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

According to the laws of the Republic of Kazakhstan "About insurance activity", "About state regulation, control and supervision of the financial market and the financial organizations" and "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.

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 "About insurance activity" (further - the Law), "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. Normative values for the insurance (reinsurance) organization and insurance group are established according to article 46 of the Law and are calculated on the basis of the reporting accepted by National Bank of the Republic of Kazakhstan according to Articles 190, 231 and 249 Codes of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget (Tax code)" and subitem 65-2) of article 15 of the Law of the Republic of Kazakhstan "About National Bank of the Republic of Kazakhstan".

2-1. For the purposes of calculation of Standard rates insurance reserves are calculated according to the Resolution of Board of National Bank of the Republic of Kazakhstan of January 31, 2019 No. 13 "About approval of Requirements to forming, method of calculation of insurance reserves and their structure", registered in the Register of state registration of regulatory legal acts at No. 18290 (further - Requirements to forming, method of calculation of insurance reserves and their structure).

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:

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 insurance premiums transferred (transferred) to reinsurance to the insurance (reinsurance) organizations - residents and nonresidents of the Republic of Kazakhstan according to the current agreements of reinsurance signed 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 from the insurance premiums transferred (transferred) to reinsurance 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 (Standard and Purs) 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 (Mudis Investors Service), Fitch (Features), A.M. Best and Morningstar (Hey. Em. Best and (Morninstar), their affiliated rating organizations and rating agencies corresponding to criteria, stipulated in Item 10-2 Standard rates in case of observance of condition, stipulated in Item 10-1 Standard rates (further - other rating agencies).

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

Rating estimates of Morningstar rating agency (Morninstar) are used only for the purpose of assessment of shares of Exchange Traded Funds (ETF) (Ekscheyndzh Treyded by Fands), Exchange traded commodities (ETC) (Ekscheyndzh Treyded Kommoditis), Exchange Traded Notes (ETN) (Ekscheyndzh Treyded Nouts).

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.

10-1. When calculating Standard rates the long-term credit scores assigned by the rating agencies corresponding to criteria, stipulated in Item 10-2 Standard rates on the international rating scale are used only concerning foreign objects of rating.

10-2. For the purposes of Standard rates authorized body rating estimates of the rating agencies corresponding to the following criteria are recognized:

1) the rating agency is subject to regulation in country of source and estimates of rating agency are recognized within prudential regulation;

2) the minimum size of equity of rating agency constitutes the amount equivalent to at least 600 000 000 (six hundred million) tenges;

3) objectivity, independence and responsibility:

the methodology applied by rating agency is reliable and is subject to check on the basis of historical and (or) anticipated data about defaults, and also contains the detailed description of all key quantitative and high-quality factors determining capability of reytinguyemy person to fulfill the assumed financial liabilities, and also the description of their influence on credit ratings and forecasts for credit ratings;

the rating agency is not controlled by state bodies or officials in state bodies, subjects of the quasi-public sector or political parties and which do not interfere with activities of rating agency and have no influence on processes of assignment of ratings;

legal entities to whom the rating agency appropriates, confirms or reviews rating, are not affiliates of rating agency, except for no persons who directly own less than 10 (ten) percent of shares of rating agency and are had by influences on rating activities of rating agency;

the rating analysts of rating agency participating in rating actions concerning reytinguyemy person do not consist and did not consist in employment or business relations with reytinguyemy person within the last 3 (three) years before date of implementation of rating action, and also do not own directly or indirectly, including through close relatives, securities, other financial instruments or other property of reytinguyemy person or the persons exercising control over reytinguyemy person or exerting considerable impact on such person;

the rating agency has service of the internal audit or internal control including performing internal audit functions, accountable to the board of directors of rating agency;

in rating agency at least one third, but at least two board members are the independent members who are not performing rating actions, advertizing of services of rating agency and other actions for customer acquisition;

the share of immediate or indirect possession by shares of each shareholder of rating agency does not exceed 50 (fifty) percent from total quantity of voting shares of this rating agency in case shareholder is the financial organization, the share of immediate possession does not exceed 10 (ten) percent;

internal procedures of rating agency provide measures for prevention of unauthorized use and disclosure of information and provide protection and confidentiality of information;

4) transparency and disclosure of information:

the rating agency provides disclosure on Internet resource of rating agency of the following information:

the methodology applied by rating agency in case of determination of rating;

the list of the credit scores assigned for the last year and also reytinguyemy persons and other persons, the share of cash receipts from whom constituted 5 (five) and more percent in the annual total revenue of rating agency as of the end of the last expired calendar year;

5) reliability of ratings:

the rating agency performs rating activities on regular basis at least 5 (five) last years;

the number of the organizations to which the rating agency assigned and reviewed credit score makes at least thirty, including for the last 3 (three) years at least twenty, from them at least five were the financial organizations;

the personnel of rating agency which are directly engaged in assignment of ratings have the corresponding education, skills and experience;

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