The Superintendence of Private Insurance (SUSEP) placed for public consultation Notice No. 31/2021, presenting the draft Circular that introduces new provisions regarding the drafting and presentation of the consolidated financial statements of the Prudential Groups.
In accordance with the definition introduced by CNSP Resolution No. 388/2020, Prudential Groups are characterized by a group of supervised companies in which a partner or group of partners holds control or participates in a joint control regime.
For the regulator, the new rules will allow for the aggregated verification of active and passive presentations for the prudential group for each of the supervised companies that are part of it, in addition to allowing the execution of impact analyses on factors such as the risk matrix, prioritization, scale and supervision methods from the consolidated group’s point of view.
On this matter, the new Circular proposes the following main rules:
- Requirement to prepare and send to SUSEP consolidated financial statements of Prudential Groups, using the same accounting standard required for individual entities, as provided for in SUSEP Circular No. 517/2015, except for supervised companies classified in segment S4;
- Adoption of a single accounting standard for reporting to the supervisor to reduce costs of managing differentiated accounting systems and to facilitate the preparation and auditing of financial statements for the supervised market;
- Waiver of the publication of consolidated financial statements together with the individual financial statements, since they will be published on SUSEP’s website;
- Establishment of March 15 as the deadline for sending the consolidated financial statements of the Prudential Group, for the base date of December 31;
- Determination that the consolidated financial statements must include all the supervised companies subject to them, considering those included and disregarding those excluded from the Prudential Group in the period;
- Requirement that, in the consolidated financial statements of the Prudential Group, the entities not supervised by SUSEP consider the accounting standards defined by the specific regulators, if applicable, and be recorded using the equity method;
- Observance of the transactions of any nature carried out between the supervised companies of the Prudential Group, for consolidation purposes, which must comply with the procedures relative to intercompany transactions, provided for in article 9 of the new draft Circular;
- Provision that the consolidated financial statements of the Prudential Group must be presented with an independent auditor’s opinion that addresses the compliance or not with the accounting standards adopted in Brazil, applicable to institutions authorized to operate by SUSEP.
The new draft Circular modifies article 133 and repeals article 132 of SUSEP Circular No. 517/2015 (available only in Portuguese).
The full draft Circular can be accessed at this link and interested parties may send comments or suggestions on the text by electronic message addressed to firstname.lastname@example.org, in accordance with the specific standardized table duly completed, by October 21, 2021.
Demarest’s Insurance and Reinsurance team is closely monitoring the development of this public consultation through to the publication of the final version and makes itself entirely available to provide any clarifications on the subject.