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.
|
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) |
|
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 ([email protected]). The Hogan Lovells website can be accessed at www.hoganlovells.com.
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