Lima, 11 May 2012

S.B.S. Resolution No. 2840-2012

The Superintendent of Banking, Insurance and
Private Administrators of Pension Funds:

WHEREAS:

That, in accordance with article 347 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments, hereinafter the General Law, it is incumbent upon the Superintendency to defend the interests of the public, safeguarding the economic and financial soundness of the natural and legal persons subject to its control, for which purpose it is necessary that the supervised companies have a risk control system that allows them to identify, measure, control and report the risks they face in their operations;

That, by SBS Resolution No. 037-2008 the Regulation of Integral Risk Management was approved, which incorporates provisions that take into consideration, among other documents, the Integrated Framework for Enterprise Risk Management, published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), applicable to all supervised companies;

That, in addition, it is considered necessary to approve the regulation of real estate risk management in insurance companies, which establishes provisions related to the methodology for calculating an indicator for measuring real estate risk in accordance with the Solvency II standard model.

That, in order to gather the opinions of the general public regarding the proposed amendments to the regulations of the insurance system, the pre-publication of the draft resolution on the matter was ordered on the Superintendency's electronic portal, under the provisions of Supreme Decree No. 001-2009-JUS;

In accordance with the opinion of the Deputy Superintendencies of Private Administrators of Pension Funds and Insurance, Risks, Economic Studies, and Legal Advisory;

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

RESOLVES:

Article One.- To approve the Regulation of real estate risk management in insurance companies, which forms part of this resolution.

REGULATION OF REAL ESTATE RISK MANAGEMENT IN INSURANCE COMPANIES

CHAPTER I GENERAL ASPECTS

Article 1.- Scope

This regulation applies to the companies included in literal D of article 16 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance - Law No. 26702 and its amendments.

Article 2.- Definitions

For purposes of this regulation, consider the following definitions:

a) Solvency capital: Capital requirement defined in the Regulation of capital requirements of insurance and reinsurance companies, approved by SBS Resolution No. 1124-2006 and its amendments.

b) Chart of accounts for companies of the insurance system: Chart of accounts for companies of the insurance system, approved by SBS Resolution No. 348-95 and its amendments.

c) Real estate risk: Possibility of losses due to variations or volatility of the market prices of real estate. .

d) Regulation of classification and valuation: Regulation of classification and valuation of investments of insurance companies, approved by SBS Resolution No. 513-2009 and its amendments.

e) Regulation of sanctions: Regulation of sanctions, approved by SBS Resolution No. 816-2005 and its amendments.

CHAPTER II REAL ESTATE RISK MANAGEMENT

Article 3.- Responsibility of the risk unit and the board of directors

The company, through its risk unit, must adequately identify, measure, control and report the level of real estate risk it faces. Likewise, it shall be the responsibility of its board of directors to approve policies and procedures for the administration of real estate risk and to ensure that management adopts the necessary measures to monitor and control this risk.

Article 4.- Applicability

For purposes of this regulation, the following shall be considered as assets subject to real estate risk:

a) Real estate in which there are real rights, both those used for investment purposes and those for own use.

b) Securities representing shares of real estate companies, understood as those that generate periodic income from this activity or that are dedicated to real estate investment.

c) Participation certificates in collective real estate investment schemes, whether open or closed.

d) Participations in real estate trusts.

e) Other instruments that the Superintendency establishes by general rule.

Assets subject to real estate risk that back the reserves of those insurance products where the investment risk is fully assumed by the policyholder or insured shall not be considered.

Article 5.- Real estate risk measurement indicator

For the calculation of the real estate risk measurement indicator, each asset subject to real estate risk shall be grouped into one of the following indices:

• Real Estate Index.- composed of the list of assets indicated in literal a) of article 4.

• Other Index.- composed of the list of the rest of the assets subject to real estate risk indicated in literals b) to e) of article 4.

The calculation of the real estate risk measurement indicator shall be performed as follows:

a) Each of the assets included in the "Real Estate Index" or in the "Other Index" shall be valued at fair value.

b) The global position of the real estate shall be calculated, that is, the arithmetic sum of the fair values of each asset included in the "Real Estate Index"

c) The global position of other assets subject to real estate risk shall be calculated, that is, the arithmetic sum of the fair values of each asset included in the "Other Index".

d) The measurement of real estate risk shall be calculated by multiplying the global position of the real estate and the global position of other assets subject to real estate risk by the shock of the corresponding time horizon, according to the following table:

Horizon	Shock
Annual	25%
Monthly	7.4%

e) To totalize, the measurement corresponding to the "Real Estate Index" and the "Other Index" is added arithmetically.

f) The result obtained for each of the time horizons (annual and monthly) shall be expressed as a percentage of thirty-five percent (35%) of the solvency patrimony (SP).

Article 6.- Real estate risk mitigation procedures

The risk unit shall establish real estate risk mitigation procedures, which shall be implemented to the extent that an alert level is activated with respect to the real estate risk measurement indicator or another qualitative or quantitative indicator. The results of said indicators shall be reported periodically to the risk committee. Likewise, said committee shall approve the real estate risk mitigation procedures.

Article 7.- Information to the Superintendence

The company shall submit to the Superintendence, through the external capture and validation submodule –SUCAVE, within fifteen (15) calendar days after the close of each month, Annex No. ES-24, Real Estate Risk Measurement, in accordance with the provisions of article 5.

FINAL AND COMPLEMENTARY PROVISIONS

First.- Measurement of fair value1

For purposes of this regulation and the preparation of Annex No. ES-24 "Real Estate Risk Measurement", the fair value of the real estate is calculated in accordance with the provisions of the Regulation for the Classification and Valuation of Investments of Insurance Companies, approved by Resolution SBS No. 7034-3012 and amending norms.

[1] Final and complementary provision modified by Resolution SBS No. 3872-2012, published on 22-12-2021.

For the rest of the assets subject to real estate risk, the estimation of fair value is made in accordance with the provisions of the pertinent sections of the aforementioned Regulation and the Chart of accounts for companies in the insurance system.

Second.- Sanction applicable to the appraiser

The appraisers indicated in the first final and complementary provision shall be subject to the sanctions established in numerals 36, 37 and 38 of Serious Infractions of Annex 2 of the Regulation of sanctions, referred to "Specific Infractions of the Financial System and of Complementary and Related Service Companies."

Article Second.- Approve Annex No. ES-24, Real Estate Risk Measurement, which shall be published on the institutional portal (www.sbs.gob.pe), in accordance with the provisions of Supreme Decree No. 001-2009-JUS.

Article Third.- This resolution shall enter into force as of 1 July 2012.

Register, communicate and publish,

DANIEL SCHYDLOWSKY ROSENBERG
Superintendent of Banking, Insurance and
Private Administrators of Pension
Funds

ANNEX No. ES-24: "REAL ESTATE RISK MEASUREMENT"
(In units of nuevos soles)

Company:

---

As of: / /

I. EXPOSURE TO REAL ESTATE RISK(i)

a) Real estate

Code1	Public registry No.2	Country	Department	Province	District	Address3	Type4	Use5	Built area (m2)	Total area (m2)

)
)

Fair value6	Valuation date7	Appraiser8

b) Other assets subject to real estate risk

Code9	Type of instrument10	Type of fund11	Issuer / counterparty 12	Currency code13	Exchange rate14	No. of Units15	Unit fair value16	Total fair value17	Source18

II. REAL ESTATE RISK MEASUREMENT INDICATOR19
.

	Real Estate Index	Other Index	Total	35% solvency equity (PS)
a) Global position of assets subject to real estate risk
b) Real estate risk measurement (annual shock)
c) Real estate risk measurement (monthly shock)

(i) This section describes the procedure for recording the positions of assets that give rise to real estate risk, and which are reported in the investment annexes of insurance and reinsurance companies No. S-5, No. S-7 and No. S-8 of the Regulation of eligible investments of insurance companies, as applicable. The recording of positions must be expressed in nuevos soles, using for this purpose the accounting exchange rate corresponding to the reporting date. Only the assets indicated in article 4 of the Regulation on real estate risk management in insurance companies shall be taken into account.

1 The company shall assign each real estate investment a unique code to facilitate subsequent identification of the property and to enable tracking over time. Such code must have a length of 10 alphanumeric digits.

2 Indicate the number under which the property is identified in the Public Registries of the National Superintendence of Public Registries in the case of properties located in Peru, or equivalent registries in the case of properties located abroad.

3 Indicate the exact address of the property (Av., Jr., Street, Name, exterior No., interior No., urbanization or other reference data).

4 Indicate "CASA" if the property is a house, "DPTO" for apartment, "OFIC" for office, "ESTA" for parking spaces, "TERR" for land, "LOCAL COMERCIAL" for commercial premises (retail), "LOCAL INDUSTRIAL" for industrial premises or "OTROS" for other properties.

5 Indicate "Own use" if the property is for own use and "Investment" if it corresponds to a real estate investment.

6 Corresponds to the fair value of the property in accordance with the provisions of the Regulation on real estate risk management in insurance companies.

7 Date of the last valuation according to the following format dd/mm/yyyy.

8 Name or business name of the appraiser.

9 Corresponding ISIN (International Securities Identification Number) code. The CUSIP (Committee on Uniform Securities Identification Procedures) code shall be indicated in the event that the security is not identified with the ISIN code. If these are not available, indicate the identifier code reported in Bloomberg or the ticker code. Otherwise, the company must designate a code for its identification.

10
Indicate "AC" for Common Shares, "AI" for Investment Shares, "AT" for Treasury shares, "ADRs" for American Depositary Receipts, "GDRs" for Global Depositary Receipts, "ETFs" for Exchange-Traded Fund, "CPECIA" for Participation Certificates in Open-Ended Collective Investment Schemes, "CPECIC" for Participation Certificates in Closed-Ended Collective Investment Schemes, "IT" for Securitization Instruments and "OIV" for Other Equity-Representing Instruments.

11 In the case of Participation Certificates in Open-Ended Collective Investment Schemes or Participation Certificates in Closed-Ended Collective Investment Schemes, indicate "RF" for fixed income, "RV" for variable income" or "Mx" for mixed, according to its investment portfolio.

12
Indicate the name or business name of the issuer. In the case of Collective Investment Schemes (ECI), indicate the particular name of the scheme or "fund" together with its management company, according to the format "Name of the ECI - Management company". In the case of other assets, indicate the name or business name of the counterparty to the transaction. In the case of trusts, indicate the name of the autonomous estate and its manager "Name of the Trust-Trustee".

13 Indicate only the ISO code of the currency of the instruments. Example: "PEN" for Nuevos Soles and "USD" for US Dollars.

14 Indicate the exchange rate of the currency of issue of the security or of the transaction (soles vs. issue currency), determined by the Superintendence for the reporting date.

15 Number of instruments involved. In the case of mutual funds or investment funds, indicate the number of units.

16 The fair value determined in accordance with the provisions of the Regulation on real estate risk management in insurance companies, corresponding to the day of submission of the
annex and in nuevos soles. In the case of mutual funds or investment funds, enter the "Unit Value" at the reporting date.

17 Enter the product of the unit fair value times the No. of units of the security held. In the case of mutual funds or investment funds, it is the unit value times the No. of units.

18
Indicate the name or business name of the source used to obtain the unit fair value. In the specific case that it comes from a centralized trading mechanism, the acronym identifying it shall be noted; for example, if it comes from the BVL, "BVL" shall be entered. In the case that the unit fair value is calculated on its own account, it shall be indicated "Estimated".

19 It shall be calculated in accordance with the provisions of article 5 of the Regulation on real estate risk management in insurance companies.