Azerbaijan, Baku, June 23 / Trend N. Ismayilova /
The Azerbaijani Ministry of Finance restored the license for conducting insurance of Azal Sigorta Company June 21, which was suspended May 7 in connection with the failure of the requirements of state insurance supervisory body for the implementation of certain standards of solvency of insurance legislation and financial stability of insurers, the Ministry said.
The license was restored in connection with the removal of the reasons for its suspension, the message said.
The company said that Azal Sigorta completed the process of increasing the total capital to the required level. Azal Sigorta's authorized capital was increased up to 7 million manat, the total amount was increased in excess of the required one.
Insurance companies were supposed to bring the total capital to at least 2 million manat in accordance with the law "Insurance activity" January 1, 2010. Despite the fact that Azal Sigorta's authorized capital was 4 million manat, the requirement on total capital was not fulfilled by the company. It is formed at the expense of the authorized capital, insurance reserves. This situation usually develops while violating regulations on the diversification of investments, because in this case, the funds (authorized capital and insurance reserves) can not be fully covered by the joint capital.
According to the law, Azerbaijani insurers can not invest more than 60 percent of total capital in the bank deposits, and more than 30 percent in one bank. According to the current law "Insurance activity", insurers can invest in real estate, private equity, as well as in other areas. But they do not do so because of favorable conditions while investing in bank deposits.
Deposit accounts in banks are the most liquid ones for insurers of the country. It is the cause for insurers to actively invest in banks. Azerbaijani insurers also invest in state securities, which are less liquid and less profitable.
Azal Sigorta, specializing in insurance of air transport, 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 market of the country. Premiums for January-April amounted to 10,8 million manat with payments worth 0.39 million manat.