INSURANCE NSURANCE AND OPEN SUPPLEMENTARY SOCIAL SECURITY

1) PRIVATE INSURANCE SUPERINTENDENCE - SUSEP CIRCULAR No. 579, OF 11/13/2018

On 11/16/2018, the Federal Official Journal published SUSEP Circular no. 579, of 11/13/2018, amends SUSEP Circular no. 535, of April 28, 2016, which establishes the codes of the lines of insurance and the classifications of the coverages of insurance plans for accounting purposes.

The full rule, which took effect on the date of its publication, may be accessed at http://pesquisa.in.gov.br/imprensa/jsp/visualiza/index. jsp?data=16/11/2018&jornal=515&pagina=70

2) SUSEP STATEMENT No. 213, OF 11/13/2018

On 11/16/2018, the Federal Official Journal published SUSEP Statement no. 213, of 11/13/2018, which regulates the preparation of the Regulation Plan within the ambit of SUSEP.

This is an important statement because the Regulation Plan is the institutional planning document, valid for two years and revised annually, that indicates the subjects related to the regulated market that demand priority aiming to a more effective preparation of rules, predictable actions, and efforts focused on the accomplishment of the mission and strategic goals of SUSEP.

The statement may be checked at http://pesquisa.in.gov.br/imprensa/jsp/visualiza/index. jsp?data=16/11/2018&jornal=515&pagina=69

3) SUSEP STATEMENT No. 214, OF 11/22/2018

On 11/23/2018, the Federal Official Journal published SUSEP Statement no. 214, of 11/23/2018, which sets the indicators and the global and intermediary goals of performance for the purposes of the 8th Cycle of Assessment of the Institutional Performance of SUSEP, among other provisions. The full statement, which took effect on the date of its publication, may be accessed at http://www2.susep.gov.br/bibliotecaweb/docOriginal. aspx?tipo=1&codigo=44794

4) 2nd SECTION OF THE SUPERIOR COURT OF JUSTICE - STJ RULES ON THE INAPPLICABILITY OF THE REFERENCE FEE AS THE INFLATION ADJUSTMENT INDEX FOR SUPPLEMENTARY BENEFIT PAID BY OPEN SUPPLEMENTARY SOCIAL SECURITY ENTITIES – EAPC

On 11/5/2018, the Second Section of STJ ruled, on appeal against a divergent decision, that the imposition of the Reference Fee - TR as the inflation adjustment index for supplementary benefits paid by the Open Supplementary Social Security Entities is not possible.

According to the STJ, the said index does not measure the inflation because its calculation formula is not linked to the variation of prices in the economy. The single application of the TR to the supplementary pension benefit, which is periodical and alimentary by nature, would result in substantial losses to the beneficiary.

Also, the STJ held that the inflation adjustment indexes stipulated, along the years, by the entities of the National System of Private Insurance must be applied, especially to the open social security contracts, in the following order: ORTN (Readjustable National Treasury Bonds), OTN (National Treasury Bonds), IPC (Consumer Price Index), BTN (National Treasury Bonus), TR, and the general price index widely disclosed.

The applied index may vary according to the time, as the participant is entitled to an effective adjustment of the supplementary social security benefit. However, such vested right does not involve the fixation and application of one single index.

Finally, the STJ refuted the EAPC's allegation that the TR should be applied without any time limitation to the contracts signed on a date before 1/1/1997 and that some of the general price indexes widely disclosed would apply only to those contracts signed on a later date, on penalty of absence of a funding source. This is so because the EAPCs are required to provide for the formation, the contribution, and the discounts from the beneficiaries so that the legislation established mechanisms for the entities to overcome deficits and reestablish the guarantee reserve.

Although this is not a decision on repeated appeal, therefore, it is not binding upon the other Brazilian courts, it is of utmost importance because was rendered on appeal against a divergent decision. This mechanism is intended to settle conflicting positions of the sections of the STJ.

In this fashion, this understanding, even not being binding, leads the lower instances to render similar decisions.

The full appellate decision and the case development may be checked at https://ww2.stj.jus.br/processo/pesquisa/?tipoPesquis a=tipoPesquisaNumeroRegistro&termo=2013001203 00&totalRegistrosPorPagina=40&aplicacao=process os.ea

5) STJ TRIES REPEATED APPEAL ON THE REGULATION APPLICABLE TO THE SOCIAL SECURITY PLAN PARTICIPANTS FOR PURPOSES OF CALCULATION ON THE INITIAL INCOME

On 11/28/2018, the 2nd Section of STJ began the trial of Special Appeal no. 1.435.837/RS related to which regulation applies to participants of a private social security plan for the calculation of the initial monthly income: if the regulation applicable at the time of the participant's retirement or the regulation in effect at the time the participant adhered to the plan.

Until now, only the Justice-Rapporteur Paulo de Tarso Sanseverino gave opinion, in which he states that the applicable regulation, in case of a structured plan of the defined benefit modality, "is a regulation that does not change the benefit originally agreed between the parties, subject to a possible balance of and deficit in the guarantee reserves, upon a supplementary contribution to be paid by the participant or the beneficiary".

After the Justice-Rapporteur having given his opinion, Justice Ricardo Cueva requested to see the record. The development of the proceeding may be monitored at https://ww2.stj.jus.br/processo/pesquisa/?src=1.1.2& aplicacao=processos.ea&tipoPesquisa=tipoPesquisa Generica&num_registro=201400313793

6) Ministry of Finance - MF Administrative Rule No. 477, OF 11/29/2018

On 11/30/2018, the Federal Official Journal published MF Administrative Rule no. 477, of 11/29/2018, which addresses the formation of the Appeals Board of the Brazilian Private Insurance, Open Private Social Security and Capitalization System (CRSNSP), and amends the CRSNSP Internal Regulation, among other provisions.

In addition to increasing the number of Members of the Board from 6 to 10, and their substitutes, the administrative rule determines that the CRSNSP formation will obey the following proportion:

I - public sector:

a) three incumbent members and two alternate members appointed by the Ministry of Finance, and

b) two incumbent members and one alternate member appointed by SUSEP.

II - private sector:

a) one incumbent member and respective alternate member appointed by the National General Insurance Federation - FENSEG in lists of three names;

a) one incumbent member and respective alternate member appointed by the National Private Social Security and Life Insurance Federation - FENAPREVI in lists of three names;

c) one incumbent member and respective alternate member appointed by National Federation of Private Insurance and Reinsurance, Capitalization, Private Social Security Brokers of the Insurance and Reinsurance Broker Companies - FENACOR in lists of three names;

a) one incumbent member and respective alternate member appointed by the National Capitalization Federation - FENACAP in lists of three names;

a) one incumbent member and respective alternate member appointed by the National Federation of Reinsurance Companies - FENABEREG in lists of three names.

This is a significant and very important change because, before this Administrative Rule, some entities were excluded from the formation of the Board by the selection process in itself. Previously, the CRSNSP was composed of 6 members only, of which 3 from the public sector and the other 3 from the private sector (this sector represented by 5 different entities from 5 different areas of the market). That is, inevitably some entities were excluded from the formation.

Another laudable and fundamental change was the inclusion of FENABER among the entities that appoint members, a measure that reflects the current structure of the Brazilian insurance and reinsurance market.

Additionally, the participation of all entities in the Board to process and try the administrative appeals will bring important advancements and improvements to the Brazilian insurance market.

The full rule may be checked at http://portal.imprensanacional.gov.br/materia/- /asset_publisher/Kujrw0TZC2Mb/content/id/5275425 7/do1-2018-11-30-portaria-n-477-de-29-denovembro- de-2018-52754002

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