Azerbaijan, Baku, Dec. 13 / Trend U. Ismayilova /
Azerbaijani insurance companies whose capital does not meet the Azerbaijani Finance Ministry's minimum requirements must be consolidated to survive on the market, Khayal Mammadkhanli, the chairman of the Alfa Sigorta Board of Directors, told Trend today.
"The practice of insurance companies' merging is used throughout the world," he said. "I think this principle can be successful on the Azerbaijani market."
He said these companies will be able to continue their activities by exchanging portfolios and clients.
Referring to the ministry's recent decision to reduce the requirements for the minimum level of capital, Mammadkhanli said it was a sound step to improve the state of insurance companies during the difficult post-crisis period.
"Mitigating the requirements for the capitalization of insurers will provide additional support for developing both insurance companies separately, and the entire insurance market in the current situation," Mammadkhanli said.
The ministry recently changed the minimum requirements for the capitalization of insurance and reinsurance companies. Based on the requirements, the capital of insurance companies as of Jan. 1, 2011 must be 3 million manat (previously 3.5 million manat), and as of Jan. 1, 2012 -- 4 million manat (previously 5 million manat).
Roughly 27 insurance and one reinsurance companies operate on the insurance market.
The official exchange rate is 0,7991 manat to $1.