RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of May 6, 2014 No. 77

About modification and amendments in 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 normative values and technique of calculations of prudential standard rates of the insurance (reinsurance) organization, the standard rate of sufficiency of margin of solvency of insurance group, forms and terms of submission of reports on accomplishment of prudential standard rates"

For the purpose of enhancement of regulatory legal acts of the Republic of Kazakhstan the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Bring in 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 normative values and technique of calculations of prudential standard rates of the insurance (reinsurance) organization, the standard rate of sufficiency of margin of solvency of insurance group, forms and terms of submission of reports on accomplishment of prudential standard rates" (registered in the Register of state registration of regulatory legal acts at No. 5331, published on November 15, 2008 in the Collection of acts of the central executive and other central state bodies of the Republic of Kazakhstan No. 11) the following changes and amendments:

state heading in the following edition:

"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";

state Item 1 in the following edition:

"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).";

in the Instruction about normative values and technique of calculations of prudential standard rates of the insurance (reinsurance) organization, the standard rate of sufficiency of margin of solvency of the insurance group, forms and terms of submission of reports on accomplishment of prudential standard rates approved by the specified resolution:

state heading in the following edition:

"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";

to state part one of preamble in the following edition:

"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.";

state Item 10 in the following edition:

"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.";

state Item 15 in the following edition:

"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.";

exclude Item 16;

third Item 18 to state the paragraph in the following edition:

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

3) of Item 22 to state the subitem in the following edition:

"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) afterwards cannot lead to non-compliance by the insurance (reinsurance) organization with the prudential standard rates established by this Instruction;";

state Item 25 in the following edition:

"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.";

the second Item 32 to state part in the following edition:

"Calculation of insurance value (reinsurance) organization taking into account their classification by quality and liquidity does not join receivables delayed under the terms of the agreement, receivables formed according to insurance contracts, effective period of insurance (reinsurance) protection according to which did not come, and also receivables of large participants, the affiliated organizations, organizations in which the insurance (reinsurance) organization is large participant or has considerable participation, and also other affiliirovanny organizations.";

state Item 33 in the following edition:

"33. The insurance (reinsurance) organization daily observes the standard rate of sufficiency of highly liquid assets calculated as the relation of cost of highly liquid assets to the amount of insurance reserves minus the overcautious person's share, on formula:

where:

Nva - the standard rate of sufficiency of highly liquid assets;

VA - the cost of the highly liquid assets for the end of calendar day specified in Item 36 of this Instruction;

WEDNESDAY - the amount of insurance reserves of insurance company minus the overcautious person's share for the end of the last month under report calculated according to the resolution of Board of National Bank of the Republic of Kazakhstan of May 6, 2014 No. 76 "About approval of Requirements to forming, the method of calculation of insurance reserves and their structure" (registered in the Register of state registration of regulatory legal acts at No. 9529) (further - the resolution No. 76). The amount of insurance reserves is used about day of provision of monthly financial and other reporting in authorized body.

The standard rate of sufficiency of highly liquid assets constitutes at least unit.";

state Item 33-1 in the following edition:

"33-1. The amount of share of the overcautious person in insurance reserves when calculating the standard rate of sufficiency of highly liquid assets and actual margin of solvency taking into account classification of assets by quality and liquidity according to Item 24 of this Instruction does not join the overcautious person's share in insurance reserves according to the agreements of reinsurance signed with the insurance (reinsurance) resident organizations of the Republic of Kazakhstan and the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan in one of the following cases:

the insurance (reinsurance) nonresident organization of the Republic of Kazakhstan has the international rating assessment of the agency of "Standard & Poor" of s" below "B-" or the rating of similar level of one of other rating agencies, or has no rating assessment of data of rating agencies;

the reinsurer (assignor) has no information on financial stability of the insurance (reinsurance) nonresident organization of the Republic of Kazakhstan, including the financial reporting for the last three financial years preceding date of the conclusion of the agreement of reinsurance and information on observance of requirements for margin of solvency (equity) of authorized body of the country of its registration during the last accounting period before date of the conclusion of the agreement of reinsurance;

the size of insurance premium under the agreement of optional reinsurance at the time of transfer of insurance risk exceeds bonus level according to the insurance contract, except for exceeding case as a result of change in the exchange rate of currency of obligation fulfillment under the agreement of reinsurance;

the agreement of reinsurance provides transfer less than ten percent of scope of responsibility and more than fifty percent of insurance premium;

the agreement of reinsurance is signed in contradiction to policy of reinsurance of the reinsurer (assignor), and also provisions of 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 February 1, 2010 No. 4 "About approval of the Instruction about requirements for availability of risk management systems and internal control in the insurance (reinsurance) organizations" (registered in the Register of state registration of regulatory legal acts at No. 6113);

the agreement of reinsurance contains condition about receipt of the reinsurer (assignor) by affiliirovanny person and (or) affiliirovanny face of the insurer, except for the reinsurer (assignor) and insured person, part of insurance premium, profit and (or) positive difference between the income and the overcautious person's expenses under the agreement or group of agreements of reinsurance;

the agreement of reinsurance, provides transfer of all or parts of insurance risks to reinsurance under the agreement or class of compulsory insurance of civil responsibility of owners of vehicles.";

state Item 38 in the following edition:

"38. For calculation of the amount of assets of the insurance (reinsurance) organization, according to Items 32 and 36 of this Instruction, are not considered:

1) assets on which the property right of insurance company is limited (including, as a result of provision as a deposit, transaction on encumbrance of asset for ensuring obligation fulfillment), except for the assets which are subject of repo operations;

2) shares of legal entities and deposits in banks of the second level which according to the Law are large participants or the affiliated organizations (the organizations in which the insurance (reinsurance) organization has considerable participation);

3) the securities issued by the legal entities who are affiliirovanny persons in relation to this organization;

4) the assets received as a result of placement of internal reserve fund according to life insurance contracts with participation of the insurer in investments of insurance company.";

state Item 42 in the following edition:

"42. The maximum amount of own deduction of the insurance (reinsurance) organization according to the separate insurance contract or reinsurance, and also on each insurance risk is calculated the actuary.

The maximum amount of own deduction of the insurance (reinsurance) organization for date of the conclusion and on each subsequent reporting date during the entire period of validity of insurance or reinsurance does not exceed the following values in relation to the size of actual margin of solvency of the insurance (reinsurance) organization expected reporting date:

since January 1, 2013: 80 (eighty) percent;

since January 1, 2014: 50 (fifty) percent;

since January 1, 2015: 30 (thirty) percent.";

add with Chapter 8-2 of the following content:

"8-2. Additional prudential standard rates: reserve of unexpected risks, stabilization reserve.

44-8. Reserve of unexpected risks (further - RNR) - the reserve on possible future risks created in case of insufficiency of reserve of not earned premium (further - RNP) for covering of insurance payments and expenses on settlement of insurance losses. In case of this RNP is calculated according to the resolution No. 76.

The reserve of unexpected risks is calculated monthly in case of simultaneous observance of the following conditions:

the relation of the amount of net insurance payments, expenses on settlement of insurance losses and changes of reserve of losses without the overcautious person's share to difference of net signed insurance premiums and changes of RNP without share of the overcautious person exceeds 105 (hundred five) percent on insurance class;

the amount of net insurance premiums according to current agreements of insurance on separate class of insurance exceeds 10 (ten) percent from the total amount of net insurance premiums on current agreements of insurance for the accounting period.

RNR is calculated as follows:

where:

In - net insurance payments;

Р - expenses on settlement of insurance losses;

The delta of RU - change of reserves of losses (without the overcautious person's share);

State of emergency - net signed insurance premiums (signed awards without the overcautious person's share). Net signed insurance premiums - the awards accepted by the insurer to accounting irrespective of, are received or are not received they actually;

RNP - change of reserve of not earned premium without the overcautious person's share;

RNP - reserve of not earned premium without the overcautious person's share for settlement date.

Parameters B, P, the Delta of RU, state of emergency, the Delta of RNP are calculated for the last twelve months.

44-9. The stabilization reserve is assessment of obligations of the insurance (reinsurance) organization connected with implementation of future insurance payments.

The stabilization reserve is created on insurance class in case of exceeding of mean square variation of the coefficient characterizing unprofitability of insurance company without share of the overcautious person, 10 (ten) percent from average value of the coefficient characterizing unprofitability.

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