He said that the 2016 figures also display some positive trends proving that insurance companies' assets quality is improving in many respects thaks to implementing the first phase of reform under the resolution on obligatory criteria and requirements for asset adequacy, diversification and quality, since May 2016.
The assets' reallocation provided for a transition from "unreliable" (corporate securities, financial instruments for which it is impossible to determine the fair cost) to "low risk" assets (bank deposits made with trustworthy institutions, government securities).
Yet, the analysis of the year results showed that a large part of assets is placed in doubtful financial instruments, such as bills of exchanges and corporate rights to blank check companies. "This leads to the non-observation of the insurance agreement conditions by insurers both for payments in claims and the term of payment," Zaletov said.
The market authority's representative also revealed that for the second phase of the assests' reform process the commission intends to remove from the assets allowed cathegories the following classes: assets burdened with liabilities taken into account on off-balance sheet accounts (collateral, guarantees, liabilities); assets of registered and/or located on the temporarily occupied territory of Ukraine or on the territories where Ukrainian authorities cannot fulfill their duties and located on the contact line.
It is also proposed to remove claims to individuals and companies on which the National Security and Defense Council (NSDC) of Ukraine applied sanctions and banned from using or selling assets of these persons or their property, apart from cases when the restriction is imposed aiming at making insurers to observe their liabilities.
The commission proposes to expand the list of low risk assets thanks to the inclusion of claims to nonresident reinsurers under the reinsurance agreements signed with nuclear unit operators for damage caused due to nuclear incident, obligatory civil aviation insurance and under Green Card agreements if the reinsurers are not residents of the aggressor state.
In addition, the commission proposes to expand the acceptable assets by including undue bills receivable under the insurance and/or reinsurance agreements, bills receivable on accrued bank deposit interests and contributions of insurers which are members of financial groups to charter capitals of other insurers - members of the groups in the amount set in Ukrainian law if the financial group observes the requirements to regulatory capital.
Source: Interfax-Ukraine
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