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A Requirement to Joint Capital to Be Set Up to Insurance Companies According to New Azerbaijani Law On Insurance

Business Materials 7 October 2006 14:24 (UTC +04:00)

The insurance companies operating in the country have positively admitted the passing of requirements to the minimum amount of capital from the authorized capital to the joint one, as it did in the country`s banking sector. These proposals were initiated by the insurers themselves, therefore they admitted the changes in the new law On Insurance quite normally, Intigam Husseynov, General Director of the insurance company Ateshgakh told Trend.

According to him, the minimum requirement to the amount of the joint capital to be set up by the Finance Ministry has not determined yet. I think that there are no restrictions in it. It would even be better if this amount were more. However, at the same time, the capabilities of the stockholders should be taken into consideration as well, since one cannot at once close companies and open new ones. That is why there should be a compromise for benefit of the common business, pointed out Mr. Husseynov.

According to him, the requirement to the joint capital of the insurance companies may reach 5 m. AZN. That is unreal. In the future, this amount may even reach 10 m. AZN, he told. He also thinks that it will be right if the approaching of the insurance companies` capitals to the level of the capitalization in the banking sector of the country. At the same time, all financial institutes all over the World are virtually developing at the one level, pointed out Mr. Husseynov.

The new schedule on increasing the minimum requirement to the capital for the insurance companies operating in the country will be announced as soon as the new law On Insurance is put to force. The Finance Ministry thinks that the new schedule will start its work since the second half of 2007.

According to the existing program on increasing of the authorized capitals in the insurance companies, till 2010, it is to be brought up to 1 m. AZN. This date is expected to be altered forward, but it is unknown yet how much exactly. The Finance Ministry will discuss it. Financial analysts think that today it is impossible to bring the date to the requirements set up to the banks, because there is a gap between them.

The authorized capital of 28 insurance companies operating in Azerbaijan to July 1, 2006 made up 35.89 m. AZN. In comparison with the corresponding period of 2005, the increase made up 41.7 percent (10.56 m. AZN). Azerbaijan`s largest insurance authorized capital are the International Insurance Company (Beynalkhalg Sighorta Shirkati), Standard Insurance, MBASK, Xalg Sighorta.

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