Amendments To The Mexican Insurance Law - Banking and Financial - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 29342115

Amendments To The Mexican Insurance Law

Profession:Jáuregui, Navarrete y Nader, S.C.
 
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Article by Michell Nader S. and Yves Hayaux-du-Tilly L.

On January 16, 2002, a Decree ("Decree") with Amendments to the Mexican General Law of Insurance and Mutual Companies (Ley General de Instituciones y Sociedades Mutualistas de Seguros) ("Insurance Law"), was published in the Official Gazette of the Federation. The Decree became effective as of January 17, 2002 (the "Effective Date").1

Below is a summary of some of the most relevant aspects of the Decree:

1. Lines of Business

An insurance company cannot longer be licensed to operate both the life and property & casualty lines of business. Insurance companies currently licensed to operate both lines of business may continue to operate as such under their current license; provided, however, that they may not modify nor expand the lines of business they currently operate without first spinning-off their life and property & casualty operations.

2. Participation in Insurance Companies

The prior authorization of the Ministry of the Treasury and Public Credit (Secretaría de Hacienda y Crédito Público) ("SHCP") is now required for any party to control 5% or more of the shares representing the paid-in capital stock of insurance companies, as from the Effective Date. The former threshold was 10%. Additionally, individuals or entities acquiring or transferring shares representing more than 2% of the paid-in capital stock of an insurance company must give notice of such acquisition or transfer to the SHCP within 3 business days following such acquisition or transfer.

In order to acquire a controlling interest2 in an insurance company, an application must be filed with the SHCP which must be accompanied with, inter alia, (i) a list of the individuals or entities who will acquire the control of the insurance company indicating the capital stock to be acquired, the manner in which they will pay for such capital stock and the origin of the funds with which the corresponding payment will be made, (ii) the names, nationality, domiciles and activity of the directors, officers and compliance officers of the insurance company, (iii) a plan of activities for the insurance company, (iv) a strategic plan for the implementation of the policies and guidelines on subscription of risks, investments, risk, management, reinsurance, financial reinsurance, marketing, development and financing of its operations, as well as the strategic objectives on those matters and the mechanisms to monitor and evaluate compliance of same, and (v) such other related documentation that SHCP may further require to evaluate the corresponding application.

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