securities from the portfolios they manage with the purpose of obtaining brokerage revenues or rebates for themselves or third parties; or (8) subject to certain exceptions set out in the regulation, acting as a counterparty, directly or indirectly, to clients.
In addition, our subsidiary Vinci Soluções de Investimentos Ltda. (former Vinci Gestão de Patrimônio Ltda.), performs wealth management activities. Wealth management activities, in Brazil, encompass services to investors with an individualized approach. While such services are subject to CVM regulation regarding portfolio management, ANBIMA has a set of additional rules applicable to entities that perform wealth management activities governing best practices in dealing with the owner of the managed assets and mitigation of agency risks.
The asset management industry is subject to further regulation, mainly from the CVM, but also from the CMN and other authorities. Specific regulations apply to the various types of funds we manage, according to the class of assets held, the qualification of the investment public target, and how shares are offered, among other things.
Insurance companies such as VVP are required to be licensed by SUSEP in order to operate in any given insurance field and are subject to the local legal and regulatory framework governing their operations, governance, solvency, products, accounting, actuarial standards and other technical aspects of their business.
With respect to solvency, CNSP Resolution No. 432/2021 and SUSEP Circular No. 648/2021 provide for sets forth technical provisions and standards for assets that reduce the need to cover technical provisions, risk capital, adjusted net worth, minimum required capital, smoothing plans, retention limits, accounting standards, criteria for investments, accounting standards, regularization plans, accounting auditing and independent actuarial auditing.
The minimum capital requirement is the total capital that a supervised company must maintain in order to operate and is equivalent to the greater of the base capital and risk capital (segregated in market, credit, underwriting and operational risk capital). Base capital is a fixed amount of R$1.2 million and a variable amount according to the geographical region in which the insurer operates. For insurers classified as an “S3” entity (a type of systemic risk classification) operating in all the geographic regions of Brazil, like Vinci Vida e Previdência S.A., the base capital is R$3.96 million. Risk capital is calculated using highly detailed rules.
With respect to investments, CNSP Resolution No. 432/2021 applies, as a general rule, to both “free” assets (not related to technical provisions and reserves) and assets related to technical provisions and reserves and imposes general prudential rules. CMN Resolution No. 4,993/2022 applies only to assets related to technical provisions and reserves. CMN Resolution No. 4,993/2022 establishes also some general prudential rules and, in particular, allocation limits to fixed income, variable income, real estate, and investments subject to exchange variation, among others.
With respect to governance, CNSP Resolution No. 422/2021 authorizes SUSEP to regulate, among other things, licensing, mandatory statutory or contractual bodies, the payment of capital and transfer of portfolio, and corporate control structure. In addition, SUSEP Circular No. 622/2021 regulates the prevention of money laundering, SUSEP Circular 638/2021 regulates cybersecurity and SUSEP Circular No. 666/2021 regulates sustainability requirements.
With respect to product marketing, the primary rules on personal insurance, which is VVP’s line of operation, and more specifically risk and accumulation products, are CNSP Resolution No. 348/2017, SUSEP Circular No. 564/2017, SUSEP Circular No. 667/2022 and CNSP Resolution No. 439/2022. VVP’s operations are concentrated in accumulation products, which in Brazil are associated with tax benefits.
Internal Compliance Procedures
CVM Resolution No. 21 requires that asset management firms maintain internal compliance procedures.
Moreover, SUSEP rules require all supervised companies to implement and maintain an internal control system and appoint a statutory officer responsible for internal controls. Supervised companies must create a compliance unit responsible exclusively for continuously monitoring and supporting the activities aimed at ensuring compliance. In addition, companies supervised by SUSEP must implement and maintain a risk management structure and have a risk management policy. Such companies must also create a risk management unit, responsible exclusively for continuously monitoring and supporting its risk management, and a risk committee, responsible for assisting its most senior managerial body in the performance of its attributions related to risk management. Finally, insurance
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