Resolution 36,615/2011 provides that in order to start operating as a local reinsurer, the reinsurer must have a minimum capital equal to the highest of Ps20 million or 16% of the net premium issued each year.

However, in December 2011 the Minimum Capital Requirements Regulation (36,350/2011) was issued by the insurance regulator. In terms of reinsurance, among other things, the resolution sets out that:

  • local reinsurers that began registration proceedings before July 1 2012 will have six quarters in which to raise the minimum capital from Ps20 million to Ps30 million; and
  • local reinsurers that start the registration process after July 1 2012 must deposit an initial capital equal to twice the minimum capital (ie, Ps60 million) for registration, which can then be reduced to Ps30 million over four fiscal years.

Any international reinsurer that wishes to become a local reinsurer and to credit only Ps20 million as a minimum capital must speed up the process of registration so that it is commenced before July 1 2012. If it fails to do so, it will instead be forced to provide credit of Ps60 million as its minimum capital.

Some international reinsurers that have already made the decision to become local reinsurers are struggling with the regulators of their head offices to gain approval before the formal commencement of the process of registration with the insurance regulator. Regulators sometimes take a long time to grant such approval, which may have adverse consequences.

To avoid this, it would be advisable either to:

  • speed up the process of approval with the home office's regulator in order to start the process of registration in Argentina before July 1 2012; or
  • file a request with the insurance regulator proving that the process of authorisation with the home office's regulator has already started and formally request that the minimum capital currently in force (ie, Ps20 million to be raised to Ps30 million) therefore be applied to the local reinsurer.

For further information on this topic please contact Martín Argañaraz Luque at Allende & Brea by telephone (+54 11 4318 9900), fax (+54 11 4318 9999) or email ([email protected]).