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Ministry of Justice

Republic of Moldova

On April 8, 2011 No. 812

RESOLUTION OF THE NATIONAL COMMISSION ON THE FINANCIAL MARKET OF THE REPUBLIC OF MOLDOVA

of January 21, 2011 No. 2/1

About approval of the Regulations on margins of solvency and liquidity rate of the insurer (overcautious person)

(as amended on 11-02-2019)

For the purpose of execution of provisions of Art. 30 of the h. (4) and h. (7), Art. 34 of the h. (10) the Law 407-XVI of 21.12.2006 "About insurance" (The official monitor of the Republic of Moldova, 2007, No. 47-49, the Art. 213) the National commission on the DECIDES: financial market

1. Approve Regulations on margins of solvency of the insurer (overcautious person), according to appendix 1.

2. To insurers till 30.09.2011 to give the assets accepted in covering of technical reserves and the minimum margin of solvency, in compliance with the regulations established in Provision Item 18.

3. Recognize invalid some regulations of the State inspectorate for supervision of insurance and non-state pension funds, according to appendix 2.

 

Deputy chairman of the National commission on the financial market

Aurika Doyna

Appendix No. 1

to the Resolution of the National commission on the financial market of the Republic of Moldova of January 21, 2011 No. 2/1

Regulations on margins of solvency and liquidity rate of the insurer (overcautious person)

Chapter I. General provisions

1. This Provision establishes procedure of payments and the reporting, structure and components of the minimum margin of solvency (MMS) and free (actual) margin of solvency (SMP), categories of assets accepted in covering of technical reserves and the minimum margin of solvency, regulation of distribution of placements and liquidity rate of the insurer (overcautious person).

2. For the purpose of this provision the terms and determinations provided below have the following value:

quick assets - cash liquidity in cash desk, on settlement accounts, deposit accounts urgent or poste restante which can be withdrawn without restrictions, and securities which are easily converted into money without imposing of sanctions;

claimed losses - the paid losses increased by changes of reserve of not settled losses for certain accounting period;

declared gross - losses - the come losses, to deduction of the overcautious person's share corresponding to them;

declared net - losses - come gross - losses less the overcautious person's share from declared gross - losses;

funds of insurers - the total amount of assets, accepted by this Provision to covering of contractual debts of the insurer (overcautious person), and one second minimum margins of solvency according to the standard rates provided by placement regulations;

funds of the insurer (overcautious person) - the total amount of the assets accepted and provided by this Provision, others than what is represented by funds of insurers;

the free (actual) margin of solvency - the amount on which the size of assets exceeds the size of debt and represents the level of equity of the insurer (overcautious person);

the minimum margin of solvency - the amount of equity which the insurer (overcautious person) shall own and hold constantly, below which level the insurer (overcautious person) has no the guaranteed financial stability, and accomplishment of the accepted debts to insurers (reinsurers) is in danger. The size of the minimum margin of solvency cannot be below the minimum size of the authorized capital established by the law;

contractual debts (the debt accepted according to the policy of assurance) - the total amount of insurance technical reserves;

the standard rate of sufficiency of solvency - ratio between the size of actual margin of solvency and size of the minimum margin of solvency;

the risk amount - difference between insurance compensation and the mathematical reserve calculated according to insurance contracts which cover risk on death case;

warranty minimum margin of solvency – the size of the minimum margin of solvency of the insurer who owned the license for implementation of activities in insurance field of life or general insurance (further – insurance company).

2-1. The actuary of the insurer (overcautious person) shall check the assets accepted in covering of technical reserves, calculate the minimum and free margin of solvency, warranty minimum margin of solvency, the standard rate of sufficiency of solvency and liquidity rate according to appendices to this Provision. When implementing actuarial calculations the insurer (overcautious person) shall submit the documents requested by the actuary and information which are necessary for it for creation and preparation of obligatory actuarial calculations and conclusions, and bears responsibility for reliability of the provided data. The actuary bears responsibility for correctness and accuracy of the constituted actuarial calculations, estimates and conclusions.

Chapter II. Determination of structure and components of margin of solvency of the insurer (overcautious person)

3. The insurer (overcautious person) / insurance company shall determine asset cost for calculation of free margin of solvency and constitute the report of the Form A – Assets according to appendix No. 1 separately on life insurance and general insurance.

3-1. Detailed data on each asset of certain category and on its cost are represented by the insurer (overcautious person) in the special asset register, the technical reserves accepted in covering, separately on life insurance and general insurance according to appendix No. 7 to this Provision.

4. The following assets are recognized with zero value:

1) intangible assets of the insurer (overcautious person);

2) furniture as component of fixed assets, materials and stock;

3) the advance payments issued in any form;

4) receivables corresponding to the added awards with term more than 60 days from the moment of repayment by the provided insurance contract;

5) receivables of the overcautious persons who are not owning more license for reinsurance activities and also with term more than 90 days from the moment of repayment;

6) other receivables and advance payments which are not subject to repayment;

7) expenses, including purchasing, postponed;

8) reserves, others, than technical, intended to distribution by the insurer (overcautious person) and other dummy assets, other than preliminary expenses;

9) investment into securities of issuers at which permission to activities was withdrawn or which are in the procedure of insolvency;

10) the loans issued by the insurer, except for interest-bearing loans to own insurers physical persons within the compensation amount provided by the agreement on life insurance;

11) deposits and investments into financial institutions in connection with which actions of the resolution were taken or from which the license was revoked;

12) cash on hand in the amount of the cost exceeding 3% generally of the total size of technical reserves, except for the overcautious person's shares in technical reserves, and one second minimum margins of solvency.

5. Ceased to be valid according to the Resolution of the National commission on the financial market of the Republic of Moldova of 11.02.2019 No. 6/3

6. All other assets of the insurer (overcautious person) / insurance company shall have the determined cost calculated according to regulations of the current law on financial accounting.

6-1. Ceased to be valid according to the Resolution of the National commission on the financial market of the Republic of Moldova of 11.02.2019 No. 6/3

7. The insurer (overcautious person) / insurance company shall determine the debt size for calculation of free margin of solvency according to regulations of the current law on financial accounting and constitute the report of the Form Z – Debt according to appendix No. 2 to this Provision separately on life insurance and general insurance.

Chapter III. Procedure of payments and reporting of margins of solvency of the insurer (overcautious person)

8. The minimum margin of solvency and warranty minimum margin of solvency for activities for life insurance are calculated based on technical reserves on life insurance and the risk amounts, according to Form MMP_Zh/GMP_Zh according to appendix No. 3 to this Provision, depending on circumstances:

1) the insurer (overcautious person) owning the license for activities for life insurance shall calculate the minimum margin of solvency (MMS) which shall equal to the largest size between MMP-1 using coefficient 1,25 and the minimum authorized capital established by the legislation;

2) the insurance company which owned the license for activities for life insurance and bears responsibility only for portfolio of the signed agreements shall calculate warranty minimum margin of solvency (GMP) which shall equal to the size corresponding to calculation of MMP-1, using 1,25 coefficient.

9. The minimum margin of solvency and warranty minimum margin of solvency for activities for general insurance are calculated based on added for the last 12 months net - awards and declared for the last 12 months net - losses, according to Form MMP_O/MPG_O according to appendix No. 4 to this Provision, depending on case:

1) the insurer (overcautious person) owning the license for activities for general insurance shall calculate the minimum margin of solvency (MMS) which shall equal to the largest size between MMP-1, MMP-2 and the minimum authorized capital established by the legislation;

2) the insurance company which owned the license for activities for general insurance and bears responsibility according to current agreements shall calculate warranty minimum margin of solvency (GMP) which shall equal to the largest size between MMP-1 and MMP-2 according to calculations using 1,25 coefficient.

10. The free (actual) margin of solvency and the standard rate of sufficiency of solvency of the insurer (overcautious person) are calculated separately on life insurance and general insurance according to the SMP-ND Form according to appendix No. 5 to this Provision.

11. Technical reserves and one second minimum margins of solvency shall be constantly covered and provided by the allowed assets, taking into account distribution regulations, according to Chapter IV.

12. The standard rate of sufficiency of solvency of the insurer (overcautious person) shall be at least than 100%.

12-1. The insurer (overcautious person) shall hold constantly the standard rate of sufficiency of solvency at the level not below than is provided in Item 12, level below which it is considered is not able to execute debts on measure of approach of terms of their accomplishment.

13. Each insurer (overcautious person) shall calculate monthly and watch continuously the minimum margin of solvency and actual margin of solvency.

14. The insurer (overcautious person) will provide information on the minimum margin of solvency and actual margin of solvency for date of creation of financial statements or on any other reporting date established by supervision body.

15. If it is determined that the standard rate of sufficiency of solvency falls below the required level provided in Items 12 and 121 of this provision, the insurer (overcautious person) shall inform supervision body immediately or within 10 days from the date of when he knew of this situation.

Chapter IV. The categories of assets accepted in covering of technical reserves and the minimum margin of solvency, regulation of distribution of placements of these assets

16. The following categories of assets are allowed to cover and represent insurance technical reserves and the minimum margin of solvency of the insurer (overcautious person):

1) the securities issued by the Government of the Republic of Moldova or other state body provided that the Government, respectively the state body, guarantees principal payment and percent;

2) the securities issued by the governments, national banks of other states having rating is at least VVV or similar according to the international rating agencies, and also international financial institutions provided that the governments, banks or the specified organizations guarantee principal payment and percent;

3) shares of the issuers allowed on the controlled market and within multilateral trade system. The issuers allowed within multilateral trade system shall at the same time, satisfy the following conditions throughout the entire period of ownership of investment of the insurer:

a) have equity in the amount of at least 5 million lei according to the last accounting period;

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