Article 46. Prudential standards and other mandatory norms and limits of the Insurance Law

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 1. Control and supervision over the solvency and financial stability of an insurance (reinsurance) organization and persons supervised on a consolidated basis are carried out through control and supervision over the implementation or compliance with prudential standards and (or) other mandatory standards and limits established by the authorized body.

2. Prudential standards for insurance (reinsurance) organizations include:

minimum size of the authorized capital;

margin adequacy ratio of solvency;

adequacy ratio of highly liquid assets;

asset diversification standards.

The prudential standard for insurance groups is the standard of sufficient margin of solvency.

The authorized body has the right to establish additional prudential standards, including for the investment of assets covering insurance reserves for annuity insurance.

The authorized body has the right to establish additional prudential standards for insurance companies licensed to manage their investment portfolio in the securities market.

The authorized body, in accordance with the legislation of the Republic of Kazakhstan, takes measures to hold insurance (reinsurance) organizations and (or) insurance holdings or their officials and (or) major participants in insurance (reinsurance) organizations or insurance holdings liable for violations by an insurance (reinsurance) organization of prudential standards and (or) other mandatory requirements. norms and limits.

3. Excluded by the Law of the Republic of Kazakhstan dated 07/12/2022 No. 138-VII (effective sixty calendar days after the date of its first official publication).

3-1. Payment of dividends on ordinary and (or) preferred shares (shares of participation in the authorized capital) of an insurance (reinsurance) organization or insurance holding company is not allowed in the following cases::

1) if such a payment results in:

violation of one or more prudential standards of an insurance (reinsurance) organization or insurance group established by a regulatory legal act of an authorized body;

to the appearance of a factor(s) affecting the deterioration of the financial situation of an insurance (reinsurance) organization, insurance group, established by a regulatory legal act of the authorized body;

2) the existence of a violation by an insurance (reinsurance) organization or an insurance group of prudential standards, as well as failure to take measures in accordance with paragraph 4 of this article;

3) the presence of a factor(s) influencing the deterioration of the financial situation of the insurance (reinsurance) organization, insurance group and (or) failure to comply with the action plan providing for early response measures to improve the financial stability of the insurance (reinsurance) organization, insurance group, to prevent deterioration of its financial situation and increase the risks associated with insurance activities and the activities of an insurance group submitted to the authorized body in accordance with paragraphs 3 and 4 of Article 53 of this Law.

4. An insurance holding company, as well as major participants in an insurance (reinsurance) organization – individuals who directly or indirectly own more than twenty-five percent of the voting (minus preferred) shares of an insurance (reinsurance) organization, are required to take measures provided for by regulatory legal acts of the authorized body to maintain prudential standards at a level not lower than the established one..

In the event of a deterioration in the financial situation of an insurance (reinsurance) organization or insurance group, an insurance holding company or a major participant in an insurance (reinsurance) organization is obliged, including at the request of an authorized body, to take measures to improve the financial situation of an insurance (reinsurance) organization or insurance group, to increase the equity capital of an insurance (reinsurance) organization or insurance company. a group in an amount sufficient to ensure the financial stability of an insurance (reinsurance) organization or insurance group.

In case of non-fulfillment of the requirements provided for in this paragraph, the authorized body has the right to apply compulsory supervisory response measures provided for in Article 53-4 of this Law to an insurance holding company, a major participant in an insurance (reinsurance) organization.

4-1. The measures listed in this article may also be applied to affiliated companies of major participants in an insurance (reinsurance) organization if the authorized body determines that violations, misconduct or omission of these persons, their officials or employees have worsened the financial condition of the insurance (reinsurance) organization.

5. The solvency margin represents the excess of assets over liabilities of an insurance (reinsurance) organization.

6. The guarantee fund is created in order to ensure the financial stability and solvency of an insurance (reinsurance) organization as a result of reducing the margin of solvency below the minimum established amount.

7. The requirements for calculating the amount of an insurance (reinsurance) organization's own deduction under an insurance, reinsurance, and co-insurance (joint reinsurance) agreement(s) are established by regulatory legal acts of the authorized body.

8. Excluded by the Law of the Republic of Kazakhstan dated 07/02/2018 No. 166-VI (effective ten calendar days after the date of its first official publication).

9. An insurance (reinsurance) organization submits to the authorized body information on the availability and restrictions on the use of derivative financial instruments that are not included in the financial statements.

10. The regulatory values and methods of calculating prudential standards of an insurance (reinsurance) organization and insurance group and other mandatory standards and limits are established by regulatory legal acts of the authorized body.

Insurance (reinsurance) organizations and insurance groups submit reports on the implementation of prudential standards in accordance with the regulatory legal act of the National Bank.

The list and forms of reporting on the implementation of prudential standards by insurance (reinsurance) organizations and insurance groups, the terms and procedure for its submission to the National Bank are established by regulatory legal acts of the National Bank in coordination with the authorized body.

10-1. The regulatory values and methods of calculating the prudential standards of an Islamic insurance (reinsurance) organization and other mandatory norms and limits are established by regulatory legal acts of the authorized body, taking into account the specifics of the implementation of Islamic insurance activities by Islamic insurance (reinsurance) organizations provided for by this Law.

Islamic insurance (reinsurance) organizations submit reports on the implementation of prudential standards to the National Bank in accordance with the regulatory legal act of the National Bank.

10-2. In order to determine the value of assets taken into account when calculating prudential standards, the authorized body has the right to require an insurance (reinsurance) organization or an insurance holding company to assess their value from an appraiser or through the Chamber of appraisers.

If an insurance (reinsurance) organization or insurance holding company fails to comply with the requirements of the authorized body established by part one of this paragraph, the relevant asset is excluded from the subsequent calculation of prudential standards.

11. If an insurance (reinsurance) organization or a member of an insurance group fails to comply with the requirements of the authorized body specified in the written order to adjust data in financial and (or) other statements, the calculation of prudential standards and other mandatory norms and limits is carried out by the authorized body on the basis of the statements it has corrected.

11-1. The requirements of this article do not apply to an insurance (reinsurance) organization in cases when the general meeting of shareholders (an insurance organization that is a non–resident of the Republic of Kazakhstan) decides on the voluntary liquidation (voluntary termination of the activities of a branch of an insurance (reinsurance) organization. – non-resident of the Republic of Kazakhstan) of this insurance (reinsurance) organization, the voluntary reorganization of this insurance (reinsurance) organization into a legal entity that does not carry out insurance activities, the voluntary surrender of a license for the right to carry out insurance (reinsurance) activities, as well as the availability of documents confirming the absence of an insurance (reinsurance) organization's insurance portfolio, within six months from the date of adoption by the general meeting of shareholders (insurance company – a decision on the voluntary liquidation of an insurance (reinsurance) organization (voluntary termination of the activities of a branch of an insurance (reinsurance) organization that is a non–resident of the Republic of Kazakhstan), voluntary reorganization of an insurance (reinsurance) organization into a legal entity that does not carry out insurance activities, voluntary surrender of a license for the right to carry out insurance (reinsurance) activities.

12. In order to ensure the integrity and stability of the financial system, protect investors, policyholders (insured, beneficiaries), the authorized body establishes prudential standards and other mandatory norms and limits for branches of insurance (reinsurance) organizations that are non-residents of the Republic of Kazakhstan.

The authorized body has the right to establish additional prudential standards, including for the investment of assets covering insurance reserves for annuity insurance.

In order to ensure the financial stability of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, no later than three working days after the registration of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, forms assets of a branch of an insurance (reinsurance) organization of the Republic of Kazakhstan, accepted as a reserve.

Regulatory values and methods for calculating prudential standards of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan and other mandatory norms and limits, including the procedure for forming assets of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, accepted as a reserve, and their minimum amount are established by regulatory legal acts of the authorized body.

The authorized body, in accordance with the legislation of the Republic of Kazakhstan, takes measures to hold accountable branches of insurance (reinsurance) organizations that are non-residents of the Republic of Kazakhstan for violations by branches of insurance (reinsurance) organizations that are non-residents of the Republic of Kazakhstan of prudential standards and (or) other mandatory standards and limits.

Branches of insurance (reinsurance) organizations that are non–residents of the Republic of Kazakhstan submit reports on the implementation of prudential standards to the National Bank in accordance with the regulatory legal act of the National Bank.

Regulatory values and methods of calculating prudential standards of a branch of an Islamic insurance (reinsurance) organization that is a non-resident of the Republic of Kazakhstan and other mandatory norms and limits, including the procedure for forming assets of a branch of an Islamic insurance (reinsurance) organization that is a non-resident of the Republic of Kazakhstan, accepted as a reserve, and their minimum size is established by regulatory legal acts of the authorized body, taking into account the specifics of the Islamic insurance activities provided for by this Law carried out by branches of Islamic insurance (reinsurance) organizations that are non-residents of the Republic of Kazakhstan.

Branches of Islamic insurance (reinsurance) organizations that are non–residents of the Republic of Kazakhstan submit reports on the implementation of prudential standards to the National Bank in accordance with the regulatory legal act of the National Bank.

A non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, whose branch is opened in the territory of the Republic of Kazakhstan, is obliged to take measures provided for by regulatory legal acts of the authorized body to maintain prudential standards of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan at a level not lower than established.

In case of deterioration of the financial situation of a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan, the non-resident insurance (reinsurance) organization of the Republic of Kazakhstan is obliged, including at the request of the authorized body, to take measures to improve the financial situation of the branch of an insurance (reinsurance) organization of the Republic of Kazakhstan, to increase the assets of the branch of the insurance (reinsurance) organization- non-residents of the Republic of Kazakhstan, accepted as reserves provided for in part three of this paragraph, in the amount of, sufficient to ensure the financial stability of a branch of a non-resident insurance (reinsurance) organization in the Republic of Kazakhstan.

If the measures taken by a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan specified in part ten of this paragraph are insufficient, the non-resident insurance (reinsurance) organization of the Republic of Kazakhstan shall fulfill the obligations not fulfilled and (or) improperly fulfilled by the branch of the non-resident insurance (reinsurance) organization of the Republic of Kazakhstan in accordance with a written commitment previously submitted to the authorized body. in accordance with subparagraph 12) of the first part of paragraph 2 of Article 30-1 of this Law.

If a branch of a non-resident insurance (reinsurance) organization of the Republic of Kazakhstan fails to comply with the requirements of the authorized body specified in the written instruction to adjust the data in the financial statements according to accounting and (or) other reporting, the calculation of prudential standards and other mandatory norms and limits is carried out by the authorized body on the basis of the statements it has corrected.

The provisions of paragraphs 5, 6 and 10-2 of this article apply to a branch of a non–resident insurance (reinsurance) organization of the Republic of Kazakhstan.

The Law of the Republic of Kazakhstan dated December 18, 2000 No. 126.

President

Republic of Kazakhstan

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