1) National Council of Private Insurance - CNSP RESOLUTION No. 363, OF 10/11/2018

Published in the Federal Official Journal on 10/17/2018, CNSP Resolution no. 363 provides for the local reinsurers' acceptance of reinsurance and retrocession transactions of cedents abroad and the intermediation of the transactions.

Our Firm's partner João Marcelo dos Santos participated directly in the preparation of the Resolution as consultant of the National Association of Local Reinsurers (ANRE).

We highlight art. 10 of the Resolution, according to which the reinsurance and retrocession contracts of cedents based abroad accepted by local reinsurers and the retrocession contracts of cedents abroad reinsurance accepted by insurers are not subject to the provisions in Chapter VIII of CNSP Resolution no. 168/2007, which deals with Contracts and the compulsory clauses. This was the most important point to be addressed in the Resolution.

The acceptance of reinsurance or retrocession of cedent abroad by a local reinsurer may be made through a direct negotiation with the cedent abroad or through a reinsurance broker based in the Country or an intermediary abroad. This was also an important point as it dispelled any doubts as to the requirement for the reinsurance broker to be Brazilian and/or authorized to operate by the Private Insurance Superintendence (SUSEP).

Anyway, the local reinsurers may accept only reinsurance or retrocession risks related to the groups of lines they are authorized to operate in Brazil, subject to the rules in effect on the withholding limits.

The contracts related to the lines or groups of lines without co-relation in Brazil may be accepted provided that the technical characteristics of the covered risks are similar to those of the groups of lines they are authorized to operate in Brazil.

It is important to highlight that the local reinsurers must have monitoring and control mechanisms in place to mitigate the risks of accumulation and exposure inherent in the characteristics of the risks covered by the accepted reinsurance and retrocession contracts of cedents abroad.

The retrocessions ceded by the local reinsurers related to the risks covered by accepted reinsurance and retrocession contracts of cedents abroad must obey the regulations applicable to the retrocessions related to the risks accepted in reinsurance and retrocession of cedents based in the Country.

Finally, we stress that the cedent abroad was considered equivalent to a company or entity authorized to contract reinsurance or retrocession as determined by the supervising entity of the country of domicile of the cedent, irrespective of any register kept at SUSEP.

It should be noted that all local legal rules whose applicability to the risk contracts abroad was eliminated are rules that protect cedents and not the reinsurers. Therefore, considering this specific effectiveness of such rules, it was possible to expressly establish that they are not applicable in the case of risks of cedents domiciled abroad.

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