Proposed Changes In The Brazilian Insurance And Reinsurance Market Regulation Under A Corporate Perspective - Outlook For 2015

Recently, the Brazilian Private Insurance Supervisory Agency (SUSEP) has made publicly available the draft of a new Resolution by the National Council of Private Insurance (CNSP), through the Notice of Public Inquiry No. 7/2014 (Edital de Consulta Pública Nº 7/2014). If approved, this rule will most certainly impact the Brazilian insurance and reinsurance market regulation. It was granted a 10-day term as of the publication date, which ended on October 30, 2014, to the public to reply to SUSEP with comments and suggestions to the proposed wording.

The rule is intended to provide for the requirements and proceedings that shall apply in the incorporation, authorization to operate, change of control, corporate changes and conditions to the election of members of statutory or contractual bodies, among others, of the entities supervised by SUSEP. The proposed Resolution shall revoke the CNSP Resolutions Nos. 136/2005 (which relates to the election and appointment of members of statutory bodies of regulated entities); 166/2007 (which provides for the requirements and proceedings for incorporation, authorization to operate, transfer of corporate control, corporate restructuring and cancellation of the authorization to operate for regulated entities); 221/2010 (which amended the CNSP Resolution No. 166/2007); 255/2012; and 288/2013 (which amended the CNSP Resolution No. 136/2005), as well as some articles of the CNSP Resolutions No. 282/2013, 173/2007 (which regulates the reinsurance brokerage activities) and 168/2007 (which provides for the reinsurance and retrocession activities). The main objective of this new rule is to standardize and unify determined legal and regulatory references to be considered under similar cases involving different types of entities regulated and supervised by SUSEP.

Among the proposed changes to be implemented, some can be considered more important and deserve especial attention, as they are expected to cause an impact to certain concepts the market is already familiar with.

Accordingly, one of the changes proposed by SUSEP is to amend the definition of qualified equity participation, which now shall correspond to 15% or more. The current rules establish the concept of qualified equity participation any entity or individual who holds interest in any company (either a company regulated by SUSEP or any other that is part of its controlling structure) in a percentage superior to 5%. Therefore, any individual or entity...