Annuity insurance in a foreign currency and emergency regulations: Insurer must comply as originally agreed

On March 3, 2009 the Argentine Supreme Court of Justice confirmed the ruling of the Commercial Court of Appeals in re: "Álvarez, Raquel c/ Siembra Seguros s/ Ordinario", which had ordered the insurer to pay the surrender value of an annuity policy to the insured in US dollars, as originally agreed, in spite of the emergency regulations enacted in 2002.

In the Álvarez case, the Court basically extended the ruling established on September 16, 2008 in re: “Benedetti, Estela Sara c/ Poder Ejecutivo Nacional”, where the Court had ordered the insurer to make payments under an annuity agreement connected to the mandatory social security system (a renta vitalicia previsional) in US dollars, as originally agreed.

In the Benedetti case, the Court had stated that the renta vitalicia previsional is a kind of annuity governed by Law No 24,241, which is the law that set up the Argentine Integrated Social Security System (Sistema Integrado Previsional Argentino). A renta vitalicia previsional has a risk coverage purpose and grants the insured a right of credit which must be fully comprehensive.

The economic changes that may occur while the agreement is in force are risks inherent to an insurer’s activity. In consequence, the Court concluded that the right to a social security benefit of the insured cannot be affected by unreasonable regulations (i.e., emergency regulations), especially considering that the insured is the weaker party to the agreement.

Although the Benedetti case was related to a renta vitalicia previsional, i.e., an annuity connected to the mandatory pension system, and the Álvarez case revolved around a purely voluntary annuity insurance agreement, the Court decided that the holding of the Benedetti case must still be applied.

The final decision in the “Álvarez” case was rendered with the votes of Justices Ricardo Lorenzetti, Raúl Zaffaroni and Carmen Argibay. Justice Carlos Fayt concurred with the majority decision, although he added some other arguments.