Article 48. Activities prohibited or restricted for insurance (reinsurance) organizations and insurance holdings of the Insurance Law

Home / RLA / Article 48. Activities prohibited or restricted for insurance (reinsurance) organizations and insurance holdings of the Insurance Law

1. An insurance (reinsurance) organization is prohibited from acquiring shares in the authorized capitals or shares of legal entities, establishing and participating in the activities of non-profit organizations, with the exception of membership in the National Chamber of Entrepreneurs of the Republic of Kazakhstan, as well as the cases established by this Law, and carrying out transactions with securities in the cases provided for in paragraph 4 of this Article.

2. Insurance holdings are prohibited from carrying out operations and transactions as entrepreneurial activities, as well as the acquisition of shares in the authorized capital or shares of legal entities, the creation and participation in the activities of non-profit organizations, with the exception of membership in the National Chamber of Entrepreneurs of the Republic of Kazakhstan, as well as the cases established by this Law, and transactions with securities in in the cases provided for in paragraph 4 of this Article.

3. The prohibition established by paragraphs 1 and 2 of this Article does not apply to the following cases of creation, as well as acquisition of shares or participation shares in the authorized capital:

1) insurance (reinsurance) organizations:

organizations that create and maintain databases;

legal entities engaged in the activity of an insurance agent as an exclusive type of activity;

an organization that guarantees insurance payments to policyholders (insured, beneficiaries) in the event of liquidation of insurance organizations;

legal entities in the amount of less than ten percent of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital), provided that the acquired shares (stakes in the authorized capital) comply with the requirements of the regulatory legal act of the authorized body;

financial organizations, as well as non-resident legal entities of the Republic of Kazakhstan that have the status of banks, insurance organizations, pension funds, and professional participants in the securities market, in the amount of ten percent or more of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital) if it has an insurance holding company. At the same time, the requirement for an insurance holding company does not apply to insurance (reinsurance) organizations, more than fifty percent of the voting shares of which belong to the state or the national managing holding company.;

organizations (residents and non-residents of the Republic of Kazakhstan) that develop, implement, and support software used in the activities of financial organizations, including for automating their activities;

organizations (residents and non-residents of the Republic of Kazakhstan) that provide services for the provision of financial services using artificial intelligence, blockchain and other innovative technologies;

2) insurance holdings:

financial organizations;

non-resident legal entities of the Republic of Kazakhstan that have the status of banks, insurance organizations, pension funds, and professional participants in the securities market.

The provisions established by paragraphs seven and eight of subparagraph 1) and paragraphs four and five of subparagraph 2) of part one of this paragraph apply to cases of creation, as well as acquisition by insurance (reinsurance) organizations and insurance holdings of shares or participation interests in the authorized capitals of non–resident organizations of the Republic of Kazakhstan, subject to an agreement between the authorized body and the relevant supervisory authority. by an authority of a foreign state on the exchange of information.

The acquisition by an insurance (reinsurance) organization of shares in the authorized capital or shares of legal entities specified in subparagraph 1) of part one of this paragraph shall not exceed ten percent of the equity capital of an insurance (reinsurance) organization per legal entity. This restriction applies to the ownership of shares in the authorized capital or shares of these legal entities by an insurance (reinsurance) organization, including in cases of their creation.

The total value of the shares of an insurance (reinsurance) organization in the authorized capital of legal entities or shares should not exceed fifty percent of the equity of the insurance (reinsurance) organization.

Subsidiaries of insurance (reinsurance) organizations have the right to acquire only shares or shares of participation in the authorized capital of legal entities that meet the requirements established by the regulatory legal act of the authorized body. This requirement does not apply to subsidiary banks that are residents of the Republic of Kazakhstan.

Subsidiaries of the insurance holding company are entitled to acquire only shares or shares of participation in the authorized capital of legal entities that meet the requirements established by the regulatory legal act of the authorized body. This requirement does not apply to:

subsidiary insurance (reinsurance) organizations-residents of the Republic of Kazakhstan;

subsidiary banks-residents of the Republic of Kazakhstan;

legal entities in which an insurance holding company is a parent organization through ownership (having the ability to vote, determine decisions and/or influence decisions made by virtue of a contract or otherwise) of shares of an insurance (reinsurance) organization or a bank resident in the Republic of Kazakhstan that directly own (having the ability to vote, determine decisions and/or) to influence decisions made by virtue of a contract or otherwise) by shares or shares of participation in the authorized capital of the specified legal entities;

non-residents of the Republic of Kazakhstan who are subsidiaries of non-residents of the Republic of Kazakhstan who are an insurance holding company, provided that one of the following conditions is met:

The insurance holding company has an individual credit rating of at least A rating from one of the rating agencies, the list of which is established by the authorized body, as well as written confirmation from the financial supervisory authority of the country of origin of these persons that they are subject to consolidated supervision.;

the existence of an agreement between the authorized body and the relevant supervisory authority of a foreign state on the exchange of information, as well as the minimum required rating of one of the rating agencies. The minimum rating and the list of rating agencies are established by a regulatory legal act of the authorized body.

4. The prohibition established by paragraphs 1 and 2 of this Article does not apply to cases of acquisition of ownership.:

1) insurance holdings:

bonds of international financial organizations, the list of which is established by the authorized body;

bonds with the minimum required rating. The minimum required rating and the list of rating agencies are established by a regulatory legal act of the authorized body.;

2) insurance (reinsurance) organizations:

financial instruments (with the exception of shares and participation shares in the authorized capital), the list of which is established by regulatory legal acts of the authorized body.

The restrictions established by this article do not apply to cases when an insurance (reinsurance) organization or an insurance holding company purchases bonds to replace previously acquired organizations that are in the process of restructuring, provided that obligations under previously issued bonds are included in the list of restructured obligations of this organization.

5. An insurance (reinsurance) organization is prohibited from:

1) issue other types of securities, except for shares, as well as unsecured bonds that comply with the conditions provided for in Article 25-1 of this Law;

2) to attract borrowed funds from banks, branches of non-resident banks of the Republic of Kazakhstan for a period exceeding three months, in an amount exceeding the amount of equity, with the exception of attracting a loan without collateral that meets the conditions provided for in Article 25-1 of this Law;

2-1) to attract borrowed funds from individuals and legal entities, with the exception of attracting unsecured loans that meet the conditions provided for in Article 25-1 of this Law;

3) provide financial assistance free of charge, with the exception of financial assistance to officials and employees of an insurance (reinsurance) organization for an amount not exceeding one hundred times the monthly calculation index;

4) provide loans by any means, except in cases established by the legislation of the Republic of Kazakhstan;

5) payment of any type of remuneration to policyholders, including through third parties, unless otherwise provided by the legislation of the Republic of Kazakhstan;

5-1) conclude, through the intermediary of an insurance agent, a second–tier bank, a branch of a non–resident bank of the Republic of Kazakhstan, or an organization engaged in microfinance activities, an insurance contract without specifying the amount of its commission in it.;

6) to give money to employees and affiliated persons of an insurance (reinsurance) organization without primary accounting documents.

6. In addition to the activities specified in paragraph 2 of this Article, insurance holdings may engage in the following types of activities::

1) purchase of property from a person who is not an affiliated person of the insurance holding company, acquired for their own needs;

2) providing consulting services on issues related to financial activities;

3) sale of own property to a person who is not an affiliated person of the insurance holding company.

7. Insurance (reinsurance) organizations and insurance holdings are prohibited from conducting operations with derivative financial instruments, with the exception of operations performed for the purpose of hedging risks.

7-1. Transactions with derivative financial instruments carried out by insurance (reinsurance) organizations and (or) insurance holdings for the purpose of hedging risks may be carried out in the form of a transaction (transactions) under a general financial agreement.

The provisions of sub-paragraphs 2), 4), 7) and 8) of paragraph 1 of Article 53-3, sub-paragraphs 2), 3) and 5) of paragraph 2 of Article 53-4, paragraph 1 of Article 53-5, paragraph 5 of Article 54-1, paragraph 3 of Article 55, paragraph 1 of Article 55-1, subparagraph 4) of paragraph 1 and subparagraph 7) of paragraph 2 of Article 55-4, paragraph 2 of Article 69 and paragraph 2 of Article 71 of this Law shall not apply to the offsetting of claims and (or) liquidation netting under the transaction (transactions) under the general financial agreement.

The parties to the general financial agreement shall set off (apply) claims and (or) liquidation netting for the transaction(s) under the general financial agreement in accordance with the procedure and on the terms defined in the general financial agreement.

A net claim that has arisen (calculated) as a result of offsetting claims and (or) liquidation netting carried out (applied) in accordance with the procedure and conditions defined in the general financial agreement is satisfied on a general basis in accordance with the rules for settlements with creditors established by this Law and the civil legislation of the Republic of Kazakhstan.

8. The total share of shares (stakes in the authorized capital) of the parent organization of an insurance group, insurance (reinsurance) organization or insurance holding company owned by subsidiaries of an insurance (reinsurance) organization or insurance holding company, organizations in which the insurance (reinsurance) organization or insurance holding company have significant equity participation, should not exceed the limits determined by the regulatory legal act of the authorized body.

9. The requirements of this article do not apply:

1) for non-residents of the Republic of Kazakhstan who are an insurance holding company, a person who has the characteristics of an insurance holding company, if one of the following conditions is met:

the presence of an individual credit rating not lower than the A rating of one of the rating agencies, the list of which is established by the authorized body, as well as written confirmation from the financial supervisory authority of the country of origin of the insurance holding company, a person with the characteristics of an insurance holding company, that these non-resident persons of the Republic of Kazakhstan are subject to consolidated supervision;

2) insurance holdings that are bank holdings that are part of banking conglomerates;

3) insurance holdings that indirectly own (have the ability to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise) shares of an insurance (reinsurance) organization through ownership (having the ability to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise shares or shares of participation in the authorized capital of an insurance holding company-a resident of the Republic of Kazakhstan, directly owning (having the opportunity to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise) by shares of the specified insurance (reinsurance) organization;

4) insurance holdings – residents of the Republic of Kazakhstan, which are financial organizations.

10. An insurance (reinsurance) organization is obliged to transfer a part of the insurance risks assumed by it from affiliated persons of an insurance (reinsurance) organization, exceeding the amount of its own retention of the insurance (reinsurance) organization, to insurance (reinsurance) organizations with an international credit rating not lower than the sovereign rating of the Republic of Kazakhstan. The list of rating agencies is established by a regulatory legal act of the authorized body.

11. The requirements of this article do not apply to the investment of assets formed from a portion of insurance premiums (insurance premiums) received from policyholders for investment purposes and income (expenses) received (incurred) from their investment under insurance contracts providing for the condition of the policyholder's participation in investments.

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

President

Republic of Kazakhstan

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