Kyrgyzstan: Establishment of the first reinsurance company
This decision was taken in order to protect the insurance industry by reducing technical risk and adverse financial consequences the insurers are exposed to.
According to the press release, the main objective is the creation of a national reinsurance system, the re/insurance industry development and also attracting foreign investors in Kyrgyzstan's market.
The bill stipulates that "insurance companies are required to cede compulsory insurance premiums in reinsurance to the KYRGYZ-English Reinsurance Company. In this case, the reinsurance contract sets at 20% the net retention (the limit upon which the claims from an insured event are supported by the insurer), the amounts exceeding this limit being covered by reinsurance".
The capital of the KYRGYZ-English Reinsurance Company will be KGS 1 billion (EUR 16 million), divided into one million ordinary shares. The nominal value per share will be KGS 1.000 (EUR 16.3). Also, participation in Kyrgyz-English Reinsurance Company goes as follows: 10% of the shares belong to the state and 90% to - ASUIA- All Seasons Underwriting Agencies Ltd. Insurance
During 2005-2011, the annual average growth of gross written premiums was between 9-33%. It is estimated that the volume of underwritings would increase by 40% in 2012, to KGS 1.0 billion (EUR 16 million) compared to financial year 2011, when business totaled EUR 10.34 million.
A significant share of the GWP is ceded in reinsurance to foreign companies. For example, last year in Kyrgyzstan, total of amount of gross premiums ceded in reinsurance went up to KGS 497.4 million (EUR 8 million), that is 70.1% of total GWP, out of which about KGS 491.2 million were ceded to foreign companies (69.3%) and only KGS 6.2 million (EUR 101.463) or 0.9% of premiums ceded were taken over by local insurers.