage and Economic Group, the fair value of the instruments indicated in Article 30° must be supported by a technical study prepared by an unrelated person, in which the valuation methodology used is described in detail. This technical study must be available to the Superintendence.

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CHAPTER VIII 34

INVESTMENT MANDATES

Article 34°.- Investment mandates

The company may hire a third party to develop, partially or totally, the functions of the Investment Unit indicated in the Regulation on Investments of Insurance Companies, provided that it complies with the requirements indicated in this chapter. The hiring of the mandate holder will be considered as a significant subcontracting, for which the company must comply with the requirements established in the Regulation on Integrated Risk Management and in the Regulation on Operational Risk Management.

Article 35°.- Mandatee selection policy

Companies that decide to hire a mandate holder to perform the functions of the Investment Unit, regardless of whether such hiring requires prior authorization or not, must have a mandate holder selection policy that must include the following aspects:

Due diligence report containing, at minimum, the following:

a. General information about the mandate holder (volume of assets managed, governing bodies, among other aspects). b. Financial situation of the mandate holder, demonstrating economic solvency and recognized prestige in financial markets.
c. Asset valuation policy and procedures, which must comply with the provisions of this Regulation.
d. Policy for the identification and resolution of potential conflicts of interest. e. Evaluation and opinion on the mandate holder's internal investment policies, which must comply with the investment criteria and risk management requirements defined by the company and current regulations. f. Evaluation and opinion on the structure of expenses, costs, and commissions that the mandate holder will charge to the company. g. Capacity and infrastructure of the mandate holder for compliance with the regulations and investment policies of insurance companies. The infrastructure must include the evaluation of computer systems. h. Evaluation of custody requirements for instruments, established in Chapter V of this Regulation.
i. Evaluation of minimum management, recording, and reporting information to the supervisor.

Mandatee selection criteria, which must contemplate, at minimum, those indicated in Article 38°.
Criteria that investment mandate contracts must contain, which must seek to safeguard the interests of the managed investment portfolios and include, at minimum, the aspects indicated in Article 39°.

Article 36°.- Authorization to sign investment mandates for the management of investments representing 20% or more of the company's portfolio

The company requires prior authorization from the Superintendence if, through the investment mandate, it subcontracts, partially or totally, the functions of the Investment Unit on the management of investments that represent 20% or more of its portfolio. For this effect, the company must present a request signed by the general manager with the documentation indicated below:

34 Chapter incorporated by Resolution SBS No. 5027-2017 of 12.27.2017, adaptation deadline until 06.30.2018.

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Report from the Investment Unit describing and supporting in detail the reasons why it has decided to subcontract the management of investments in the instruments or investment operations that are the object of the request.
Copy of the Investment Committee minutes, in which the investment mandate is approved. Such approval must be based on the Investment Unit report described in item 1.
Report from the Investment Risk Unit that must include the evaluation on: i) compliance with the selection criteria and minimum requirements of mandate holders; ii) compliance with the criteria that the investment mandate contract must contain and aspects indicated in Article 39°; iii) evaluation of risks associated with the subcontracting of services and mitigation measures implemented for this effect; and, iv) the valuation process of the instruments that are the object of the investment mandate.
Copy of the Risk Committee minutes, in which the approval of the investment mandate is recorded. Such approval must be supported by the Investment Risk Unit report described in item 3.
Copy of the board of directors minutes in which the investment mandate is approved.
Due diligence report of the potential mandate holder.
Legal opinion on the clauses provided in the contract.
Draft investment mandate contract.
Designation of the person in charge in the company of supervising compliance with the contract and the Investment Policy.
Others established by the Superintendence.

In the case of subcontractings that do not require prior authorization, companies must keep the documentation indicated in items 1 to 7 available to the Superintendence.

Article 37°.- Communication to the Superintendence

Regardless of whether authorization is required or not, the company must communicate to the Superintendence about the hiring of the mandate holder, within five (5) calendar days following the signing of the corresponding contracts.

Article 38°.- Minimum requirements of mandate holders

The company must ensure that the mandate holder complies with at least the following requirements:

a) Be a legal entity constituted in a country that maintains a risk classification equal to or higher than investment grade for its long-term foreign currency sovereign debt. b) Be duly supervised and regulated by the corresponding securities and/or financial market authorities of the country where it is constituted. For this effect, the company must verify, among others, the corresponding registration record. c) Show a direct relationship, in terms of management and patrimony, with the parent company or the group to which it belongs. d) Have experience of no less than five (5) years in the administration of resources of institutional investors and prove that the persons responsible for the management team have at least five (5) years of experience in the management of investment mandates, specifically in the administration of portfolios that support obligations with characteristics of similar nature to the technical obligations of the company, with strategies and in comparable markets. e) The entity and the persons responsible for executing any of the terms and conditions of the investment mandate must not have been specifically sanctioned for serious and/or very serious infractions in the administration of investment portfolios (asset management), by any securities and/or financial market authority of the country or abroad. Likewise, they must not have received a final conviction sentence and/or been found responsible by competent authorities for actions or omissions committed with intent or gross negligence regarding compliance with their fiduciary duty or for fraud.

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f) There must be absolute patrimonial separation between the patrimony of the mandate holder and the investment mandate.

g) Have the technological infrastructure for the processing, valuation, and monitoring of risks associated with the investments that are the object of the investment mandate.

h) In the case that the mandate holder is a legal entity domiciled abroad, this or its parent company must prove that the assets managed in investment portfolio management mandates are no less than five billion United States dollars (US$ 5,000 million). In case the compliance with this requirement is supported by the accreditation carried out by its parent company or the group to which the mandate holder belongs, the entity must show a direct relationship in terms of management and patrimony with said parent company or group.

The selection of the mandate holder must be the result of an evaluation of different market proposals, based on the objectives and criteria established in the company's policy and compliance with the requirements indicated in this article.

Article 39°.- Investment mandate contract

Investment mandate contracts must include, in addition to the requirements indicated in the Regulation on Integrated Risk Management and in the Regulation on Operational Risk Management regarding subcontracting, the following aspects:

The obligation held by the mandate holder to know and comply with current regulations on the investments of insurance companies and with the policies and procedures defined by the company.
The prohibition of the mandate holder to subcontract any obligation provided in the contract signed with the company.
The mechanisms for the identification, mitigation, and resolution of potential conflicts of interest that may arise during the validity of the investment mandate framework.
The obligation of the mandate holder to keep confidential the information and/or documentation sent by the company for the fulfillment of the investment mandate objective.
The obligation of the mandate holder to present manuals and procedures that allow identifying, monitoring, controlling, and mitigating investment risks, including contingency plans and processes that guarantee continuity in the management of investments in accordance with the agreed terms.
The company and the mandate holder must define the information they will receive and deliver, indicating the form, detail, and time of the investments made for the purpose of determining the level of compliance with the mandate.
The validity of the mandate may be for a fixed term or indefinite. The contract must contemplate the causes and procedures by which the company is allowed to terminate the contractual relationship early without incurring penalties for the managed portfolios and take control of the management of the assets under the mandate holder's administration. Likewise, the contract must establish the effective date of the mandate.
The structure, composition, and functions of the governing bodies of the mandate holder; as well as the obligation to report on changes and appointments of its officials, including those who perform investment management activities (key person).
The establishment of a reference indicator (benchmark) on which the management of the mandate holder will be measured, which must be included in the Investment Policy of the insurance company. This benchmark must be determined according to the objective of the investment mandate.

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The exhaustive list of expenses, costs, and commissions for administration and services attributed to the investment mandate.
The selection and hiring of the custodian of the instruments and investment operations that are the object of the mandate is the responsibility of the company, and the mandate holder must timely supply the information that the custodian considers necessary for the fulfillment of its functions. In this sense, the type of information that the custodian will require and the channels through which the mandate holder will send said information must be specified.
The obligation of the mandate holder to indemnify the company for willful non-compliance or gross negligence of contractual provisions or breach of fiduciary duty.
The obligation that the valuation of investment portfolios be carried out in accordance with international accounting standards and best practices, complying with what is regulated in this Regulation.
The country and competent tribunal to which any divergence regarding the scope or application of the mandate will be submitted.
Others determined by the Superintendence through a general norm.

Any modification to the terms and conditions of the investment mandate contract must have the approval of the company's Board of Directors, whose addendum must be accompanied by a report from the Risk Unit on the potential impact of the modifications on the company's investment management.

Article 40°.- Corporate-level Investment Unit

The functions of the company's Investment Unit may be performed by another entity of the economic group to which the insurance company belongs, provided that said entity and the contract meet the requirements indicated in Articles 38° and 39°, respectively.

The company requires prior authorization from the Superintendence if, through the contract or agreement with another entity of its economic group, it subcontracts, partially or totally, the functions of the Investment Unit on the management of investments that represent 50% or more of its portfolio.

In this sense, the company must follow the procedure indicated in Article 36°.

The corporate-level Investment Unit must comply with the disclosure and conflict of interest resolution policy established in item c) of Article 4° of Resolution SBS No. 1041-2016.

Likewise, the persons responsible for the aforementioned Investment Unit must not present conflicts of interest, generated by the simultaneous performance of functions linked to financial or investment decision-making in entities that: (i) are issuers of instruments in which company resources have been invested, (ii) are intermediaries of the instruments or operations or (iii) are structurers of instruments or operations offered to the company; (iv) others detected by the company or this Superintendence.

Article 41°.- Evaluation of the investment mandate by Internal Audit

If the company has signed an investment mandate contract, its Internal Audit Unit must evaluate the compliance with the mandate and the management of the mandate holder, in common agreement with the mandate holder and with a periodicity of at least annually. The audit reports must be brought to the knowledge of the company's Audit, Investment, and Risk Committees, and be available to this Superintendence, with the requirements and conditions established in the Internal Audit Regulation being applicable.

FINAL AND COMPLEMENTARY PROVISIONS

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First.- Application of international accounting standards The provisions established in this Regulation are in accordance with the criteria contained in NIC 32 "Financial Instruments: Presentation", NIC 39 "Financial Instruments: Recognition and Measurement" and its Application Guide, NIC 40 "Investment Property", NIC 21 "The Effects of Changes in Foreign Exchange Rates", NIC 28 "Investments in Associates", NIC 31 "Interests in Joint Ventures", NIC 36 "Impairment of Assets", IFRS 3 "Business Combinations" and IFRS 7 "Financial Instruments: Disclosures" in force in Peru. Therefore, the aforementioned NIC, the Guide and IFRS mentioned are applicable to the extent that they do not conflict with what is established in this Regulation and other standards issued by the Superintendency.

Second.
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Third.- Commodities
Investment in commodities shall be accounted for in accordance with the criteria established for investments at fair value with changes in profit or loss.

Fourth.- Costing method for investments in financial instruments issued in series and provisions on the sale or accounting reclassifications of instruments 36 In the event that several purchases of a certain debt or capital instrument issued in series have been made, the weighted average cost method shall be used for capital-representative instruments, and the FIFO (first in, first out) formula for debt-representative instruments. The scope or perimeter applicable for the calculation of the weighted average cost or the FIFO formula shall be the company's global portfolio, except for the exception noted in the following paragraph.

It is permitted that the scope or perimeter for the calculation of the average cost or the FIFO formula be the investment portfolio to which the instruments subject to costing belong, when said portfolio backs a single homogeneous group of obligations (GHO). This treatment is also permitted in cases where the aforementioned GHO is backed by other portfolios, provided that these portfolios do not include instruments with the same investment codes and do not back another GHO. 37

The application of the exception noted in the previous paragraph shall be carried out without prejudice to the sale or accounting reclassification of financial instruments complying with what is stated in this matter by the current regulations. Likewise, this exceptional treatment shall only be applicable to sales or accounting reclassifications of those instruments that have not been reassigned between investment portfolios in the last thirty (30) calendar days prior to the date on which such sales or accounting reclassifications are proposed. Otherwise, the general treatment described in the first paragraph of this provision shall apply.

Fifth.- Requirement for impairment adjustments and additional provisions 38 When, in the opinion of the Superintendency, there is any distortion in the calculation of the valuation of investments or operations within the scope of this Regulation, the company shall be required to justify the calculations made or proceed to make impairment adjustments or establish additional provisions.

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Sixth.- Covered items
Investment instruments designated as covered items in a hedge accounting defined in accordance with the standards issued by the Superintendency shall be measured in accordance with said standards.

Seventh.- Effective equity 39
The excess of unrealized losses on available-for-sale investments over accumulated profits and profit for the year, without an agreement to capitalize profits or an agreement to capitalize future profits, must be deducted from effective equity. In the event that there are no accumulated profits nor profit for the year, without an agreement to capitalize profits or an agreement to capitalize future profits, the total of unrealized losses on available-for-sale investments shall be deducted from effective equity.

Unrealized gains on available-for-sale investments shall not form part of effective equity.

Eighth.- Treatment of investment excesses
With respect to the limits established in the Regulation on Diversification by Issuer of Investments of Insurance Companies, approved by Resolution SBS No. 829-2005 and its amendments, excesses to the limits that occur exclusively due to variations in the fair value of investments shall not be sanctionable. In this case, the company may not increase its exposure until it is again within the legal limit. However, if the Superintendency deems it necessary, it may require, either due to the magnitude of the excess or the quality of the company's risk management, an adjustment plan for these excesses, case by case.

Ninth.- Application of the fair value model for real estate investments for companies that had authorization 40 Companies that had authorization to value their real estate investments under the fair value model, before the entry into force of Resolution SBS No. 3872-2021, must take the following into consideration:

Regarding accounting effects: They must make an adjustment to reflect the gain or loss associated with their real estate investments (stock portfolio), which arises as a result of the adaptation to the modifications indicated in said Resolution. The resulting gain or loss from this adjustment must be applied against the accumulated results account. The aforementioned adjustment does not imply making reversals or write-offs of previous profit capitalizations recognized by the company.
Regarding extra-accounting effects: They must constitute the monthly requirement for additional capital in the calculation of the Guarantee Fund, equivalent to 10% of the value of real estate investments (stock portfolio).
Regarding the Compliance Gaps and Financial Impacts Report: They must submit to the Superintendency a Report within a maximum period of ninety (90) calendar days, 39 Disposición modificada por Resolución SBS N° 603-2016, publicada el 06.02.2016. 40 Disposición final y complementaria sustituida por Resolución SBS N° 3872-2021, publicada el 22.12.2021.

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counted from the entry into force of the aforementioned Resolution, in which the following aspects are detailed:

a) Identification and evaluation of gaps regarding compliance with the requirements indicated in Article 28°. b) Analysis of the impacts of accounting and extra-accounting effects, reflected in the technical obligations coverage and solvency ratios.

Regarding the operational adjustment plan: In the event that the company does not fully comply with the new requirements established in Article 28°, it must submit, in addition to the Report indicated in item 3, an adjustment plan corresponding to the operational implementation of the requirements indicated in said article, and which considers a maximum implementation period of two (2) calendar years, counted from the entry into force of the aforementioned Resolution. In said adjustment plan, those aspects that present compliance gaps must be highlighted, and the actions to be taken by the company to overcome said gaps must be described, including details on the responsible area and the scheduled date for implementing each of these actions. The company must remedy the observations made by this Superintendency on this plan and obtain its express approval for its respective implementation.
Regarding the financial adjustment plan: In the event that the company requires an adjustment period to implement the accounting and extra-accounting requirements associated with its stock portfolio, contemplated in items 1 and 2 above, it must submit, in addition to the Report indicated in item 3, an adjustment plan detailing the implementation proposal, which may consider the maximum date for the initial implementation milestone as January 01, 2024. The maximum gradual adjustment period to be considered cannot exceed December 31, 2026. The company must remedy the observations made by this Superintendency on this financial adjustment plan and obtain its express approval for its respective implementation.

The company may continue to use the valuation methodology it was applying before the entry into force of the previously mentioned Resolution, until the expiration of the maximum adjustment period indicated in the preceding item 4, or until the effective month of the total overcoming of the identified gaps according to letter a) of item 3 of the preceding item, whichever occurs first.

Additionally, it is specified that the gain or loss arising from the fluctuation of the fair value of real estate investments acquired after the entry into force of Resolution SBS No. 3872-2021 (new portfolio) is subject to what is stated in letter c) of Article 27° of this Regulation, without the application of gradual adjustment periods for the recognition of said accounting effects. Likewise, the monthly requirement for additional capital in the calculation of the Guarantee Fund, for the case of the new portfolio, must be calculated and constituted at the close of each month, without a gradual adjustment period applying for this purpose. It is specified that the new portfolio under the treatment described above even includes those real estate properties acquired during the operational adjustment period referred to in item 4 of the preceding item.

Tenth.
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41 Disposición incorporada por la Resolución SBS N° 2904-2014, de fecha 15.05.2014. Posteriormente derogada por la Resolución SBS N° 332-2023, publicada el 02.02.2023, vigente desde el 01.06.2023.

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Eleventh.- Adaptation to the provisions of Chapter VIII "Investment Mandates" 42 Companies that have signed investment mandates or that maintain a Corporate Investment Unit prior to the publication of Resolution SBS No. 5027-2017, must communicate this to the Superintendency within ten (10) calendar days following the publication of said Resolution. Likewise, within sixty (60) calendar days following the communication, companies must present a Report in which compliance with the provisions of Articles 34°, 35°, 38° and 39° of the Regulation is evaluated.

If during the adaptation period to Resolution SBS No. 5027-2017 any company is interested in signing an investment mandate or implements a Corporate Investment Unit, the provisions of Chapter VIII of the Regulation shall apply.

"Twelfth.- Treatment of new authorizations to apply the fair value model in real estate investments 43 Companies that receive authorization, from the entry into force of Resolution SBS No. 3872-2021, to apply the fair value model in their real estate investments, must register the gain or loss resulting from the first application of said model in the accumulated results account. Subsequently, what is established in letter c) of Article 27° of this Regulation applies. It is specified that no gradual adjustment period applies to these cases for the calculation and constitution of the Guarantee Fund established in the Regulation on Equity Requirements of Insurance and Reinsurance Companies.

Thirteenth.- Adaptation of experts or valuing entities to the requirement of periodic alternation 44 For companies that had authorization to value their real estate investments under the fair value model, before the entry into force of Resolution SBS No. 3872-2021, the alternation required in item 2 of Article 28° of this Regulation must be evaluated from the expiration of the maximum operational adjustment period indicated in item 4 of the ninth final and complementary provision above, or from the effective month of the total overcoming of the gaps identified according to letter a) of item 3 of said provision, whichever occurs first.

Fourteenth.- Valuation of investments in real estate investment funds or other vehicles with real estate underlying 45 In the case of indirect real estate investments, through real estate investment funds, real estate trusts, and other vehicles or structures with real estate underlying, the company must ensure that the valuation methodology applied to the real estate of the investment vehicle is consistent with the cost model or the fair value model established in NIC 40 "Investment Property" or with the valuation model or methodology established by the respective regulatory and/or supervisory authorities of the securities and/or financial markets. Said methodology must be incorporated in the Participation Regulation or document that supports the characteristics of the investment vehicle or real estate structure, which must be available to the Superintendency.

If the real estate investment fund, the real estate trust, or the vehicle or structure with real estate underlying does not comply with the valuation provisions described above, the company 42 Disposición incorporada por la Resolución SBS N° 5027-2017, de fecha 27.12.2017, plazo de adecuación hasta el 30.06.2018. 43 Disposición final y complementaria incorporada por Resolución SBS N° 3872-2021, publicada el 22.12.2021. 44 Disposición final y complementaria incorporada por Resolución SBS N° 3872-2021, publicada el 22.12.2021. 45 Disposición final y complementaria incorporada por Resolución SBS N° 3872-2021, publicada el 22.12.2021.

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must register as the value of its investment the lower of the acquisition value of its participation and the value reported by the fund, trust, or real estate investment vehicle. In the case of those funds or investment vehicles that were acquired before the entry into force of Resolution SBS No. 3872-2021, and that do not comply with the valuation provisions described, they must be alerted as part of the adjustment plan indicated in the twelfth final and complementary provision, and are subject to the maximum operational implementation period of two (2) years, established in that same provision.

Article Two.- Annex I "Standard methodology for the identification of impairment of available-for-sale investments and investments to maturity" 46 referred to in the new Regulation on Classification and Valuation of Investments of Financial System Companies approved by Article One of this resolution, is published on the Institutional Portal –www.sbs.gob.pe – in accordance with what is established in Supreme Decree No. 001-2009-JUS.

Article Three.- Incorporate Procedure No. 154 "Authorization for the application of methodology for the identification of impairment of investments of insurance companies" and No. 155 "Authorization for the application of the fair value model for the valuation of real estate investments of insurance companies" into the Single Text of Administrative Procedures – TUPA of the Superintendency of Banks, Insurance and AFP approved by Resolution SBS No. 3082-2011, in accordance with the text attached to this Resolution and published in accordance with what is established in Supreme Decree No. 004-2008-PCM, Regulation of Law No. 29091. (Institutional Portal: www.sbs.gob.pe).

Article Four.- Modify the Regulation on Eligible Investments of Insurance Companies, approved by Resolution SBS No. 039-2002 and modifying norms, according to the following:

Modify Article 15° "Investments in urban real estate located in national territory" according to the following:

"Investments in urban real estate located in national territory
Article 15º.- For the purposes of backing technical obligations, the value of urban real estate located in national territory shall be determined by applying the criteria established in the Conceptual Accounting Framework of the Chart of Accounts for Companies of the Insurance System, approved by Resolution SBS No. 348-95 and its amendments, and in the Regulation on Classification and Valuation of Investments of Insurance Companies.

Properties for own use must be appraised at the beginning and every two years by experts registered in the Register of Valuing Experts (REPEV) maintained by the Superintendency. The appraisal report carried out by said experts must contain the commercial value and the realization value of the appraised property. In the event of significant changes in the market values of said properties, the Superintendency may order appraisals in periods shorter than indicated."

Modify Article 19° "Submission of Information" according to the following:

Submission of information
46 Denominación modificada por la Resolución SBS N° 2608-2018, de fecha 04.07.2018.

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Article 19º.- Companies must present to this Superintendency the information indicated below, together with the corresponding financial statements:

Annex No. Designation Periodicity
Annex No. ES-3 Technical Obligations Monthly
Annex No. ES-4 Eligible Investments Monthly
Annex No. ES-4A Investment in Deposits Monthly
Annex No. ES-4B Investment in debt-representative instruments Monthly
Annex No. ES-4C Investment in capital-representative instruments Monthly
Annex No. ES-4D Repo operations and repurchase agreements Monthly
Annex No. ES-4E.1 General characteristics of properties for own use and investments in real estate Monthly
Annex No. ES-4E.2 Sold Properties Annual
Annex No. ES-4E.3 Additional characteristics of investments in real estate that generate periodic flows Annual
Annex No. ES-4E.4 Application of discounted cash flow methodology in investments in real estate Quarterly
Annex No. ES-4F Other Instruments Monthly
Annex No. ES-4G Premiums receivable from insured parties not due and not accrued Monthly
Annex No. ES-4H Unaccrued premiums receivable from cedents Monthly
Annex No. ES-4I General characteristics of real estate underlying instruments issued by trusts Monthly

In the preparation of the Annexes, the following shall be taken into account:

The annexes must record all assets of the same class that the company possesses, whether eligible investments or not.
The valuations of the investments recorded must correspond to those in effect on the last calendar day of the period being reported.

Article Five.- The following form part of this Resolution: Annexes ES-4E.1 "General characteristics of properties for own use and investments in real estate", ES-4E.2 "Sold Properties", ES-4E.3 "Additional characteristics of investments in real estate that generate periodic flows", ES-4E.4 "Application of discounted cash flow methodology in investments in real estate" and ES-4I "General characteristics of real estate underlying instruments issued by trusts", whose models are published on the Institutional Portal (www.sbs.gob.pe), in accordance with what is established in Supreme Decree No. 001-2009-JUS.

Article Six.- Modify the Regulation for the Negotiation and Accounting of Financial Derivative Products in Insurance Companies, approved by Resolution SBS No. 514-2009 and modifying norms, according to the following:

Any reference to the National Commission for the Supervision of Companies and Securities –CONASEV is replaced by the Securities Market Superintendency –SMV.
Any reference to hybrid instrument, hybrid financial instrument, or structured instruments is replaced by combined instrument or combined financial instrument, as appropriate.
Incorporate as Article 16-A° "Types of accounting hedges" the following:

"Article 16°-A.- Types of accounting hedges
The accounting hedges subject to this Regulation may be of three types:

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a. Fair value hedges: Cover exposure to changes in the fair value of recognized assets or liabilities or unrecognized firm commitments, or a identified portion of such assets, liabilities, or firm commitments, which can be attributed to a particular risk and can affect the period's result. As long as the effectiveness of the hedge can be measured, only a percentage of the fair value of the hedging instrument can be considered as the hedged item.

b. Cash flow hedges: Cover exposure to variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction, which can affect the period's result. As long as the effectiveness of the hedge can be measured, the uncertainty regarding only some of the future cash flows of the hedging instrument, or even a portion thereof (for example, those related to a specific reference rate), can be considered as the hedged item.

c. Hedge of a net investment in a foreign operation: The definitions of foreign operation and net investment in a foreign operation are the same as those stated in IAS 21 "The Effects of Changes in Foreign Exchange Rates". Hedges of a net investment in a foreign operation, including the hedge of a monetary item that is accounted for as part of a net investment, will be accounted for similarly to cash flow hedges.

The hedge of foreign currency risk of a firm commitment may alternatively be accounted for as a fair value hedge or as a cash flow hedge."

Seventh Article.- Insurance companies may manage in advance the authorization to use the fair value model for purposes of valuing their real estate investments, with the aim that its use will be available from the effective date of the aforementioned articles.

Eighth Article.- This Resolution will enter into force on January 1, 2013, from which date the Regulation on Classification and Valuation of Investments of Insurance Companies approved by SBS Resolution No. 513-2009 is repealed, with the exception of what is provided in the seventh article, which will enter into force from the day following the publication of this regulation in the Official Gazette El Peruano.

DANIEL SCHYDLOWSKY ROSENBERG
Superintendent of Banks, Insurance, and Private Pension Fund Administrators

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ANNEX I
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STANDARD METHODOLOGY FOR THE IDENTIFICATION OF IMPAIRMENT OF INVESTMENTS AVAILABLE FOR SALE AND INVESTMENTS HELD-TO-MATURITY

Companies must apply the methodology quarterly, in connection with the preparation of their quarterly financial statements, to all debt and equity instruments classified in the categories of investments available for sale and investments held-to-maturity.

I. Debt Instruments

Companies must evaluate, for the entire portfolio of debt instruments subject to impairment, the occurrence of the following situations:

Weakening in the financial situation or financial ratios of the issuer and its economic group.
Downgrade in any of the credit ratings of the instrument or the issuer by at least two (2) "notches", with respect to the rating at the time of acquisition of the instrument; where a "notch" corresponds to the minimum difference between two risk ratings within the same rating scale.
Interruption of transactions or of an active market for the financial asset, due to financial difficulties of the issuer.
Observable data indicate that since the initial recognition of a group of financial assets there has been a measurable decrease in their estimated future cash flows, although it cannot yet be identified with individual financial assets of the group.
Decrease in value due to regulatory changes (tax, regulatory, or other governmental).
Significant decrease in fair value below its amortized cost. A significant decrease will be considered to have occurred if the fair value at the closing date has decreased by at least 40% below its amortized cost.
Prolonged decrease in fair value. A prolonged decrease will be considered to exist if the fair value at the closing date has decreased by at least 20% compared to the amortized cost twelve (12) months ago, and the fair value at the closing date of each month during the previous twelve (12) month period has always remained below the amortized cost corresponding to the closing date of each month.

The fair value to be used for purposes of evaluating criteria 6 and 7 is that considered for purposes of valuing debt instruments available for sale, according to the criteria established in Article 11 of this Regulation, regardless of the accounting classification of the debt instrument. However, if the total or partial decline in the fair value of the debt instrument is a consequence of an increase in the risk-free interest rate, this decline should not be considered for the evaluation of criteria 6 and 7.

If at least two (2) of the aforementioned situations are met, impairment will be considered to exist, and consequently, the company must determine the amount of any impairment loss as established in Article 10 of the Regulation.

If at least two (2) of the aforementioned situations have not occurred, it will be sufficient for any of the following specific situations to be present to consider that impairment exists:

Breach of contractual clauses, such as interruption in the payment of interest or principal.
Forced renegotiation of the contractual conditions of the instrument due to legal or economic factors linked to the issuer.
Evidence that the issuer is in the process of forced restructuring or bankruptcy.
When the risk classification of an instrument classified as investment grade is reduced to a classification below investment grade.

The company will determine the amount of any impairment loss in accordance with what is established in Article 10 of the Regulation.

II. Equity Instruments

Companies must evaluate, for equity instruments subject to impairment, the occurrence of the following situations:

When the risk classification of a debt instrument of the issuer, which was classified as investment grade, is reduced to a classification below investment grade.
Significant changes have occurred in the technological, market, economic, or legal environment in which the issuer operates, which may have adverse effects on the recovery of the investment.
Weakening in the financial situation or financial ratios of the issuer and its economic group.
Interruption of transactions or of an active market for the financial asset, due to financial difficulties of the issuer.
Observable data indicate that since the initial recognition of a group of financial assets there has been a measurable decrease in their estimated future cash flows, although it cannot yet be identified with individual financial assets of the group.
Decrease in value due to regulatory changes (tax, regulatory, or other governmental).

If at least two (2) of the described situations are met, impairment will be considered to exist, and consequently, the company must determine the amount of any impairment loss in accordance with what is established in Article 10 of the Regulation.

If at least two (2) of the aforementioned situations have not occurred, it will be sufficient for any of the following specific situations to be present to consider that impairment exists:

Significant decrease in fair value below its acquisition cost. A significant decrease will be considered to have occurred if the fair value at the closing date has decreased by at least 40% below its cost value.

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As acquisition cost, the initial cost will always be taken as reference, regardless of whether an impairment loss has been previously recognized for the analyzed equity instrument.

Prolonged decrease in fair value. A prolonged decrease will be considered to have occurred if the fair value at the closing date has decreased by at least 20% compared to the fair value twelve (12) months ago, and the fair value at the closing date of each month during the previous twelve (12) month period has always remained below the acquisition cost.
Breach of statutory provisions by the issuer, related to the payment of dividends.
Evidence that the issuer is in the process of forced restructuring or bankruptcy.

The fair value to be used for purposes of evaluating the situations indicated in items 1) and 2) is the fair value considered for purposes of valuing equity instruments available for sale, according to guidelines established in Article 11. The aforementioned items 1 and 2 are not applicable to equity instruments classified in the available-for-sale category and valued at cost due to the absence of a reliable fair value.

The company will determine the amount of any impairment loss in accordance with what is established in Article 10 of the Regulation.

This Superintendence may conduct its own analysis of the instruments comprising the portfolio of investments in debt and equity instruments and determine which instruments, in its opinion, have suffered impairment and require companies to recognize them, in accordance with what is established in Article 10 of the Regulation.

47 Annex modified by SBS Resolution No. 2608-2018, dated 04.07.2018.
48 Paragraph replaced by SBS Resolution No. 4034-2022, published on 30.12.2022.

Resolution SBS No. 7034-2012: Approves the Regulation on Classification and Valuation of Investments of Insurance Companies

Lineage: Amended

Timeline

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