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The document ceased to be valid since  March 7, 2017 according to Item 2 of the Resolution of Board of National Bank of the Republic of Kazakhstan of December 26, 2016 No. 304

THE RESOLUTION OF BOARD OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND SUPERVISION OF THE FINANCIAL MARKET AND THE FINANCIAL ORGANIZATIONS

of August 22, 2008 No. 131

About approval of the Instruction about establishment of prudential standard rates and other regulations and limits, obligatory to observance, for the insurance (reinsurance) organization and insurance group, including the minimum sizes of the authorized capital, guarantee fund, margin of solvency and terms of submission of reports on accomplishment of prudential standard rates

(as amended on 24-12-2014)

For the purpose of implementation of the Law of the Republic of Kazakhstan of December 18, 2000 "About insurance activity", the Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations (further - the Agency) DECIDES:

1. Approve the enclosed Instruction about establishment of prudential standard rates and other regulations and limits, obligatory to observance, for the insurance (reinsurance) organization and insurance group, including the minimum sizes of the authorized capital, guarantee fund, margin of solvency and terms of submission of reports on accomplishment of prudential standard rates (further - the Instruction).

2. Recognize invalid regulatory legal acts of the Republic of Kazakhstan according to appendix to this resolution.

3. This resolution becomes effective since October 1, 2008, except for Items 39, 41 Instructions which become effective since January 1, 2009.

4. Strakhov (reinsurance) organizations till July 1, 2009 to bring the standard rates of asset diversification into accord with requirements of Items 39, of 41 Instruction.

The insurance (reinsurance) organizations having investments into the financial instruments which are not conforming to requirements of Items 40, of 41 these Instructions realize financial instruments till July 1, 2009.

5. To department of strategy and analysis (Abdrakhmanov N. A.):

1) together with Legal department (Sarsenov N. V.) to take measures to state registration in the Ministry of Justice of the Republic of Kazakhstan of this resolution;

2) in ten-day time from the date of state registration in the Ministry of Justice of the Republic of Kazakhstan to bring this resolution to the attention of the interested divisions of the Agency, Consolidation of legal entities "Association of financiers of Kazakhstan".

6. To department of information technologies (Tusupov K. A.) till October 1, 2008 to provide completion of the Automated workplace "Insurance supervision", except for completions of the specified Automated workplace according to Items 39, to 41 Instruction which completion to provide till January 20, 2009.

7. To service of the Chairman of the Agency (Kenzhe A. A.) take measures to the publication of this resolution in mass media of the Republic of Kazakhstan.

8. To impose control of execution of this resolution on the vice-chairman of the Agency Aldambergen A. U.

Chairman

E.Bakhmutova

Approved by the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of August 22, 2008 No. 131

The instruction about establishment of prudential standard rates and other regulations and limits, obligatory to observance, for the insurance (reinsurance) organization and insurance group, including the minimum sizes of the authorized capital, guarantee fund, margin of solvency and terms of submission of reports on accomplishment of prudential standard rates

This Instruction about establishment of prudential standard rates and other regulations and limits, obligatory to observance, for the insurance (reinsurance) organization and insurance group, including the minimum sizes of the authorized capital, guarantee fund, margin of solvency and terms of submission of reports on accomplishment of prudential standard rates is developed according to the laws of the Republic of Kazakhstan of December 18, 2000 "About insurance activity" (further - the Law), of July 4, 2003 "About state regulation, control and supervision of the financial market and the financial organizations" and establishes prudential standard rates and other regulations, obligatory to observance, and limits for the insurance (reinsurance) organization and insurance group, including the minimum sizes of the authorized capital, guarantee fund, margin of solvency and terms of submission of reports on accomplishment of prudential standard rates.

The regulations provided by this Instruction regarding affiliirovanny persons of the insurance (reinsurance) organization are not applied to the legal entities and their affiliirovanny persons which are affiliirovanny with the insurance (reinsurance) organization as a result of direct (on banks - indirect) ownerships of twenty five and more percent of voting shares of the specified organizations by joint-stock company "National welfare fund "Samruk-Kazyna".

Chapter 1. Minimum size of the authorized capital of the insurance (reinsurance) organization

1. The minimum size of the authorized capital for again created insurance (reinsurance) organization constitutes:

in case of receipt of the license on industry "general insurance" - 1 100 000 000 (one billion hundred million) tenges;

in case of receipt of the license on industry "life insurance" - 1 200 000 000 (one billion two hundred million) tenges;

in case of receipt of the license on industry "general insurance" and licenses on reinsurance - 1 200 000 000 (one billion two hundred million) tenges;

in case of receipt of the license on industry "life insurance" and licenses on reinsurance - 1 300 000 000 (one billion three hundred million) tenges;

in case of receipt of the license on reinsurance with reinsurance implementation as exclusive type of activity - 1 000 000 000 (one billion) tenges.

2. For again created insurance organization obtaining the license in industry "general insurance" on the class "mortgage insurance", the minimum size of the authorized capital constitutes 1 600 000 000 (one billion six hundred million) tenges.

3. It is excluded

Chapter 2. The minimum size of margin of solvency for the insurance company performing insurance activity on industry "general insurance" and the reinsurance organization

4. The minimum size of margin of solvency for the insurance company performing insurance activity on industry "general insurance" and the reinsurance organization represents the size equal to the maximum value of one of the sizes calculated by methods according to Items 5 and 6 of this Instruction.

5. Procedure of payments of the minimum size of margin of solvency with use of "method of awards":

1) calculation is perfromed proceeding from the amount of the cumulative insurance premiums accepted according to insurance contracts (reinsurance) for the previous financial year, or the cumulative earned insurance premiums for the previous financial year from which for calculation the largest size is accepted;

2) the amount of the cumulative insurance premiums accepted by the insurance (reinsurance) organization on class of compulsory insurance of civil responsibility of owners of vehicles is subject to increase by 50 percent;

3) the amount of cumulative insurance premiums (cumulative earned premiums) accepted according to insurance contracts (reinsurance) for the previous financial year decreases by expense amount on payment of commission fee for insurance activity, and also by the amount of the corporate income tax from the main activities;

4) the amount of the insurance premiums calculated according to subitems 1) - 3) this Item, in the amount of, not exceeding 1 500 000 000 tenges, is multiplied by 18%, the remained amount of excess is multiplied by 16%. The received results are summed up and adjusted on the correction coefficient calculated according to the subitem 5) of this Item;

5) the correction coefficient is calculated as the relation of the amount of cumulative insurance payments, less the overcautious person's share in the insurance payments added for the previous three financial years to the amount of the cumulative insurance payments added for the previous three financial years. This relation cannot be less 0,5. If the size of the correction coefficient received as a result of calculation is less than 0,5, that for calculation 0,5 is accepted.

The correction coefficient is not applied when calculating the minimum size of margin of solvency of the organization if for the previous three financial years the insurance (reinsurance) organization did not perform insurance payments.

6. Procedure of payments of the minimum size of margin of solvency with use of "method of payments":

1) for calculation the amount of the cumulative insurance payments added for the previous three financial years is used;

the insurance company which is engaged only in risks insurance, specified in subitems 13), 14) of Item 3 of article 6 of the Law, for calculation uses the amount of cumulative insurance payments for the previous seven financial years;

2) the amount of the cumulative insurance payments performed by the insurance (reinsurance) organization on class of compulsory insurance of civil responsibility of owners of vehicles is subject to increase by 50 percent;

3) the amount of cumulative insurance payments increases by the amount of reserve of the declared, but not settled losses for the end of the previous financial year and decreases:

on the amount of reserve of the declared, but not settled losses for the end of financial year, in three years prior to accounting financial year;

for the organizations specified in the paragraph the second the subitem 1) of this Item, - on the amount of reserve of the declared, but not settled losses for the end of financial year, in seven years preceding accounting financial year;

4) for calculation of the minimum size of margin of solvency of the insurance (reinsurance) organization it is used:

the one third part of the amount received according to the paragraph to the second the subitem 3) of this Item;

for the insurance companies specified in the paragraph the second the subitem 1) of this Item - the one seventh part of the amount received according to the paragraph to third the subitem 3) of this Item;

5) the amount of insurance payments calculated according to subitems 1) - 4) this Item, in the amount of, not exceeding 1 000 000 000 tenges is multiplied by 26%, the remained amount of excess is multiplied by 23%. The received results are summed up and adjusted on the correction coefficient calculated according to the subitem 5) of Item 5 of this Instruction.

If the insurance (reinsurance) organization did not perform insurance payments during the term specified in the subitem

1) this Item, calculation of the minimum size of margin of solvency is perfromed without use of "method of payments".

7. For the insurance (reinsurance) organizations accepting insurance premiums according to insurance contracts (reinsurance) on the class "mortgage insurance", the minimum size of margin of solvency increases by five percent from insurance sum on the insurance contracts (reinsurance) existing by the end of the reporting period on the class "mortgage insurance" less the overcautious person's share in insurance sum by the end of the reporting period.

According to the insurance contracts (reinsurance) on the class "mortgage insurance" signed by the insurance (reinsurance) organization with persons who according to articles 3 and 26 of the Law are large members of the insurance (reinsurance) organization and also persons in whom insurance (reinsurance) has considerable participation or the being affiliated organizations according to article 32 of the Law, the minimum size of margin of solvency increases by ten percent from insurance sum on the insurance contracts (reinsurance) existing by the end of the reporting period on the class "mortgage insurance" less the overcautious person's share in insurance sum by the end of the reporting period.

8. If the minimum size of margin of solvency of the insurance (reinsurance) organization for the accounting period is less, than for the previous financial year, the minimum size of margin of solvency for the accounting period is equal to the minimum size of margin of solvency for the same period of the last year corrected on coefficient of the reserve calculated according to Item 9 of this Instruction.

If the minimum size of margin of solvency for the same period of last year corrected on reserve coefficient is less than minimum size of margin of solvency for the accounting period, for calculation the minimum size of margin of solvency for the accounting period is used.

9. The coefficient of reserve is calculated as the relation of the amount of reserve of the declared, but not settled losses minus the overcautious person's share for the end of the previous financial year to the amount of reserve of the declared, but not settled losses minus the overcautious person's share for the beginning of the previous financial year. This relation cannot be more than 1. If the size of the reserve coefficient received as a result of calculation more 1, that for calculation is accepted by 1.

Chapter 3. The minimum size of margin of solvency for the insurance company performing insurance activity on industry "life insurance

10. Calculation of the minimum size of margin of solvency for the insurance company performing activities in industry "life insurance" is performed separately on classes and types of insurance:

1) on class life insurance and annuity insurance;

2) by the form insurance, providing life insurance with participation of the insurer in investments of insurance company;

3) on class accidents insurance and sickness insurance.

For calculation of the minimum size of margin of solvency of insurance company the amounts received according to Items 11, of the 15 and 17 this Instruction are accepted.

11. Calculation of the minimum size of margin of solvency of insurance company for the insurance classes specified in the subitem 1) of Item 10 of this Instruction represents the size equal to the amount of the values calculated according to Items 12 and 14 of this Instruction.

12. The minimum size of margin of solvency according to life insurance contracts on death case according to which the capital under risk is not negative value, is equal to the amount of the following sizes:

1) according to life insurance contracts on death case (for up to 3 years) - 0, the % of capital sum under risk is multiplied by the correction coefficient calculated according to the paragraph the second Item 13 of this Instruction;

2) according to life insurance contracts on death case (for from 3 to 5 years) - 0,15 of % of capital sum under risk is multiplied by the correction coefficient calculated according to the paragraph the second Item 13 of this Instruction;

3) according to other life insurance contracts on case of death of 0,3 of % of capital sum under risk it is multiplied by the correction coefficient calculated according to the paragraph the second Item 13 of this Instruction.

13. The capital under risk represents the cumulative insurance sum according to current agreements of life insurance for the end of the previous financial year reduced by the amount of the created insurance reserves on them.

The correction coefficient is calculated as the capital relation under risk according to life insurance contracts on death case, minus the overcautious person's share, to the capital under risk. This relation cannot be less 0,5. If the size of the correction coefficient received as a result of calculation is less than 0,5, that for calculation 0,5 is accepted.

14. The minimum size of margin of solvency according to other insurance contracts on the classes specified 1) of Item 10 of this Instruction is equal in the subitem to the work of 4% of the amount of the created insurance reserves and the correction coefficient calculated according to the paragraph the second this Item.

The correction coefficient is calculated as the relation of the amount of the created insurance reserves less the overcautious person's share in insurance reserves for the end of the previous financial year to the total amount of the created insurance reserves for the end of the previous financial year. This relation cannot be less 0,85. If the size of the correction coefficient received as a result of calculation is less than 0,85, that for calculation 0,85 is accepted.

15. The minimum size of margin of solvency for insurance company by the form of insurance "Life insurance with participation of the insurer in investments of insurance company" represents the value equal to the amount of the following sizes:

1) 4 (four) percent from the amount of the internal reserve fund calculated according to the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of September 3, 2010 No. 134 "About approval of Rules of participation of the insurer in investments or profit of insurance company" registered in the Register of state registration of regulatory legal acts at No. 6540 (further - the resolution No. 134), under agreements under which the insurance company bears investment risk;

2) 1 (one) percent from the amount of the internal reserve fund calculated according to the resolution No. 134, under agreements under which the insurance company does not bear investment risk and on which the amount of means allocated for covering of administrative expenses is fixed;

3) 25 (twenty five) percent from the amount of administrative expenses for the previous financial year under agreements under which the insurance company does not bear investment risk and on which the amount of means allocated for covering of administrative expenses is not fixed.

16.  No. 77 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 06.05.2014

17. On classes of accidents insurance and sickness insurance, the minimum size of margin of solvency is calculated according to items 4 - the 6th this Instruction.

Chapter 4. Calculation of actual margin of solvency of the insurance (reinsurance) organization

18. The actual margin of solvency is calculated as the amount:

the paid authorized capital minus preferred shares;

retained income of previous years (including funds, reserve of unforeseen risks, stabilization reserve, the reserves created at the expense of net income of last years) minus the dividends which are subject to payment;

behind minus:

intangible assets, except for the software acquired for the purposes of main insurance activity (reinsurance) organization. The software acquired for the purpose of main insurance activity (reinsurance) organization is accepted in the amount of its cost taking into account accumulated depreciation and not exceeding 10% of assets of the insurance (reinsurance) organization;

uncovered loss of previous years;

uncovered loss of the accounting period;

investments into the capital of other legal entities;

the subordinated loan granted faces which according to article 32 of the Law are the affiliated organizations of the insurance (reinsurance) organization or persons in which the insurance (reinsurance) organization has considerable participation.

19. It is excluded

20. The actual margin of solvency can be increased by the amount of preferred shares and subordinated debt in the amount which is not exceeding 50% of actual margin of solvency or of the minimum size of margin of solvency (depending on what indicator is less). Preferred shares and subordinated debt with fixed maturity date in the amount cannot exceed 50% of the total amount of preferred shares and subordinated debt.

21. It is excluded

22. The subordinated debt of the insurance (reinsurance) organization is unsecured obligation of the insurance (reinsurance) organization.

The subordinated debt shall correspond to the following conditions:

1) are considered only completely paid amount of the money which is actually received by the insurance (reinsurance) organization;

2) in case of liquidation of the insurance (reinsurance) organization it is satisfied according to priority, the stipulated in Clause 72 Laws;

3) it can be extinguished (fully or partially) by the insurance (reinsurance) organization, including ahead of schedule only at the initiative of the insurance (reinsurance) organization provided that such repayment according to the conclusion of authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body) cannot lead to non-compliance by the insurance (reinsurance) organization with the prudential standard rates established by this Instruction subsequently;

The repayment period of subordinated debt with fixed maturity date constitutes 4) at least five years. At least in one year prior to repayment date the insurance (reinsurance) organization represents in - authorized body the plan of providing actual margin of solvency at the time of repayment. This requirement does not extend to cases if the subordinated debt joins in calculation of actual margin of solvency in the following procedure:

during term more than five years prior to debt repayment - in full amount of debt, within five years which remained prior to debt repayment:

The 1st year - 100 percent of the amount of subordinated debt;

The 2nd year - 80 percent of the amount of subordinated debt;

3rd year - 60 percent of the amount of subordinated debt;

The 4th year - 40 percent of the amount of subordinated debt;

The 5th year - 20 percent of the amount of subordinated debt;

5) in case of repayment of the subordinated debt which does not have fixed maturity date, the insurance (reinsurance) organization at least in five years prior to expected repayment period represents the plan of providing actual margin of solvency to authorized body. This requirement does not extend to cases when the subordinated debt does not join the insurance (reinsurance) organization in calculation of actual margin of solvency, and also in case of its early repayment. In this case the insurance (reinsurance) organization receives the decision of authorized body on early repayment of subordinated debt in six months prior to expected repayment date, previously having provided the plan of providing actual margin of solvency before such repayment;

6) the subordinated debt cannot be subject to repayment in dates, excellent from approved with authorized body, except for liquidations of the insurance (reinsurance) organization;

7) change of conditions of subordinated debt are performed only in the presence of the consent of authorized body.

23. Bonds are recognized subordinated debt of the insurance (reinsurance) organization and join in calculation of actual margin of solvency only based on the report on results of placement of the bond issue approved in the procedure established by the legislation of the Republic of Kazakhstan by authorized body.

Except the conditions specified in Items 20, to the 22nd this Instruction, the bonds which are subordinated debt of the insurance (reinsurance) organization also shall correspond to the following conditions:

cannot be shown to repayment at the initiative of the owner of bonds or without prior consent authorized body;

the prospectus of the issue shall grant the insurance (reinsurance) organization the remuneration payment deferral right on debt;

the prospectus of the issue of securities shall provide adjustment of principal debt and unpaid remuneration in case of losses and at the same time provide to the insurance (reinsurance) organization opportunity to continue the activities.

24. The actual margin of solvency shall be provided with the assets calculated taking into account their classification by quality and liquidity, reduced by the amount of insurance reserves minus share of the overcautious person and obligations, except for insurance reserves, according to Item 32 of this Instruction.

If the actual margin of solvency is not provided with the amount of assets calculated according to paragraph one of this Item, the actual margin of solvency is constituted by difference between the assets calculated taking into account their classification by quality and liquidity minus insurance reserves and obligations, except for insurance reserves.

Chapter 5. Minimum size of guarantee fund

25. The minimum size of guarantee fund for the insurance (reinsurance) organizations constitutes at least following sizes:

for the insurance company having the license on industry "general insurance" - 600 000 000 (six hundred million) tenges;

for the insurance company having the license on industry "life insurance" - 1 100 000 000 (one billion hundred million) tenges;

for the insurance company having licenses on classes in voluntary form of insurance, specified in subitems 9), 10), 11), 12), 13), 14), 15) Item 3 of article 6 of the Law and any of classes in obligatory form of insurance - 1 000 000 000 (one billion) tenges;

for the reinsurance organization performing reinsurance as exclusive type of activity - 780 000 000 (seven hundred eighty million) tenges.

The minimum size of guarantee fund for the insurance (reinsurance) organizations decreases by 10 (ten) percent if the share of obligations on the class specified in the subitem 2) of Item 3 of article 6 of the Law constitutes more than 90 (ninety) percent in total amount of obligations of the insurance (reinsurance) organization on reporting date.

26. It is excluded

27. For the insurance company having the license in industry "general insurance" on the class "mortgage insurance", the size of guarantee fund shall be at least following sizes:

till April 1, 2010 - 900 000 000 (nine hundred million) tenges;

since April 1, 2010 - 1 080 000 000 (one billion eighty million) tenges;

since January 1, 2011 - 1 300 000 000 (one billion three hundred million) tenges;

since January 1, 2012 - 1 500 000 000 (one billion five hundred million) tenges.

28. It is excluded

Chapter 6. Standard rate of sufficiency of margin of solvency and guarantee fund

29. If the minimum size of margin of solvency is less than minimum guarantee fund, then the minimum size of margin of solvency is constituted by the size equal to the minimum guarantee fund.

30. The minimum size of margin of solvency or guarantee fund of the insurance (reinsurance) organization increases by the amount of the obligations transferred (transferred) to reinsurance to the insurance (reinsurance) organizations to residents and nonresidents of the Republic of Kazakhstan according to current agreements of reinsurance depending on rating assessment of the overcautious person or value of the standard rate of sufficiency of actual margin of solvency of the reinsurance resident organization of the Republic of Kazakhstan according to appendix 1 to this Instruction.

In case of decrease in rating assessment or value of the standard rate of sufficiency of actual margin of solvency of the overcautious person, the insurance (reinsurance) organization uses value of rating assessment or value of the standard rate of sufficiency of actual margin of solvency of the overcautious person for date of the conclusion of the agreement of reinsurance, during the term of the agreement reinsurance, but no more than 12 (twelve) months.

31. The standard rate of sufficiency of actual margin of solvency is calculated as the solvency margin relation to the minimum size of margin of solvency on formula:

Формула 1 к Пост. Прав. аген. по рег. и надзору фин.рынка от 22.08.08 №131

where:

Nmp - the standard rate of sufficiency of margin of solvency;

FMP - actual margin of solvency;

MMP - the minimum size solvency margin.

The standard rate of sufficiency of actual margin of solvency of the insurance (reinsurance) organization shall be at least edinitsy.sub2600

32. In calculation of insurance value (reinsurance) organization taking into account their classification by quality and liquidity, join:

1) money:

money in cash desk in the amount which is not exceeding one percent from the amount of assets of the insurance (reinsurance) organization minus reinsurance assets - of hundred percent from book value;

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