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RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of December 26, 2016 No. 304

About establishment of normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, requirements, obligatory to observance, to the shares acquired by the insurance (reinsurance) organizations, the affiliated organizations of the insurance (reinsurance) organizations or insurance holdings (to shares in the authorized capital) legal entities, the list of bonds of the international financial institutions acquired by insurance holdings, the minimum required rating for the bonds acquired by insurance holdings and the list of rating agencies, and also the list of the financial instruments (except for shares and shares in the authorized capital) acquired by the insurance (reinsurance) organizations

(as amended on 23-11-2020)

According to the laws of the Republic of Kazakhstan of December 18, 2000 "About insurance activity", of July 4, 2003 "About state regulation, control and supervision of the financial market and the financial organizations" and of March 19, 2010 "About the state statistics" the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Establish:

1) normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, obligatory to observance (further - Standard rates) according to appendix 1 to this resolution;

2)  No. 214 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 28.11.2019.

3)  No. 214 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 28.11.2019.

4) requirements to the shares acquired by the insurance (reinsurance) organizations, the affiliated organizations of the insurance (reinsurance) organizations or insurance holdings (to shares in the authorized capital) legal entities according to appendix 4 to this resolution;

5) the list of bonds of the international financial institutions acquired by insurance holdings according to appendix 5 to this resolution;

6) the minimum required rating for the bonds acquired by insurance holdings and the list of rating agencies according to appendix 6 to this resolution;

7) the list of the financial instruments (except for shares and shares in the authorized capital) acquired by the insurance (reinsurance) organizations according to appendix 7 to this resolution.

2. Recognize invalid regulatory legal acts of the Republic of Kazakhstan, and also structural elements of some regulatory legal acts of the Republic of Kazakhstan according to the list according to appendix 8 to this resolution.

3. To department of insurance supervision (Kurmanov Zh. B.) in the procedure established by the legislation of the Republic of Kazakhstan to provide:

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

2) the direction of this resolution in the republican state company on the right of economic maintaining "The republican center of legal information of the Ministry of Justice of the Republic of Kazakhstan" for inclusion in the State register of regulatory legal acts of the Republic of Kazakhstan, Reference control bank of regulatory legal acts of the Republic of Kazakhstan within ten calendar days from the date of its state registration in the Ministry of Justice of the Republic of Kazakhstan;

3) placement of this resolution on official Internet resource of National Bank of the Republic of Kazakhstan after its official publication.

4. To management on consumer protection of financial services and external communications (Terentyev A. L.) provide the direction of this resolution on official publication in periodic printing editions within ten calendar days after its state registration in the Ministry of Justice of the Republic of Kazakhstan.

5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Republic of Kazakhstan Smolyakov O. A.

6. This resolution becomes effective after ten calendar days after day of its first official publication, except for the subitem 3) of Item 12 and part two of Item 23 of Standard rates which become effective since January 1, 2018.

Chairman of National Bank

D. Akishev

It is approved

Chairman of Committee according to the statistics Ministries of national economy of the Republic of Kazakhstan

2017

 

N. Aydapkelov

Appendix 1

to the Resolution of Board of National Bank of the Republic of Kazakhstan of December 26, 2016 No. 304

Normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, obligatory to observance

Chapter 1. General provisions

1. These Normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, obligatory to observance (further - Standard rates) are 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 establish normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, obligatory to observance.

2. The normative values for the insurance (reinsurance) organization and insurance group calculated on the basis of the financial reporting are established according to article 46 of the Law.

3. Prudential standard rates and other regulations, obligatory to observance, and limits for the insurance (reinsurance) organizations include:

minimum size of the authorized capital;

standard rate of sufficiency of margin of solvency;

standard rate of sufficiency of highly liquid assets;

standard rates of asset diversification;

the amount of own deduction of the insurance (reinsurance) organization under the agreement (agreements) of insurance, reinsurance, joint insurance (joint reinsurance).

Additional prudential standard rates for the insurance (reinsurance) organizations include:

reserve of unforeseen risks;

stabilization reserve.

The insurance (reinsurance) organization provides daily observance of the standard rate of sufficiency of margin of solvency, the standard rate of sufficiency of highly liquid assets, standard rates of asset diversification.

4. The prudential standard rate for insurance groups is the standard rate of sufficiency of margin of solvency of insurance group.

Chapter 2. Minimum size of the authorized capital of the insurance (reinsurance) organization

5. The minimum size of the authorized capital for again created insurance (reinsurance) organization in case of receipt of the license for the right of implementation of insurance activity (activities for reinsurance) is established according to the Minimum size of the authorized capital of the insurance (reinsurance) organization according to appendix 1 to Standard rates.

6. For the purposes of calculation of the minimum size of the authorized capital the size of monthly settlement indicator established by the law on the republican budget for the corresponding financial year on the date of creation of the insurance (reinsurance) organization is used.

Chapter 3. Standard rate of sufficiency of margin of solvency

Paragraph 1. Calculation of the standard rate of sufficiency of margin of solvency

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

Формула 1 к Пост.НБ от 26.12.2016 №304

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

FMP - actual margin of solvency;

MMP - the minimum size of margin of solvency.

The standard rate of sufficiency of margin of solvency of the insurance (reinsurance) organization shall be at least 1 (units).

8. The minimum size of margin of solvency is calculated according to paragraphs 2 and 3 of this head Normativov. If the size of the calculated minimum size of margin of solvency is less than minimum size of the guarantee fund established in paragraph 4 of this head Normativov, then the minimum size of margin of solvency constitutes the size equal to the minimum size of guarantee fund.

9. The minimum size of margin of solvency of the insurance (reinsurance) organization increases by the amount of the obligations transferred (transferred) to reinsurance to the insurance (reinsurance) organizations - 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 margin of solvency of the reinsurance resident organization of the Republic of Kazakhstan on the previous reporting date according to the sum of increase in the minimum size of margin of solvency calculated for the Table of increase in the minimum size of margin of solvency according to appendix 3 to Standard rates.

The minimum size of margin of solvency of the insurance (reinsurance) organization increases by the value equal to 1 (one) percent from current value of assets, the created (created) at the expense of part insurance premiums (insurance premiums) got from insurers for the purposes of investment and income (losses) gained from their investment according to the insurance contracts providing condition of participation of the insurer in investments.

10. In addition to rating estimates of the Standard & Poor agency "s authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body) are also recognized rating estimates of the Moody agencies" to s Investors Service, Fitch, A.M. Best and Morningstar, and also their affiliated rating organizations (further - other rating agencies).

Rating estimates of the A.M. Best agency are used only for the purpose of recognition of rating assessment of the overcautious person.

Rating estimates of Morningstar rating agency are used only for the purpose of assessment of shares of Exchange Traded Funds (ETF), Exchange traded commodities (ETC), Exchange Traded Notes (ETN).

For the purposes of Standard rates the long-term credit ratings, the ratings of financial stability of the insurance (reinsurance) organization or ratings corresponding to them according to the comparative table of long-term ratings according to appendix 2 to Standard rates are used.

Paragraph 2. Calculation of the minimum size of margin of solvency for the insurance (reinsurance) organization performing insurance activity on industry "general insurance" and the reinsurance organization performing reinsurance as exclusive type of activity

11. The minimum size of margin of solvency for the insurance (reinsurance) organization performing insurance activity on industry "general insurance", and the reinsurance organization performing reinsurance as exclusive type of activity represents the size equal to the maximum value of one of the sizes calculated with use of the methods specified in Items 12 and 13 of Standard rates.

12. 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 cumulative insurance premiums (cumulative earned premiums) accepted by the insurance (reinsurance) organization on the class "compulsory insurance of civil responsibility of owners of vehicles" is subject to increase by 50 (fifty) percent;

3) the amount of cumulative insurance premiums (cumulative earned premiums) accepted by the insurance (reinsurance) organization under agreements of reinsurance on the class "compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it" is subject to increase by 50 (fifty) percent;

4) the amount of cumulative insurance premiums (cumulative earned premiums) calculated according to subitems 1), 2) and 3) of this Item decreases by expense amount on payment of commission fee for insurance activity, and also by the amount of the corporate income tax;

5) the amount of the insurance premiums calculated according to subitems 1), 2), 3) and 4) of this Item:

till January 1, 2018:

in the amount of, not exceeding 1 500 000 000 (one billion five hundred million) tenges, it is multiplied by 18 (eighteen) percent, the remained amount of excess is multiplied by 16 (sixteen) percent;

since January 1, 2018:

in the amount of, not exceeding 3 500 000 000 (three billion five hundred million) tenges, it is multiplied by 18 (eighteen) percent, the remained amount of excess is multiplied by 16 (sixteen) percent.

The received results are summed up and adjusted on the correction coefficient calculated according to the subitem 6) of this Item;

6) the correction coefficient is calculated as the relation of the amount of the cumulative insurance payments (less the overcautious person's share in insurance payments) added for the previous 3 (three) financial years to the amount of the cumulative insurance payments added for the previous 3 (three) financial years. If the size of the correction coefficient received as a result of calculation is less than 0,5 (zero whole five tenth), then for calculation 0,5 is accepted (zero whole five tenth).

The correction coefficient is not applied when calculating the minimum size of margin of solvency if for the previous 3 (three) financial years the insurance (reinsurance) organization did not perform insurance payments.

13. 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 3 (three) financial years is used.

The insurance company which is engaged only in risks insurance, specified in subitems 13) and 14) of Item 3 of article 6 of the Law, for calculation uses the amount of cumulative insurance payments for the previous 7 (seven) financial years;

2) the amount of the cumulative insurance payments performed by the insurance (reinsurance) organization on the class "compulsory insurance of civil responsibility of owners of vehicles" is subject to increase by 50 (fifty) 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, for 3 (three), preceding accounting financial year;

for the insurance companies 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 7 (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 the insurance payments calculated according to subitems 1), 2), 3) and 4) of this Item:

till January 1, 2018:

in the amount of, not exceeding 1 000 000 000 (one billion) tenges, it is multiplied by 26 (twenty six) percent, the remained amount of excess is multiplied by 23 (twenty three) percent;

since January 1, 2018:

in the amount of, not exceeding 2 500 000 000 (two billion five hundred million) tenges, it is multiplied by 26 (twenty six) percent, the remained amount of excess is multiplied by 23 (twenty three) percent.

The received results are summed up and adjusted on the correction coefficient calculated according to the subitem 6) of Item 12 of Standard rates.

If the insurance (reinsurance) organization did not perform insurance payments during the term specified in the subitem 1) of this Item, then calculation of the minimum size of margin of solvency is perfromed without use of "method of payments".

14. The minimum size of margin of solvency increases by the following amounts:

according to insurance contracts (reinsurance) on the classes in voluntary form of insurance specified in subitems 13), 14), 15-1) and 16) of Item 3 of article 6 of the Law - for 10 (ten) percent from insurance premiums on current agreements of insurance (reinsurance) on these classes of insurance by the end of the reporting period;

according to insurance contracts (reinsurance) on the class in voluntary form of insurance specified in the subitem 12) of Item 3 of article 6 of the Law, object of insurance on which are the valuable interests of the insurer or beneficiary connected with indemnification as a result of non-execution (improper execution) by the insurer (insured) of the agreement obligations, concluded between the insurer, the insured or third party - for 10 (ten) percent from insurance premiums on current agreements of insurance (reinsurance) on this class of insurance by the end of the reporting period;

according to the insurance contracts (reinsurance) providing compensation of financial losses of persons connected with the insurance (reinsurance) organization the special relations within the classes in voluntary form of insurance specified in subitems 13), 14), 15-1) and 16) of Item 3 of article 6 of the Law - in addition for 10 (ten) percent from insurance premium on the insurance contracts (reinsurance) existing by the end of the reporting period.

15. 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, then the minimum size of margin of solvency for the accounting period is equal to the minimum size of margin of solvency for the previous financial year corrected on coefficient of the reserve calculated according to Item 16 of Standard rates.

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

16. 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. If the size of the reserve coefficient received as a result of calculation more than 1 (unit), then for calculation is accepted 1 (unit).

16-1. In case the minimum size of margin of solvency for the insurance (reinsurance) organizations at which the share of the amount of insurance premiums on the classes "sickness insurance" and "compulsory insurance of the tourist" constitutes more than 80 (eighty) percent in total amount of insurance premiums on current agreements of insurance (reinsurance) on reporting date is the size calculated with use of one of the methods specified in Items 12 and 13 of Standard rates, then the minimum size of margin of solvency decreases by 30 (thirty) percent.

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