Azerbaijan, Baku, June 16 / Trend U.Ismayilova /
The Azerbaijani Insurance Company Azal Sigorta, the license of which was suspended by the Finance Ministry May 7 in connection with the failure of the state insurance supervisory authority's provisions, has completed the process of increasing the aggregate capital to the required level, the company reported.
"Based on the shareholders' decision, the authorized capital of Azal Sigorta increased to seven million manat, which exceeds the required amount," the company said.
The company intends to apply to the Finance Ministry for the restoration of the license in the coming days, the source said.
In accordance with the law "On insurance activity" the insurance companies were supposed to bring the total capital to at least two million manat until Jan.1, 2010. Despite the fact that the share capital of Azal Sigorta previously amounted to 4 million manat, the requirement on the company's total capital has not been met, whereas it is formed due to capital and insurance reserves. This situation usually develops in violation of regulations on the diversification of investments, as in this case, the funds (share capital and insurance reserves) may not be fully covered by the aggregate capital.
Under the legislation, the Azerbaijani insurers may invest in bank deposits the amount not exceeding 60 percent of total capital, and not more than 30 percent in one bank. Under the current law "On insurance activity", insurers can invest in real estate, private equity, as well as in other areas, but do not do it because of favorable conditions for investments in bank deposits.
Deposit accounts in banks are more liquid for the country's insurers, which caused active investments by insurers in banks. The Azerbaijani insurers also invest in government securities, which are less liquid and less profitable.
Azal Sigorta, which specializes in air transport insurance, was founded in 1995. The founder of the company is CJSC "Azal". The insurance company is a leader in terms of insurance rates in the country's market. Premiums for January-April amounted to 10.8 million manat with payments of 0.39 million manat.
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