SBS Resolution No. 1183-2007: Amends the Regulation of the Negotiable Mortgage Credit Certificate approved by SBS Resolution No. 685-2007 and the Regulation of Eligible Investments of Insurance Companies approved by SBS Resolution No. 039-2002

Lima, August 27, 2007
S.B.S. Resolution
No. 1183-2007
The Superintendent of Banking, Insurance and
Private Pension Fund Administrators:
WHEREAS:
The General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments, hereinafter the General Law, establishes in its articles 311 and following the regime of investments that back the technical reserves, the minimum solvency patrimony and the guarantee fund of insurance and/or reinsurance companies; This Superintendency approved the Regulation of Eligible Investments of Insurance Companies through SBS Resolution No. 039-2002 of January 16, 2002 and its amendments, which established the characteristics that investments must meet to be considered eligible for the coverage of the obligations indicated in the General Law; Through SBS Resolution No. 685-2007 of May 29, 2007, this Superintendency approved the Regulation of the Negotiable Mortgage Credit Certificate; It has been considered convenient to include as eligible investments for backing the technical obligations of insurance and/or reinsurance companies the negotiable mortgage credit certificates (TCHN), as well as real-estate loans for the acquisition of future property instrumented in promissory notes that have a performance bond guaranteeing the construction of the properties, their independization, the constitution of a first and preferential mortgage over said properties and their incorporation into a TCHN; Likewise, it has been deemed convenient to include clarifications in the Regulation of the Negotiable Mortgage Credit Certificate; Given the opinion of the Deputy Superintendencies of Insurance, of Risk and of Legal Advice, as well as of the Economic Studies Management, and, In use of the powers conferred by numeral 7 of article 349 of the General Law; RESOLVES:
Article One.- Amend the Regulation of the Negotiable Mortgage Credit Certificate, approved by SBS Resolution No. 685-2007, in the following terms:

1. Replace article 1 of the Regulation of the Negotiable Mortgage Credit Certificate with the following:

"This Regulation is applicable to Negotiable Mortgage Credit Certificates issued by companies of the financial system and savings and credit cooperatives not authorized to operate with third parties, linked to credits that they grant or have granted; as well as to those Negotiable Mortgage Credit Certificates that are endorsed or transferred in favor of companies of the financial system, savings and credit cooperatives not authorized to operate with third parties and companies of the insurance system."
2. Replace subsection b) of article 2 of the Regulation of the Negotiable Mortgage Credit Certificate with the following:
"b) Companies: Companies of the financial system and savings and credit cooperatives not authorized to operate with third parties that issue Negotiable Mortgage Credit Certificates linked to credits they grant; or companies of the financial system, savings and credit cooperatives not authorized to operate with third parties and companies of the insurance system that receive said certificates."
3. Replace subsection g) of article 3 of the Regulation of the Negotiable Mortgage Credit Certificate with the following:
"g) Name, official identity document and signature of the officer authorized to issue the Certificate on behalf of the company; as well as name and Taxpayer Registry (R.U.C.) of the company issuing the Certificate."
Article Two.- Amend the Regulation of Eligible Investments of Insurance Companies, approved by SBS Resolution No. 039-2002 and its amending rules, in the following terms:

1. Replace subsection n.4) and add subsection n.5) in article 4 of the Regulation of Eligible Investments of Insurance Companies, in the following terms:
   "n.4) Real-estate credits:
   n.4.1) Negotiable Mortgage Credit Certificates (TCHN), complete and up to date. n.4.2) Real-estate credits for the acquisition of future property instrumented in promissory notes that have a performance bond guaranteeing the construction of the properties, their independization, the constitution of a first and preferential mortgage over said properties and their incorporation into a TCHN. These instruments may only be used for the coverage of the Solvency Patrimony and the Guarantee Fund. n.4.3) Mortgage credits that insurance system companies grant to their workers, referred to in article 2 of SBS Resolution No. 521-2003. For the granting of these credits, the provisions of the Regulation for the Evaluation and Classification of the Debtor and the Provision Requirement are applicable. Likewise, the limit established in article 201 of the General Law is applicable. For the companies' investments in the aforementioned instruments, as they are instruments subject to credit risk, the provisions of article 304 of the General Law are applicable. n.5) The Superintendency may authorize investments in assets other than those mentioned in this Regulation, for which purpose the companies must substantiate the quality of the instruments."
2. Replace subsection n.4) and add subsection n.5) in article 5 of the Regulation of Eligible Investments of Insurance Companies, in the following terms:

Article 4 subsection	Eligible investment	Limit for general lines companies	Limit for life companies	Calculation base
n.4) Real-estate credits		30%	30%	Technical obligations
n.4.1) Negotiable Mortgage Credit Certificates (sub-limit)		30%	30%	Technical obligations
n.4.2) Real-estate credits for acquisition of future property instrumented in promissory notes (sub-limit)		10%	10%	Solvency Patrimony and Guarantee Fund
n.4.3) Mortgage credits to workers		2%	2%	Technical obligations
n.5) Others		30%	30%	Technical obligations

3. Replace article 7 of the Regulation of Eligible Investments of Insurance Companies with the following:
   "Investments in the instruments mentioned in subsections b), d), e), f), g), h), n.1) and, where pertinent, in subsection n.5) of article 4 of this Regulation that have been issued by the same issuer may not exceed 10% of the technical obligations in each item. The credits contemplated in subsections n.4.1), n.4.2) and n.4.3) of article 4 of this Regulation that have been granted to the same borrower may not exceed 10% of the obligations in each sub-item. The limits and sub-limits indicated in the preceding paragraphs are not applicable to investments in participation certificates in mutual funds for investment in securities."
4. Replace the first paragraph of article 8 of the Regulation of Eligible Investments of Insurance Companies with the following:
   "The total of investments in the instruments referred to in subsections b), d), e), f), g), h), n.1), n.2), n.4.1), n.4.2), n.4.3) and, where pertinent, n.5) of article 4 of this Regulation may not exceed 20% of the technical obligations when they are issued or the credits have been granted to the same legal person or the same economic group. For the purposes of the foregoing, repurchase operations, except those carried out on the products exchange, and repurchase agreements on underlying assets that are considered eligible investments shall be computed based on the issuer of the instrument object of said operation. In the case of repurchase agreements on product deposit certificates, the guarantor or natural claimant shall be considered in accordance with the provisions of article 16 of this rule."
5. Replace the last paragraph of article 12 of the Regulation of Eligible Investments of Insurance Companies with the following:
   "The classification requirements are applicable, where appropriate, to the investments that this Superintendency authorizes in accordance with subsection n.5) of article 4 of this Regulation." 3
6. Replace article 14 of the Regulation of Eligible Investments of Insurance Companies with the following:
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7. Replace Annexes No. 2, 3 and 12 of the Regulation of Eligible Investments of Insurance Companies, in accordance with the Annex that forms an integral part of this Resolution.
Article Three.- This Resolution shall enter into force as of September 30, 2007, so the information corresponding to said month must be prepared contemplating the provisions of this rule. As of the entry into force of this Resolution, Circular No. S-599-2003 of August 18, 2003 shall be repealed.
"For the purposes of covering the companies' technical obligations, this shall be done in compliance with the provisions established in the Regulation for the Evaluation and Classification of the Debtor and the Provision Requirement in the case of the instruments mentioned in subsections n.4.1), n.4.2) and n.4.3) of article 4 of this Regulation; and the provisions established in the Regulation for Classification, Valuation and Provisions of Financial Investments of Insurance Companies for the other instruments, except for the treatment provided for investments available for sale, which shall be valued on an individual basis. The provisions referred to in the Regulation for the Evaluation and Classification of the Debtor and the Provision Requirement shall be calculated on the nominal value of the real-estate credits." Register, communicate and publish. FELIPE TAM FOX Superintendent of Banking, Insurance and Private Pension Fund Administrators 4

ANNEX
A N N E X No. 2
ELIGIBLE INVESTMENTS AS OF ___ / ___ / ___
(In thousands of nuevos soles)
COMPANY:______
CLASSIFICATION MAXIMUM LIMITS (5) TECHNICAL RESERVES (7) TECHNICAL RESERVES OF THE SPP INVESTMENT ITEMS (1) TOTAL ELIGIBLE INVESTMENTS (2) CATEGORY (3) INVESTMENT GRADE (4) INVESTMENT ITEM ISSUER ELIGIBLE INVESTMENTS APPLIED TO TECHNICAL RESERVES, DEFERRED PREMIUMS, UNSAFE PRACTICE AND SOLVENCY PATRIMONY (6) PENDING CLAIMS LIFE MATHEMATICAL PREVISIONAL INSURANCE DISABILITY AND SURVIVORSHIP PENSIONS RETIREMENT PENSIONS CURRENT RISKS CATASTROPHIC RISKS DEFERRED PREMIUMS (7) UNSAFE PRACTICE (7) SOLVENCY PATRIMONY (7) ELIGIBLE INVESTMENTS APPLIED TO THE GUARANTEE FUND (8) TOTAL ELIGIBLE INVESTMENTS APPLIED (9) TOTAL ELIGIBLE INVESTMENTS NOT APPLIED (10) a) Cash b) Deposits and impositions c) Central Government and BCR securities d) Securities representing deposits of the financial system including bonds e) Mortgage letters, bonds, debentures and other instruments f) Corporate bonds g) Shares and Mutual Funds for Investment in Securities h) Instruments issued by States and others i) Urban real estate j) Premiums receivable and AFP individual account k) Premiums receivable not due and not accrued l) Loans with life insurance policy guarantee m) Premiums receivable not due from cedents – general insurance n) Other authorized investments:
n.1) Short-term instruments n.2) Repurchase operations and repurchase agreements n.3) Investment Funds n.4) Real-estate credits n.4.1) TCHN n.4.2) Real-estate credits for acquisition of future property instrumented in promissory notes n.4.3) Mortgage credits to their workers n.5) Others TOTAL ELIGIBLE INVESTMENTS APPLIED INVESTMENT OBLIGATION (ANNEX No. 1) SURPLUS (DEFICIT) Notes.-

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(1) Investments must be grouped in each item by type of asset, and within these by issuer or borrower in the case of real-estate credits. In the case of repurchase operations and repurchase agreements, they shall be grouped based on the issuer of the asset subject to the repurchase. (2) In this column, the amounts indicated in the "final value" column of Annexes 4 to 12 of those investments that are eligible and that are not subject to prohibitions, liens or other impediments must be recorded. (3) The highest risk category assigned to the security as of the date of presentation of the financial statements must be recorded, indicating the equivalent category in accordance with the provisions of article 10 of this Regulation. Likewise, the provisions of articles 11, 12 and 13 of this Regulation must be taken into consideration. (4) Indicate the amount of eligible investments that are classified as investment grade in accordance with the provisions of Chapter IV of this Regulation. Those eligible investments that do not require classification shall be considered investment grade. (5) The amounts corresponding to the maximum limits per investment item and issuer or borrower in the case of real-estate credits resulting from applying the maximum diversification percentages established in articles 5 and 7 of this Regulation must be indicated. (6) Corresponds to the eligible investments applied to back technical obligations, except for the guarantee fund, after having applied the maximum limits and, where applicable, the global limits of Annex No. 3. (7) The eligible investments applied (column 6) must be assigned to back technical reserves, deferred premiums, unsafe practice and solvency patrimony, taking into account the provisions of subsection b) of article 3 of this Regulation. (8) The eligible investments applied to back the Guarantee Fund must be assigned, the maximum amount of which shall be the amount of said guarantee fund, based on the provisions of the Fourth Final and Transitory Provision of this Regulation. (9) Corresponds to the total eligible investments applied to the coverage of technical obligations, representing the sum of columns (6) and (8). (10) Corresponds to the difference between the columns "Total eligible investments" (column 2) and "Total eligible investments applied" (column 9).

A N N E X No. 3
APPLICATION OF THE GLOBAL LIMITS TO ELIGIBLE INVESTMENTS AS OF ___ / ___ / ___ (In thousands of nuevos soles) COMPANY:______ GROUP (1) E INSTRUMENTS (3) TOTAL ELIGIBLE INVESTMENTS (4) GLOBAL LIMIT PER ISSUER OR ECONOMIC GROUP (6) GLOBAL LIMIT FOR INVESTMENTS ABROAD (8) ELIGIBLE INVESTMENTS APPLIED (9) INVESTMENTS ABROAD (2) ELIGIBLE INVESTMENTS WITH THE APPLICATION OF MAXIMUM LIMITS (5) 20% of technical obligations for each economic group to which the company does not belong 10% of technical obligations for the total of investments in the economic group to which the company belongs ELIGIBLE INVESTMENTS WITH THE APPLICATION OF THE MAXIMUM LIMITS (7) 40% of technical obligations ELIGIBLE INVESTMENTS APPLIED TO THE GUARANTEE FUND (10) GROUP ...... - Deposits and impositions

• Securities representing deposits of the financial system including bonds
• Mortgage letters, bonds, debentures and other mortgage instruments
• Corporate bonds
• Shares listed on the exchange
• Instruments issued by States and others
• Short-term instruments
• Repurchase operations
  and repurchase agreements
• Real-estate credits
  TCHN
  Real-estate credits for acquisition of future property instrumented in promissory notes Mortgage credits to workers
• Others
  TOTAL
  GROUP ...... - Deposits and impositions
• Securities representing deposits of the financial system including bonds
• Mortgage letters, bonds, debentures and other mortgage instruments
• Corporate bonds
• Shares listed on the exchange
• Instruments issued by States and others
• Short-term instruments
• Repurchase operations
  and repurchase agreements
• Real-estate credits
  TCHN
  Real-estate credits for acquisition of future property instrumented in promissory notes Mortgage credits to workers
• Others
  TOTAL
  INVESTMENTS ABROAD
• Deposits and impositions
• Corporate bonds
• Shares and mutual funds for investment in securities
• Instruments issued by States and others
• Short-term instruments
• Others
  TOTAL
  Notes.-
  (1) Investments whose issuers or borrowers, in the case of real-estate credits, belong to the same economic group are recorded.
  (2) Corresponds to instruments issued by foreign companies.

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(3) Financial instruments must be grouped by issuer or borrower in the case of real-estate credits, in each investment item. Repurchase operations and repurchase agreements shall be computed based on the issuer of the instrument object of said operation. (4) The total eligible investments before the application of the limits is considered. (5) The amount of eligible investments after having applied the maximum limits indicated in Annex No. 2 is recorded. (6) Corresponds to the maximum amounts of eligible investments applying the limits per economic group. (7) Corresponds to eligible investments once the limits per economic group have been satisfied. (8) The maximum amount of eligible investments abroad applying the respective limit is recorded. (9) The amounts of eligible investments after having applied the limits per issuer or borrower in the case of real-estate credits, or economic group and the limit for investments abroad are recorded, maintaining consistency in case the investments abroad belong to economic groups. These amounts shall be transferred to the column "Eligible investments applied to technical reserves, deferred premiums, unsafe practice and solvency patrimony" of Annex No. 2. (10) The amounts of eligible investments applied to the Guarantee Fund are recorded, in accordance with the Fourth Final and Transitory Provision of this Regulation. These amounts shall be transferred to the column "eligible investments applied to the Guarantee Fund" of Annex No. 2.

Los Laureles No. 214 - Lima 27 - Peru Tel.: (511)2218990 Fax: (511) 4417760
ANNEX No. 12
OTHER INVESTMENTS AS OF ___ / ___ / ___
(In thousands of nuevos soles)
COMPANY: ______
INSTRUMENT AND
ISSUER (1)
COUNTRY TICKER
CODE
NO. OF
INSTRUMENTS
(2)
ISSUE
DATE
PURCHASE
DATE
TERM
IN
MONTHS
(3)
NOMINAL VALUE
PURCHASE
VALUE
PAR
VALUE
(4)
PREMIUM OR
DISCOUNT
NOT
AMORTIZED
(5)
PURCHASE
IRR
% (6)
ACCRUED
INTEREST
(7)
PRESENT VALUE
AT PURCHASE IRR
(8)
MARKET VALUE PROVISION
(11)
FINAL
VALUE
(12)
PROHIB OR
LIEN
(YES/NO)
(13)
CLASSIFICATION
(14)
CUSTODY
(OF/CUS) (15)
AMOUNT CURRENCY
QUOT. %
(9)
AMOUNT
(10)
I.-Financial investments
Liquid Inv.
Available for Sale Inv.
Held to
Maturity Inv.
Permanent
Inv.
II.- Real-estate credits
TCHN
Real-estate credits for acquisition of future property instrumented in promissory notes Mortgage credits to workers III.- Other investments Note.-

Los Laureles No. 214 - Lima 27 - Peru Tel.: (511)2218990 Fax: (511) 4417760 (1) The information shall correspond to other types of investment not included in the previous annexes, and must be subtotaled by type of instrument, by issuer or borrower in the case of real-estate credits, and by category of classification of financial investments. It shall not be necessary to fill in all the columns if they do not adjust to the type of investment. (2) The number of instruments involved shall be reported. (3) Period between the issue date and the maturity date of the instrument. (4) Unamortized capital fund, plus accrued interest as of the information date calculated at the nominal issue rate. (5) Corresponds to the unamortized balance of the premium or discount originated at the time of purchase of the instrument, due to the difference produced between its par value and its purchase value when the latter is greater or lesser. (6) The real annual purchase IRR (%) is the discount rate implicit in the acquisition price of the instrument; it is the one used to value the security as of the date of presentation of the information. (7) Accrued interest corresponds to that yielded by the instrument but which has not matured. (8) The present value at purchase IRR, in the case of variable-income instruments, corresponds to the value of the instrument, determined as the present value at purchase IRR plus accrued and unmatured interest. In the case of fixed-income instruments, it is the total value of the future flows of the instrument, updated at the purchase IRR. (9) The quotation (%) corresponds to the unit market value determined in accordance with the parameters established for the determination of the market price. (10) The market value in amount is obtained by applying the quotation (%) to the par value. (11) Difference between present value at purchase IRR and the market value in amount, only in the case where the market value is lower. In the case of real-estate credits, the provision shall correspond to that calculated in accordance with the provisions of the Regulation for the Evaluation and Classification of the Debtor and the Provision Requirement. (12) Corresponds to the value resulting from the instruments individually. (13) A Yes shall be noted when they are subject to prohibitions, liens or other impediments indicated in article 317 of the General Law and a No, otherwise. (14) The highest risk category assigned to the security in force as of the information date must be recorded, indicating the equivalent category in accordance with Chapter IV of this Regulation. (15) "OF" is noted when the security is physically in the company's offices, or "CUS" when it is in custody of a company of the financial system or a specialized body.