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of March 25, 2011 No. 06-03-11/331/5668

To the chairman

OYuL "Association

financiers of Kazakhstan"

To Akhanov S.

Agency on regulation and supervision of financial market and financial organizations, having considered the letter of OYuL "Associations of Financiers of Kazakhstan" (further - AFK) No. 2/03/4560 of 24.01.11 concerning prudential regulation of insurance companies, reports the following.

Concerning implementation of broker and dealer activities by the insurance (reinsurance) organizations.

According to Item 1 of article 4 of the Law of the Republic of Kazakhstan "About insurance activity" (further - the Law) insurance represents complex of the relations on protection of legitimate valuable interests of physical person or legal entity in case of loss occurrence or other event determined by the insurance contract by means of the insurance payment performed by insurance company at the expense of the assets.

At the same time, according to article 11 of the Law the insurance activity is main type of the business activity performed by the insurance (reinsurance) organization. Moreover, the insurance (reinsurance) organization has the right to perform 12 types of other services also.

According to the subitem 15) article 1 of the Law of the Republic of Kazakhstan "About the security market" (dalee-Zakon "About the security market") the broker - the professional participant of the security market making transactions with issued securities and other financial instruments on the order for the account and for the benefit of the client. Also according to the subitem 23) the Law "About the Security Market" the dealer - the professional participant of the security market making transactions with issued securities and other financial instruments in the interests and at own expense in the unorganized market of securities and in the organized market of securities with the right of direct access to it. Thus, brokers and dealers are professional participants of the security market whose activities are subject to licensing according to the subitem 6) of article 1 of the Law "About the Security Market".

Thus, we believe that combination of the main (insurance) activities with broker and dealer activities of activities by the insurance (reinsurance) organizations can lead to emergence of the risks connected with combination of the this activities with own transactions of the insurance (reinsurance) organization and also it is risk, inherent in broker activities that as a result can entail emergence of losses from implementation of the specified activities.

Based on the above, we consider inexpedient combination of the specified types of activity with the main (insurance) activities.

Concerning extension of the list of legal nonresident persons of the Republic of Kazakhstan share acquisition or shares in the authorized capital which are not forbidden to the insurance (reinsurance) organizations.

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