Introduction

On June 5 2017 the National Insurance and Bonds Commission amended the Sole Provisions on Insurance and Bonds to provide the value of the investment unit (UDI) that insurers and bonding companies must consider when calculating their required minimum paid-in capital.

Insurers and bonding companies must comply with the required minimum paid-in capital each year to ensure that they can meet their financial obligations and responsibilities in the exercise of their activities. The minimum paid-in capital must be subscribed and fully paid before the last business day of the year (ie, December 26 2017).

The required minimum paid-in capital is determined by each insurer and bonding company's type of operation and authorised lines of business. For 2017, it must be calculated considering the value of the UDI as Ps5.562883 per UDI, as follows.

Insurers

Line of business

Required minimum paid-in capital

Equivalent in Mexican pesos and US dollars

Life

The equivalent of 6,816,974 UDI

Ps37,922,028.77 (approximately $2,036,585)

Pension insurance

The equivalent of 28,000,000 UDI

Ps155,760,724 (approximately $8,365,057)

Accident and health

For health, including personal accidents and/or medical expenses – the equivalent of 1,704,243 UDI

Ps9,480,504.41 (approximately $ 509,146)

Property and casualty insurance

One line of business – the equivalent of 5,112,730 UDI

Ps28,441,518.80 (approximately $1,527,438)

Two lines of business – the equivalent of 6,816,974 UDI.

Ps37,922,028.77 (approximately $2,036,585)

Three or more lines of business – the equivalent of 8,521,217 UDI

Ps47,402,533.18 (approximately $2,545,732)

Housing loans – the equivalent of 12,200,000 UDI

Ps67,867,172.60 (approximately $3,644,775)

Financial guarantee – the equivalent of 33,200,000 UDI

Ps184,687,715.60 (approximately $9,918,568)

Insurers exclusively authorised to undertake reinsurance business must calculate the Mexican pesos equivalent of the required minimum paid-in capital by considering 50% of the value indicated above for each line of business or branch authorised.

Insurers that are not authorised to operate bonds, but which operate rebonding activities, must have the following required minimum paid-in capital for each line of business or branch in bonds.

Number of lines of business

Required minimum paid-in capital

Equivalent in Mexican pesos and US dollars

One

The equivalent of 3,655,154 UDI

Ps20,333,194.04 (approximately $1,091,984)

Two

The equivalent of 4,873,538 UDI

Ps27,110,921.69 (approximately $1,455,980)

Three or more

The equivalent of 6,091,923 UDI

Ps33,888,654.89 (approximately $1,819,974)

Bonding companies

Number of lines of business

Required minimum paid-in capital

Equivalent in Mexican pesos and US dollars

One

The equivalent of 7,310,308 UDI

Ps40,666,388.09 (approximately $2,183,970)

Two

The equivalent of 9,747,077 UDI

Ps54,221,848.94 (approximately $2,911,959)

Three or more

The equivalent of 12,183,846 UDI

Ps67,777,309.78 (approximately $3,639,949)

For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (carlos.ramos@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

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