On approval of Regulation 3/01. Licensing of Insurance Activities and Insurance Intermediary Activities;

THE CENTRAL BANK OF ARMENIA BOARD RESOLUTION No. 344-N, 30.10.2007 On approval of Regulation 3/01 Licensing of Insurance Activities and Insurance Intermediary Activities; Obtaining the Preliminary Consent to Qualifying Holding in Statutory Capital of Insurance Company; Insurance Company s Business Plan Submission, Procedure and Date; Testing of Qualification of Candidates for Officials and Responsible Persons of Insurance Company and Insurance Intermediary; Themes of Qualification Test for Officials of Insurance Company and Responsible Persons of Insurance Intermediary By virtue of the Armenian Law On Licensing, Article 10 (4), Article 17 (2), guided by he Armenian Law On Insurance and Insurance activities, Article 17 (2 and 4), Article 21 (3), Article 22 (1), Article 23 (point 1 of 1), Article 38 (4 and 8), Article 40 (6), Article 44 (3), Article 46 (4 and 10, point 5 of 4), Article 47 (1, 2, 3, and 4), Article 49 (1), Article 51 (4), Article 88 (point 3 of 3), Article 90 (4, point 2 of 5), Article 97 (2), Article 100, Article 103 (1), Article 107 and the Armenian Law On the Central Bank of Armenia, Article 2 (3) and Article 20 (e), the Board of the Central Bank of Armenia enacts: 1. Approve Regulation 3/01 on Licensing of Insurance Activities and Insurance Intermediary Activities; Obtaining the Preliminary Consent to Qualifying Holding in Statutory Capital of Insurance Company; Insurance Company s Business Plan Submission, Procedure and Date; Testing of Qualification of Candidates for Officials and Responsible Persons of Insurance Company and Insurance Intermediary; Themes of Qualification Test for Officials of Insurance Company and Responsible Persons of Insurance Intermediary (hereinafter Regulation 3/01))pursuant to ANNEX hereto. 2. This Resolution enters into force on the 10-th day following its publication. 3. Upon entry of this Resolution into force, to repeal the Central Bank Board Resolution adopted on August 1, 2006 on approval of Procedure for Licensing of Entities Carrying out Insurance Activities, for Registration of Branches and for Preliminary Consent to Obtaining Share or Share Holding in Statutory Capital of such Entities, Resolution No. 476-N on approval of Procedure for Submission of 3-year Business Plan of Insurance Activities, Resolution No. 477-N (August 1, 2006) on approval of Themes of Qualification Test for Officials of Parties Carrying out Insurance Activities and for Agents of the Latter. Chairman of the Central Bank of Armenia T. Sargsyan Changes and amendments adopted by the CBA Board resolutions No. 104-N, 08.04.08, No. 180-N, 24.06.08 and No. 188-N, 01.07.08 have been considered. 1

ANNEX Approved by Resolution No. 344-N of the Board of the Central Bank of the Republic of Armenia October 30, 2007 R E G U L A T I O N 3/01 Licensing of Insurance Activities and Insurance Intermediary Activities; Obtaining the Preliminary Consent to Qualifying Holding in Statutory Capital of Insurance Company; Insurance Company s Business Plan Submission, Procedure and Date; Testing of Qualification of Candidates for Officials and Responsible Persons of Insurance Company and Insurance Intermediary; Themes of Qualification Test for Officials of Insurance Company and Responsible Persons of Insurance Intermediary SECTION I. GENERAL PROVISIONS Chapter 1. Subject of Regulation 1. This Regulation defines: the procedure of establishment, registration (including registration of amendments) and licensing of Armenian insurance companies; procedure of registration of branches and representative offices of foreign insurance companies operating in the Republic of Armenia; procedure of establishment and registration of territorial subdivisions, i.e. branches and representative offices of insurance companies; procedure of obtaining consent to establish a foreign branch or representation of an insurance company operating in the Republic of Armenia; procedure of obtaining the preliminary consent to qualifying holding in statutory capital of insurance company; the requirements to the premises and technical equipment of insurance companies and territorial subdivisions of the companies, and that of insurance intermediaries; procedure of submission of insurance company s three-year business plan; licensing of activities of insurance companies and insurance intermediaries; registration of insurance agents; procedure of obtaining consent to establish branches or representative offices of insurance intermediaries in the Republic of Armenia and abroad; the size of liabilities of insurance intermediaries; the amount of annual insurance premiums for insurance agents; professional adequacy and qualification standards of officials and responsible persons, as well as the procedure of testing of their professional adequacy and qualification; registration of officials and responsible persons; themes of qualification test for candidates for officials and responsible persons; as well as it regulates other relations arising out of the above areas which are reserved by law to the authority of the Central Bank of the Republic of Armenia (hereinafter referred to as the Central Bank). 2. This Regulation applies to insurance and reinsurance companies (hereinafter referred to as insurance companies) both in a process of establishment and functioning in the Republic of Armenia, to their branches and representative offices, to branches and representative offices of foreign insurance companies, and to insurance brokers and insurance intermediaries, their branches and representations. 3. All documents required by this Regulation shall be submitted to the Central Bank in a printed format and in Armenian language via a registered letter, or they shall be registered in the Central Bank. The copies of the submitted documents shall be signed by the authorized person of the insurance company or insurance intermediary and have the writing A true copy. 3.1. The pages of the charter shall be numbered and stapled; furthermore, the back side of the last page shall contain a label, in conformity with Annex 11. Chapter 2. Definitions Used in this Regulation 4. The following definitions are used in this Regulation: 1) the Central Bank the Central Bank of the Republic of Armenia, 2) Insurance company an insurance or reinsurance company, 3) Manager a manager of an insurance company or a responsible person of an insurance brokerage firm, 2

4) Committee the Licensing and Supervision Committee of the Central Bank, 5) Business-plan a three-year business plan submitted to the Central Bank, 6) Candidate a person who has supplied for manager s certificate, 7) Financial group (union) a financial group or financial union defined by legislation of any country, 8) Financial institution a bank, a credit organization, an insurance company, an investment firm, pension fund, as well as other entities defined as financial organizations by the Armenian law and/or other normative regulations. Chapter 3. Deterioration of Financial Standing 5. For the meaning of this Regulation, the deterioration of financial standing of an insurance company is occurring or is possible to occur, if: a) the combined assessment of indicators of the insurance company is below the Central Bank s score 3 (three), and/or b) the insurance company has breached or is expected to breach the main prudential standard/s, and/or c) the grounds for insolvency, as set forth in Article 2 of the Armenia law On Bankruptcy of Banks, Credit Organizations and Insurance Companies, are possible to emerge. SECTION II. GENERAL PROVISIONS OF LICENSING OF INSURANCE COMPANIES AND INSURANCE INTERMEDIARIES Chapter 4. Issue of License and Copy of License 6. The Board of the Central Bank shall issue a license to an insurance company and insurance intermediary in conformity with the Central Bank s license forms as set forth in Annexes 1a, 1b, 1c and 1d hereof. The line Insurance category of Annexes 1a and 1b shall include the categories for which the insurance company has been licensed. 7. Only one copy of a license shall be issued. 8. The Central Bank shall inform the licensed entity, together with issuing a license, that the list of normative documents regulating the scope of insurance activities is available on the Central Bank official site. 9. If the license is lost or destroyed, the insurance company shall submit to the Central Bank an application to obtain the duplicate of the license together with the attached payment receipt of state duty for the license duplicate. 10. The Central Bank shall issue the duplicate of the lost or destroyed license to the insurance company within 10 days following the day when the respective application is submitted to the Central Bank. 11. If the lost license is found, the insurance company shall return the found copy to the Central Bank. 12. If the license becomes unsuitable for use (it is damaged, torn, or the letters are erased, etc.) the licensee shall submit to the Central Bank an application to receive a duplicate of the license together with the attached payment receipt of state duty for the license duplicate. 13. The Central Bank shall issue the duplicate of the license which has become unsuitable for use within 10 days following the day of receiving the application, if the unsuitable copy is returned to the Central Bank. The top right corner of the duplicate shall have the writing Duplicate. 14. If the duplicate is lost, the new duplicate shall be given according to the procedure as set forth herewith. Chapter 5. Re-licensing 15. For the purpose of re-licensing the licensee shall submit to the Central Bank an application for re-licensing and attach the documents certifying the respective changes, as well as payment receipt of state duty for re-licensing. The relicensing shall be carried out by issuing a new copy of the license comprising the respective changes to the licensee, if the license subject to re-licensing is delivered to the Central Bank. 16. The re-licensing shall be carried out within 30 days upon submission of the respective application to the Central Bank by the decision of the Board of the Central Bank based on the positive conclusion of the Committee. 17. The application for re-licensing shall be waived in cases and according to the procedure as set forth in the Armenian law On Insurance and Insurance Activities (Articles 42 and 99). 3

Chapter 6. Returning of License to the Central Bank 18. Within one business day upon receiving the resolution of the Board of the Central Bank on revocation of the license for insurance and insurance brokerage activities under the law, the insurance company, the branch or representation of a foreign insurance company or an insurance intermediary shall return the license to the Central Bank along with a letter. 19. Appealing the Board resolution of the Central Bank on revocation of the license for insurance and insurance brokerage activities shall not be a reason for not returning the license within one business day. Chapter 7. Territory and Technical Adequacy Requirements to Insurance Companies and Their Branches, Branches of Foreign Insurance Companies, Insurance Brokers 20. An insurance company, branches of insurance company and foreign insurance companies shall have: 1) Separated premises which the insurance company (for foreign company founder insurance company) owns under the proprietary right, or has taken by lease or by the right of free use. 2) A cash vault to carry out operations by cash in rendering cash services to policyholders, and ensure safe custody of cash. 3) A separate safe to keep insurance polices. 4) Anti-fire safeguard and security alarm systems. The power supply of the systems should be connected to different sources, one of which may be local. This point does not apply to a branch of an insurance company. 21. The territory and technical adequacy requirements for insurance broker shall be determined as set forth in paragraph 20 herewith, except for points 3 and 4. The requirements set forth in point 2 of paragraph 20 shall apply to an insurance broker, if the latter carries out operations by cash envisaged in the Armenian law On Insurance and Insurance Activities ( Chapter 3, paragraph12, point c ). 22. The territory and technical adequacy requirements to the foreign branch of the insurance company shall comply with the strictest of these requirements set by the Board of the Central Bank and the supervisory authority of that country. 22.1. Instead of the equipment availability, defined in points 2, 3 and 4 of paragraph 20, hereof, the insurance company and its branch, the branch of foreign insurance company, the insurance broker may sign an insurance agreement, including at least the insurance events as follows: lost or damages of property, including cash, securities, insurance policies, payment documents and other valuable property in the premises of insurance company and its branch, branch of foreign insurance company, insurance broker, belonging to them by property right, leased (sub-leased), or received for a fee-free use, resulting from fire, from robbery, theft or burglary. The amount of insurance on the abovementioned risks may not be less than 1 percent of the total assets of the company. A non-resident insurance company providing the abovementioned insurance activities shall have the rating provided by at least one of the international rating agencies indicated below, which shall not be lower than: - Standard and Poor s BBB group - BBB- - Moody s Baa group - Baa3 - A. M. Best B group - B+ - Duff and Phelps BBB group - BBB- - Weiss B group - B- - Fitch BBB group - BBB-. Chapter 8. General Provisions SECTION III. LICENSING OF INSURANCE ACTIVITIES 23. The procedure of registration and licensing of insurance companies operating in the Republic of Armenia, registration of a branch or representation of a foreign insurance company, registration of a branch or representation of an insurance company, licensing of an insurance intermediary, registration of an insurance agent shall be carried out in compliance with the Armenian Law On Insurance and Insurance Activities and this Regulation. 4

Chapter 9. Documents to be Submitted for State Registration and Licensing of Insurance Companies 24. For state registration and licensing of an insurance company, as well as for re-registration and re-licensing as provided for in the Armenian law On Insurance and Insurance Activities (Article 160, paragraph 3) the following documents shall be submitted to the Central Bank: 1) Documents as set forth in the Armenian law On Insurance and Insurance Activities (Article 40, paragraph 1). The application for registration and licensing shall be submitted with verification of the managing body of the applicant authorized by the charter of the latter (Annex 2a), along with the reference on the officials of the insurance company (Annex 3), and business-plan (Annex 9). 2) A copy of document for registration of the brand name of the insurance company. 3) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 24.1. After being licensed an insurance company or a branch of foreign insurance shall submit to the Central Bank the changes of the internal regulations of their activities and the amended internal regulations including these changes within three days after the changes have been approved by the competent body. The amended internal regulations submitted to the Central Bank shall be signed by an authorized person of insurance company or a branch of foreign insurance managing body and sealed with the seal. 25. For re-registration and re-licensing as provided for in the Armenian law On Insurance and Insurance Activities (Article 160, paragraph 3), the insurance company shall not submit the document, required by the Armenian law On Insurance and Insurance Activities (Article 40, paragraph 1, point 14), certifying the payment onto the cumulative account opened at the Central Bank or any commercial insurance company operating in the Republic of Armenia, which is not affiliated with the insurance company. 26. If there is unessential inaccuracy in the application for receiving a license or in the attached documents (omissions, extralegal or mathematical mistakes, etc.) the Board of the Central Bank shall issue the license after this inaccuracy is eliminated. Chapter 10. Licensing of New Classes of Insurance 27. To obtain a license for a new class of insurance, the insurance company shall submit to the Central Bank documents as provided for in the Armenian law On Insurance and Insurance Activities (Article 159, paragraph 1). 27.1. To obtain a license for a new class of insurance, the functioning insurance company shall submit, as set forth in Chapter 5 hereof, to the Central Bank for re-licensing the insurance activities for a new insurance class. Chapter 11. Issuing of License 28. The Board of the Central Bank shall satisfy the application of the insurance company for state registration and licensing, as well as for obtaining a license for new class of insurance pursuant to the Law and this Regulation. 29. The founders of the insurance company shall be granted a registration certificate (Annex 7a) and a license (Annex 1a, 1b and 1c) within three business days upon entering into force of the resolution of the Board of the Central Bank on registration and licensing of the insurance company. 30. The Board of the Central Bank shall carry out the registration of an insurance company, as well as shall issue a license and a new class insurance license on the ground of the conclusion of the Committee. 31. After being granted a license the officials of the insurance company shall be registered pursuant to this Regulation. 32. The Central Bank may refuse to issue a license to an insurance company if there are grounds as specified in the Armenian law On Insurance and Insurance Activities (Article 42, and Chapter 159, paragraph 4). 33. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) Chapter 12. Registration of Branches and Representations of Foreign Insurance Companies 34. In order to register a branch of a foreign insurance company the following documents shall be submitted to the Central Bank: 1) Documents as set forth in of the Armenian law On Insurance and Insurance Activities (Article 47, paragraph 2). Moreover, the application for registration shall be submitted along with the resolution of the managing body of the organization authorized by the charter of the latter on requesting to the Central Bank for registration of a branch. The application shall be submitted in compliance with Annex 2b hereof, and the business plan shall conform to Annex 9. 2) (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008). 3) A copy of document for registration of the brand name of the branch of the foreign insurance company. 4) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 5

35. In order to register a representative office of a foreign insurance company the following documents shall be submitted to the Central Bank: 1) Documents as set forth in the Armenian law On Insurance and Insurance Activities (Article 47, paragraph 4). Moreover, the application for registration shall be submitted along with verification by the resolution of the managing body of the organization authorized by the charter of the latter in compliance with Annex 2b hereof. 2) A copy of state registration certificate for ownership, a lease/sublease or free use of the premises of the representative office. In case of a sublease contract, a copy of the main lease contract will need to be submitted; 3) Reasons for establishing a representative office. 4) A copy of payment receipt of state duty for registration of the representative office. 5) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 36. The decision on registration of a branch or representative office of a foreign insurance company shall be made by the Chairman of the Central Bank. Within three business days upon entering into force of this decision, the founders shall be granted a certificate of registration of a branch or representative office of the foreign insurance company in compliance with Annex 7b. Chapter 13. Registration of Branches and Representative Offices of Insurance Companies Operating in the Republic of Armenia 37. The branches of insurance companies operating in the Republic of Armenia shall be registered by the Central Bank. The following documents shall be submitted to the Central Bank for registration: 1) Documents as set forth in the Armenian law On Insurance and Insurance Activities (Article 46, paragraph 4). Moreover, the application for registration shall be submitted in compliance with Annex 2b of this Regulation, the reference on the branch managers shall comply with Annex 3, and the business-plan shall be submitted according to Annex 9. 2) The decision of the competent managing body of the insurance company or the extract from the minutes on election or appointment of branch managers. 3) Authorized signatures of branch managers. 4) A copy of payment receipt of state duty for registration of the branch office. 5) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 38. The representative offices of insurance companies operating in the Republic of Armenia shall be registered by the Central Bank. The following documents shall be submitted to the Central Bank for registration: 1) Documents as set forth in the Armenian law On Insurance and Insurance Activities (Article 46, paragraph 5). Moreover, the application for registration of a representative office shall be submitted in compliance with Annex 2c of this Regulation. 2) A copy of state registration certificate for ownership, a lease/sublease or free use of the premises of the representative office. In case of a sublease contract, a copy of the main lease contract will need to be submitted. 3) Reasons for establishing a representative office. 4) A copy of payment receipt of state duty for registration of the representative office. 5) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 39. The decision on registration of a branch or representative office of an insurance company shall be made by the Chairman of the Central Bank. Within three business days upon entering into force of this decision the founders shall be granted a certificate of registration of a branch or representation of the insurance company in compliance with Annex 7c. Chapter 14. Consent to Establish a Branch and Representative Office of Insurance Company outside the Republic of Armenia 40. To establish branches and representative offices outside Armenia, the insurance companies operating in the Republic of Armenia shall seek the consent of the Central Bank by submitting the following documents: 1) Documents as set forth in the Armenian law On Insurance and Insurance Activities (of Article 49, paragraph 1). 2) The decision of the board of the insurance company on establishing a branch or a representative office, or the extract from the minutes of the board meeting. 3) The branch or representative office. 4) The statement on the branch managers activities in compliance with Annex 3, along with authorized signatures of managers. 5) The decision of the board of the insurance company or the extract from the minutes of the board meeting on election or appointment of branch managers. 6) A copy of state registration certificate for ownership, a lease/sublease or free use of the premises of the branch or representative office. In case of a sublease contract, a copy of the main lease contract will need to be submitted. 6

41. The Central Bank shall grant its consent to establish a branch or representative office of insurance company outside Armenia or refuse the letter of request within 30 days upon its presentment to the Central Bank. 42. The decision to give consent to registration of a branch or representative office of an insurance company shall be made by the Chairman of the Central Bank and given to the founders within three business days. Chapter 15. Registration of Amendments 43. Insurance companies, as well as branches and representative offices of foreign insurance companies operating in the Republic of Armenia shall submit the amendments to the Central Bank for registration as set forth in the Armenian law On Insurance and Insurance Activities (Article 51, paragraph 1). 44. The replacement in the officials shall be registered in the Central Bank in compliance with the procedure set in this Regulation. 45. For registration in the Central Bank of the amendments to the charter of the insurance company, its territorial subdivisions, and that of the branch of foreign insurance company, the insurance companies shall submit the following documents: 1) A letter of request to register the amendments signed by the authorized person of the managing body of the insurance company and verified by the seal of the company. 2) The decision of the authorized body of the insurance company or the extract from the minutes of the board meeting on making amendments to the charter of the insurance company, its territorial subdivisions, and that of the branch of foreign insurance company. 3) The charter, in 3 copies, of the insurance company, its territorial subdivisions, and that of the branch of foreign insurance company. 46. For registration of the change of place of business of insurance company or its territorial subdivision, branch of foreign insurance company and/or representation, the following documents shall be submitted to the Central Bank, along with the documents specified in paragraph 45 of this Regulation: 1) A copy of state registration certificate for ownership, a lease/sublease or free use of the territory. In case of a sublease contract, a copy of the main lease contract will need to be submitted. 2) Documents certifying conformity with criteria for territory and technical equipment as set forth in Chapter 7 of this Regulation. 47. For registration of the amendments in the charter of insurance company due to the increase in its statutory capital, the insurance company shall submit to the Central Bank documents specified in paragraph 45 hereof, as well as the copy of decision on registration of the prospectus for the last issue of shares of insurance company (for open joint stock companies). 48. The Central Bank must register the abovementioned amendments or refuse the registration within 30 days upon receiving the documents set forth in this Chapter. The amendments shall be registered or their registration shall be rejected by the decision of the Chairman of the Central Bank. 49. The 30-day period may be suspended in view of clarification of some facts as required by the Central Bank. The period of suspension should not exceed the number of days prior to suspension and the number of days left to complete the 30-day period. Chapter 16. Termination (Including Suspension) of the Business of Branches and Representative Offices 50. An insurance company may suspend the business of its branch or representative office for a period, however, not exceeding one year. 51. To get permission for suspension of the business of its branch or representative office, the insurance company shall submit to the Central Bank the following documents: 1) A letter of request to get permission to suspend the business of the branch or representative office, signed by a party authorized by the managing body of the insurance company. 2) The decision of the authorized body of the insurance company on suspension of the business of the branch or representative office. 3) Reasons for suspension of the business of the branch or representative office. 4) The document certifying the transfer of assets and liabilities of the branch. 52. The Central Bank, by the decision of the Chairman, may refuse the suspension of the branch or representative office, if: 1) The documents submitted contain inaccurate or misstated information. 2) The documents submitted are incomplete. 3) The further normal service of the policyholder and beneficiaries, according to the opinion of the Central Bank, is not ensured. 4) There is no other insurance company in the given region providing insurance services. 7

53. The Central Bank shall give its consent within 20 days upon presentment of the documents provided for in paragraph 51 hereinabove to suspension of the business of the branch, or it shall issue a waiver notifying the insurance company about such waiver within 10 days. The 20-day period of review of application for suspension of the business of the territorial subdivision, required by the Central Bank in order to seek certain information, may be discontinued. Once the required information is received, the period of resumed review should not exceed the number of days prior to such suspension and the number of days left to complete the 20-day period. 54. Where the Central Bank gives no waiver to the application within 20 days or fails to notify the insurance company about suspension in the same period, the business of the branch or representation shall be deemed suspended. 55. Once the decision of the Chairman of the Central Bank on suspension of the business of the branch or representative office is received, the insurance company shall within a 3-day period publish the information about the suspension in the press with circulation of at least 1 thousand copies, and present a copy of the newspaper/journal to the Central Bank, as well as the company shall locate that information on its internet site. 56. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) 57. In the event of termination of the business of the branch or representative office, the insurance company shall submit to the Central Bank the following documents: 1) A letter of request to remove the registration of the branch or representative office, signed by a party authorized by the managing body of the insurance company. 2) The decision of the authorized body of the insurance company, or the minutes on termination of the business of the branch or representative office. 3) Reasons for termination of the business of the branch or representative office. 4) The amended charter of the insurance company (3 copies). 5) The document certifying the transfer of assets and liabilities of the branch. 6) (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) 58. The Central Bank may refuse or delay the registration of termination of the business of branch or representative office, if: 1) The documents submitted contain inaccurate or misstated information. 2) The documents submitted are incomplete. 3) The further normal service of the policyholder, according to the opinion of the Central Bank, is not ensured. 59. The Central Bank, by the decision of the Chairman of the Central Bank, shall register the termination of the business of the branch, if the branch had not carried out insurance activities for 6 months upon registration in the Central Bank. 60. Once the decision of the Chairman of the Central Bank on termination of the business of the branch or representative office is received, the insurance company shall within a 3-day period publish the information about the termination in the press with circulation of at least 1 thousand copies, and present a copy of the newspaper/journal to the Central Bank, and locate that information on its internet site. 60.1. Upon enter into force of the Central Bank decision on termination of the business of the branch or representative office the insurance company shall submit to the Central Bank the certificate of registration of branch or representative office. Chapter 17. Preliminary Consent to Acquire Direct Qualifying Holding in Statutory Capital of Insurance Company; Documents to be Submitted 61. A legal entity direct participant expecting a qualifying holding in the statutory capital of both functioning and establishing insurance company shall, before acquiring any given holding, apply to the Central Bank for preliminary consent, by submitting the following documents: 1) A letter of request of the legal entity for acquiring qualifying holding in statutory capital of the insurance company. 2) A letter from the insurance company for giving consent to legal entity preparing to acquire qualifying holding in statutory capital of the insurance company, signed by the party authorized by the managing body of the insurance company and verified by the seal of the insurance company (for functioning insurance companies only). 3) A written assurance of the executive director of insurance company that the right of pre-emption of company s participant share holding (shares) in statutory capital of insurance company specified by law and other normative regulations has been obeyed. 4) The decision of the authorized body of the legal entity preparing to acquire the qualifying holding in statutory capital. 5) The charter (with amendments made prior to registration) of the legal entity preparing to acquire qualifying holding in statutory capital. 6) The list of participants of the legal entity preparing to acquire qualifying holding in statutory capital by their share (%) of holding in the statutory capital. 7) A reference on the legal entity preparing to acquire qualifying holding in the statutory capital of the insurance company, pursuant to Annex 4a hereto. 8

8) The legal entity s financial documents of the last 3 years and the recent intermediate ones, as follows: - accounting balance sheet, - statement on financial results, - statement on funds flows, - statement on changes in equity, - notes to financial statements (legal entities functioning less than three years shall submit the abovementioned documents for the whole period of their activities). If the financial statements as specified in this point are prepared pursuant to national standards of foreign countries, the foreign legal entity shall submit to the Central Bank an independent audit opinion verifying the compliance of the presented statements with the International Standards for Financial Statements or other internationally recognized standards, or shall present any official website of that country stating that the national accounting standards of that given country are in line with the International Standards for Financial Statements or other internationally recognized standards. 9) An independent audit opinion verifying the accuracy of the last annual financial statements, pursuant to the Armenian law On Accounting and the Accounting Standards of the Republic of Armenia (for foreign legal entities - pursuant to International Accounting Standards). 10) (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008). 11) A reference from an authorized government body stating whether or not the legal entity holds debt to the budget and the pension fund (for residents). 12) Sufficient and complete support information (documents, data, and etc.) providing that the funds being invested are of lawful origin. 13) A written statement of the legal entity, expecting qualifying holding, about proposed by him changes in the insurance company s business plan submitted to the Central Bank. 14) A declaration stating the lack of grounds as specified in the Armenian law On Insurance and Insurance Activities (Article 18, paragraph 1, points 5, 6, 7, 8 and 9). 15) A declaration that no other entity is acquiring an indirect holding in the insurance company, pursuant to Annex 6a hereto, otherwise the documents specified in Chapter 18 hereunder on the entity acquiring an indirect holding. The declaration shall be submitted to the Central Bank along with letter of request of the insurance company, in statutory capital of which it is preparing to acquire or has acquired qualifying holding. 62. If a legal entity direct participant is involved in any group or a union or entity that is holding consolidated financial statements, then along with the documents specified in paragraph 61, the following documents shall be submitted to the Central Bank: 1) The structure of the group/union. 2) The following documents of the group/union for the last financial year: a. accounting balance sheet, b. statement on financial results, c. statement on funds flows, d. statement on changes in equity, e. notes to financial statements. 3) An independent audit opinion verifying the accuracy of the last annual financial statements of such group/union, pursuant to the Armenian Law On Accounting and the Accounting Standards of the Republic of Armenia (for foreign legal entities - pursuant to International Standards for Financial Statements or other internationally recognized standards, if available). 63. If the financial statements as specified in point 2 of paragraph 62 are prepared pursuant to national standards of foreign countries, the foreign legal entity shall submit to the Central Bank also: 1) An independent audit opinion verifying the compliance of the presented statements with the International Accounting Standards, International Standards for Financial Statements or other internationally recognized standards, or 2) Any official website of that country stating that the national accounting standards of that given country are in line with the International Accounting Standards, International Standards for Financial Statements or other internationally recognized standards. 64. If the financial statements as specified in paragraph 62 are available on the website of such group/union, the website/homepage address shall be presented to the Central Bank. 65. If the qualifying holding in the statutory capital of the insurance company is to be acquired by international organizations, they will need to submit to the Central Bank the documents required by paragraph 61, points 1, 2, 3, 4, 5, 8, 9, and 13. The Board of the Central Bank may agree to apply this provision also to the organizations that have international reputation and hold A- or A3 and higher ratings of agencies Standard & Poor s or Moody s. 66. If the qualifying holding in statutory capital of the insurance company is being acquired by an organization controlled by the Central Bank pursuant to the Armenian Law On the Central Bank of the Republic of Armenia, such organization shall submit to the Central Bank the documents specified in paragraph 61 points 1, 2, 3, 4, 11, 13, 14, and 15. 9

67. A natural person direct participant expecting qualifying holding in statutory capital of both functioning and establishing insurance company shall, before acquiring any given holding, apply to the Central Bank for preliminary consent, by submitting the following documents: 1) An application from the natural person for acquiring qualifying holding in statutory capital of the insurance company. 2) A letter from the insurance company for giving consent to a person preparing to acquire qualifying holding in statutory capital of the insurance company, signed by the party authorized by the managing body of the insurance company and verified by the seal of the insurance company (for a functioning insurance company only). 3) A written assurance of the executive director of insurance company that the right of pre-emption of company s participant share holding (shares) in statutory capital of insurance company specified by law and other normative regulations has been obeyed. 4) A reference on the natural person preparing to acquire qualifying holding in the statutory capital of the insurance company, pursuant to Annex 4b hereto. 5) A declaration stating that there are unpaid liabilities. 6) A written statement of the natural person, expecting qualifying holding, about proposed by him changes in the insurance company s business plan submitted to the Central Bank. 7) A declaration stating the lack of grounds as specified in the Armenian law On Insurance and Insurance Activities (Article 18, paragraph 1). 8) A declaration that no other entity is acquiring an indirect holding in the insurance company, pursuant to Annex 6a hereto, otherwise the documents specified in Chapter 18 hereunder on the entity acquiring an indirect holding. The abovementioned declaration shall be submitted to the Central Bank along with letter of request of the insurance company, in statutory capital of which the person is preparing to acquire or has acquired qualifying holding. 9) Sufficient and complete support information (documents, data, and etc.) providing that the funds being invested are of lawful origin. 68. A government expecting qualifying holding in statutory capital of an insurance company shall, before acquiring any given holding, apply to the Central Bank for preliminary consent, by submitting the following documents: 1) An application from a body, entitled to act on behalf of the government, for acquiring qualifying holding in statutory capital of the insurance company. 2) The decision of the competent government department for acquiring qualifying holding. 3) A letter from the insurance company for giving consent to a government preparing to acquire qualifying holding in statutory capital of the insurance company, signed by the party authorized by the managing body of the insurance company and verified by its seal. 4) A written assurance of the executive director of insurance company that the right of pre-emption of company s participant share holding (shares) in statutory capital of insurance company specified by law and other normative regulations has been obeyed. 5) A written attitude of the competent body of foreign country, expecting qualifying holding, about proposed by him changes in the insurance company s business plan submitted to the Central Bank. Chapter 18. Documents and Information Submitted by Entities Acquiring Indirect Qualifying Holding 69. If a qualifying holding is being acquired by interrelated entities or by the entities related to the participant of the insurance company, each of these entities will need to submit the documents specified in this Chapter. 70. Documents to be submitted to the Central Bank for an entity expecting to acquire an indirect qualifying holding in the statutory capital of an insurance company shall be the documents specified in paragraph 61, points 5, 7, 8, 9 and 14 hereinabove for legal entities, and the documents specified in paragraph 67, points 4, 5, and 7 hereinabove for natural persons, as well as the reference on legal entities related to a party acquiring qualifying holding (including legal entities in statutory capital of which the entity, expecting a qualifying holding in the insurance company, has a qualifying holding) pursuant to Annex 5a, reference on natural persons related to a party acquiring qualifying holding in statutory capital of insurance company pursuant to Annex 5b, and the declaration pursuant Annex 6b. 71. If the indirect qualifying holding in the statutory capital of an insurance company is being acquired through a direct participant, the latter will present the above documents to the Central Bank; while in other cases the insurance company. 72. If the qualifying holding in statutory capital of an insurance company is being acquired by an organization controlled by the Central Bank pursuant to the Armenian Law On the Central Bank of the Republic of Armenia, such organization shall submit to the Central Bank the documents specified in paragraph 61, point 14 hereinabove. 73. If an indirect qualifying holding in the statutory capital of an insurance company is being acquired by an organization with the rating A and B of the Central Bank, such organization shall submit to the Central Bank the documents specified in paragraph 61, points 7 and 14 hereinabove. 74. If the indirect participant in the statutory capital of the insurance company and a legal entity acquiring direct qualifying holding in the insurance company are involved in a group/union or any other entity that is holding 10

consolidated financial statements, the indirect participant shall submit the to the Central Bank documents specified in paragraph 61, points 5, 7 and 14 hereinabove. 74.1. If more than one person acquire the indirect qualifying holding in the statutory capital of an insurance company through a party, acquiring qualifying holding in the statutory capital of an insurance company, they will need to submit documents for obtaining consent to acquisition of such participation required by the Armenian Law On Insurance and Insurance Activities and this Regulation only on that natural person through whom no other person acquires qualifying holding in that insurance company. In case of need the Central Bank may require documents also from those persons, through whom the qualifying holding in the insurance company is acquired. Chapter 19. Consent to Acquiring Qualifying Holding 75. The Board of the Central Bank within 30 days upon receiving all the documents required for obtaining the preliminary consent of the Central Bank to acquire qualifying holding, shall give its consent to qualifying holding or reject the acquisition. 76. If the Central Bank does not inform the entity about rejection of the application within the 30-day period, the consent is deemed granted. 77. An indirect qualifying holding in the statutory capital of the insurance company being acquired through direct participant shall be considered refused if the letter of request for the direct qualifying holding has been refused. 78. The decision of the Central Bank on giving preliminary consent to the entity and the related entities for acquisition of qualifying holding in statutory capital of insurance company shall be effective for a three-month period, unless the same decision provides for some longer period of validity. The grounds (documents) asserting an implementation of the transaction shall be submitted to the Central Bank. Failure to implement the transaction within the timeframe determined by the decision shall cause the preliminary consent of the Central Bank to operate revoked. SECTION IV. FORMAT, PROCEDURE AND TERMS OF SUBMISSION OF THREE-YEAR BUSINESS PLAN OF INSURANCE COMPANIES AND AMENDMENTS TO IT Chapter 20. Three-year Business Plan of Insurance Company, Format, Procedure and Term of Submission 79. This Chapter shall determine the procedure for submission to the Central Bank a three-year business plan of insurance company, of a company applying for life and non-life any class insurance license, as well as a two-year business plan of a company applying for establishing a branch (hereinafter the Plan). 80. The business plan is an integral document the objectives of which are as follows: 1) To serve as a basic document which enables all interested parties (participants, investors, managers of insurance company, etc) to assess the character and peculiarities of the activities of the insurance company. 2) To help the managers of the insurance company clarify, verify and research the possible trends of prospective development of the insurance company and to serve as a basis for them to estimate the actual results of the activities of the insurance company and its effectiveness. 3) To help the insurance company implement successfully the projected goals and objectives during the scheduled three years. 4) To submit to the Central Bank the projected activities of the insurance company, thus enabling the Central Bank to assess the activity of the insurance company and its strategy. 81. The basic principles of the plan shall be as follows: 1) Realism (sufficient reasons for implementation of advanced goals and objectives). 2) Assessiveness (ability to assess the results of implementation). 3) Harmonicity (cause-and-effect relation between the different parts and the chapters of the plan, availability of logical course of the plan). 4) Concreteness (title including only essence, without superfluous information, observation of objectives per se). 5) Other principles non-conflicting with basic principle can serve as a basis for the plan. 82. The insurance company along with submission of documents for licensing to the Central Bank, and before February 15 of every calendar year, shall submit to the Central Bank the forthcoming three-year plan pursuant to Annex 9 of this Regulation. 83. The Plan shall be approved by the general meeting or by the board of the insurance company. The tables and graphs attached to the Plan shall be compiled on the basis of at least one-year forecasted indicators. The forecasted indicators should be confirmed by specific calculation and reflect the policy stipulated in the Plan. 84. The Plan, forecasted data in it, as well as the revised plan shall be submitted to the Central Bank both in paper and electronically. 11

85. The Plan of the insurance company shall include data envisaged in the format of the insurer s business plan as set forth in Annex 9 of this Regulation. Along with data required by Annex 9, the Plan may comprise additional data. 86. The content of the Plan presented by the insurance company may be much larger than the content of the format plan set forth in Annex 9, if only the additional data is very essential and significant for the Plan. 87. The Central Bank may use the Plan to estimate the strategic management of the insurance company. 88. The insurance company may submit to the Central Bank a reviewed Plan, if there has been a policy change in the company. The reviewed Plan shall include the reasons for the change of the policy. SECTION V. LICENSING AND REGISTRATION OF INSURANCE BROKERAGE ACTIVITIES Chapter 21.. Documents to be Submitted for Licensing and Registration of Insurance Brokerage activities 89. For the purpose of licensing of an insurance brokerage activity as well as for re-licensing and registration as provided for in the Armenian law On Insurance and Insurance Activities (Article 160, paragraph 5) the organization shall submitted to the Central Bank the documents as follows: 1) Documents set forth in the Armenian law On Insurance and Insurance Activities (Article 97, paragraph 2). The application for registration and licensing shall be submitted with verification of the managing body of the applicant authorized by the charter of the latter (Annex 2d), along with the statement on the activities of responsible persons of the insurance brokerage firm (Annex 3). 2) The charter, in 6 copies, of the insurance brokerage firm. 3) A copy of document for registration of the brand name of the insurance brokerage firm. 4) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 90. The brokers, who carry out operations as set forth in the Armenian law On Insurance and Insurance Activities (Article 3, paragraph 3, point c ), shall submit to the Central Bank, along with the documents specified in paragraph 89 hereinabove, the copy of the document certifying the statutory paid-up process on an account with any bank, operating in the Republic of Armenia. 91. For re-licensing and registration in the Register of the Central Bank of intermediaries as provided for in the Armenian law On Insurance and Insurance Activities (Article 160, paragraph 5), the insurance brokerage firms shall not submit the document specified in paragraph 90 of this Regulation. The abovementioned document shall be submitted incase of increase of the statutory capital. 92. Within 10 days upon being granted a license, an insurance brokerage firm shall also submit the copy of the liability insurance contract as set forth in the Armenian law On Insurance and Insurance Activities (Article 90, paragraph 5). 93. The Central Bank may require additional information necessary to check the veracity of information specified in paragraphs 89, 90, 91, and 92 hereinabove. 94. If after submission of the letter of request as set forth n paragraph 89 hereinabove there have been some changes in the information, the applicant shall present also the changed information before the Central Bank s decision making on issuing a license or refusing to grant a license. 95. The Central Bank must issue a license to an insurance brokerage firm within 5 days upon making a decision on granting a license. Chapter 22. Permission to Establish a Branch or Representative Office of Insurance Brokerage Firm in the Republic of Armenia or in a Foreign Country 96. The insurance brokerage firm, operating in the Republic of Armenia, for the purpose of receiving a permission of the Central Bank to establish a branch or a representative office in Armenia or abroad, shall submit the to the Central Bank documents as follows: 1) A letter of request to establish a branch or a representative office of an insurance brokerage firm. 2) The decision of the authorized body of the insurance brokerage firm or the extract from the minutes on establishing a branch or a representative office. 3) The reasons of establishing a branch or representative office. 4) The charter, in three copies, of the branch. 5) The statement on activities of responsible persons of the branch in compliance with Annex 3, along with their authorized signatures. 12

6) The decision of the authorized body of insurance brokerage firm or the extract from the minutes on election or appointment of responsible persons. 7) Only for branches or representative offices established in the Republic of Armenia - a copy of state registration certificate for ownership, a lease/sublease or free use of the premises of the branch or representative office. In case of a sublease contract, a copy of the main lease contract will need to be submitted. 8) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 97. The Central Bank shall grant its permission to establish a branch or representative office of insurance brokerage firm in the Republic of Armenia and abroad, if the submitted documents and the information comply with requirements of this Regulation, other laws and legal acts, the data in them are accurate and trustworthy, and there are no grounds for refusal of the permission to establish a branch or representative office of an insurance brokerage firm in the Republic of Armenia or in a foreign country. 98. The chairman of the Central Bank shall refuse to grant permission for establishing a branch or representative office of an insurance brokerage firm in the Republic of Armenia or in a foreign country, if: 1) The documents submitted are false or incomplete, or they contain inaccurate or misstated information, or 2) According to the opinion of the Central Bank, in case of establishing a branch outside the Republic of Armenia, the supervisory authority of that country fails to implement a proper and internationally practiced supervision over the activities of the branch of the insurance brokerage firm registered there, or that country does not enable the Central Bank to inspect or properly supervise the branch, and/or 3) While establishing a branch or a representative office outside the Republic of Armenia, the insurance brokerage firm fails to necessitate the establishment of the branch in the given country and, according to the opinion of the Central Bank, the firm plans to circulate criminally obtained proceeds or to assist that circulation. 99. The Central Bank, by the decision of the chairman of the Central bank, shall grant the permission to establish a branch or a representative office of an insurance brokerage firm in the Republic of Armenia and abroad, or shall refuse the letter of request within 30 days upon its presentment to the Central Bank. The 30-day period may be suspended but no longer than for 30 days in view of clarification of some facts as required by the Central Bank. 100. If within the abovementioned period, the Central Bank does not make a decision on granting a permission to establish a branch or a representative office of an insurance brokerage firm in the Republic of Armenia and abroad, the permission shall be deemed granted. 101. Within 10 days upon duly registration (licensing, patenting) of a branch or representative office in a foreign country under the laws of that country, the insurance brokerage firm must register the branch or representative office in the Central Bank submitting a document certifying the registration (licensing, patenting). 102. The Central Bank within 5 days upon registration of a branch or representative office of an insurance brokerage firm in a foreign country shall inform a state body authorized for registration of legal entities to make the respective records about the registration of a branch or representative office of insurance brokerage firm. Chapter 23. Registration of Insurance Agents SECTION VI. REGISTRATION OF INSURANCE AGENTS 103. For the purpose of recording the insurance agents in the insurance register or to change the information already recorded in the register, the person or the insurance agent shall submit to the Central Bank the documents as follows: 1) For an applicant - legal entity: a. Documents as set forth in the Armenia law On Insurance and Insurance Activities (Article 103, paragraph 1, point 1). The application for registration shall be submitted pursuant to Annex 2e. b. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) c. If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 2) For an applicant private entrepreneur: a. Documents as set forth in the Armenia law On Insurance and Insurance Activities (Article 103, paragraph 1, point 2). The application for registration shall be submitted pursuant to Annex 2e. b. A document verifying that the person, who carries out operations as an insurance agent, has studied courses of insurance, or a duly declaration of an insurance company stating that the agent, who is going to work with the company, has enough knowledge of: - basic principles of insurance activities, - insurance class or sub-class, for which the intermediary shall be carried out, - procedure of signing the insurance policies, - terms of insurance policy, including insurance events, limitations and exceptions of agreements, 13

- principles of determining the insurance coverage, - factors influencing the insurance premium, - principles of insurance indemnity payment in case of an insurance event, - laws regulating the insurance agreements. c. If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 2.1) For an applicant natural person: a. application for registration pursuant to Annex 2e. b. A document stating that the natural person acting as insurance agent has attended courses on insurance, or a duly document of the insurance company (the agent is going to work with) stating that the agent has sufficient knowledge in: 1. basic principles of insurance activities, 2. insurance class or sub-class, for which the intermediary shall be carried out, 3. procedure of signing the insurance policies, 4. terms of insurance policy, including insurance events, limitations and exceptions of agreements, 5. principles of determining the insurance coverage, 6. factors influencing the insurance premium, 7. principles of insurance indemnity payment in case of an insurance event, 8. laws regulating the insurance agreements. c. If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter. 3) The insurance agent (legal entity, private entrepreneur and natural person) along with the documents specified in point 1 and 2 of article 103, shall submit to the Central Bank a duly document of the insurance company (the agent is going to work with) stating that the insurance company shall bear the liability to pay the damage caused by the insurance agent s professional negligence. If the insurance company does not bear the liability to recover the damage caused by the insurance agent s professional negligence, the copy of the document certifying the liability to recover the damage caused by the insurance agent s professional negligence as set forth in article 112 shall be presented within 10 days upon registering the insurance agents in the register. 104. The Central Bank may require additional information necessary to check the veracity of information specified in paragraphs103 hereinabove. 104.1. Entities supervised by the Central Bank for registration of insurance agent may not submit those documents and/or materials, which have been submitted to the Central Bank before. 105. The Chairman of the Central Bank shall provide the certificate of registration to the insurance agent pursuant to Annex 7d within 3 business days upon making a decision on recording the insurance agent in the respective register. Chapter 24. Permission to Establish a Branch or Representative Office of Insurance Agent in the Republic of Armenia or in a Foreign Country 106. The insurance agent operating in the Republic of Armenia for the purpose of receiving a permission of the Central Bank to establish a branch or a representative office in Armenia or abroad, shall submit to the Central Bank documents as follows: 1) A letter of request to establish a branch or a representative office of an insurance agent. 2) The decision of the authorized body of the insurance agent or the extract from the minutes on establishing a branch or a representative office. 3) The list of responsible persons of the branch along with information about them and their authorized signatures. 4) If the applicant acts through its authorized representative, the duly issued letter of attorney of the latter). 107. The Chairman of the Central Bank shall grant its permission to establish a branch and/or a representative office of the insurance agent in the Republic of Armenia and abroad, if the submitted documents and the information comply with requirements of this Regulation, other laws and normative regulations, the data in them are accurate and trustworthy, and there are no grounds for refusal of the permission to establish a branch or representative office of an insurance agent in the Republic of Armenia or in a foreign country. 108. The Chairman of the Central Bank shall refuse to grant permission for establishing a branch or representative office of an insurance agent in the Republic of Armenia or in a foreign country, if: 1) The documents submitted are false or incomplete, or they contain inaccurate or misstated information, or 2) According to the opinion of the Central Bank, in case of establishing a branch or a representative office outside the Republic of Armenia, the supervisory authority of that country fails to implement a proper and internationally practiced supervision over the activities of the branch of the insurance agent registered there, or that country does not enable the Central Bank to inspect or properly supervise the branch, and/or 3) While establishing a branch or a representative office outside the Republic of Armenia, the insurance agent, according to the opinion of the Central Bank, plans to circulate criminally obtained proceeds or to assist that circulation. 14

109. The Chairman of the Central Bank shall grant the permission to establish a branch and/or a representative office of an insurance agent in the Republic of Armenia and abroad, or shall refuse the letter of request within 30 days upon its presentment to the Central Bank. The 30-day period may be suspended but no longer than for 30 days in view of clarification of some facts as required by the Central Bank. 110. If within the abovementioned period, the Central Bank does not make a decision on granting a permission to establish a branch or a representative office of an insurance agent in the Republic of Armenia and abroad, the permission shall be deemed granted. 111. Within 10 days upon duly registration (licensing, patenting) of a branch or representative office in a foreign country under the laws of that country, the insurance agent shall register the branch or representative office in the Central Bank submitting a document certifying the registration (licensing, patenting). SECTION VII. REQUIREMETN TO INSURANCE INTERMEDIARY Chapter 25. The Amount of Insurance Liability of Insurance Intermediaries 112. For the purpose of ensuring the recovery of damage caused by the insurance intermediary s professional negligence as set forth in the Armenia law On Insurance and Insurance Activities (Article 90, paragraph 5), the liability insurance contract must have at least 100 million dram insurance coverage for all insurance events during a year for a insurance brokerage firm, 2 million drams for an insurance agent-legal entity, 1 million drams - for an insurance agent-natural person. The professional liability contract shall not have limitation of insurance amount for an insurance event, as well as it shall have no geographic restriction. 113. The requirements of paragraph 112 hereinabove shall not apply to insurance agents who act on behalf of the insurance company which bear the liability to pay the damage caused by the insurance agent s professional negligence. 114. For the purpose of ensuring the payment of damage caused by the insurance agent s professional negligence as specified in paragraph 112, the liability insurance contract may be replaced by a guarantee contract of the same amount signed with another party. Chapter 26. The Amount of Insurance Premium for Being an Insurance Agent 115. The annual amount of insurance premium provided by one insurance contract as set forth in the Armenian law On Insurance and Insurance Activities (Article 88, paragraph 3, point 3), shall be determined 10 thousand drams, and by all insurance contracts 500 thousand drams. SECTION VIII. PROFESSIONAL ADEQUACY CRITERIA OF OFFICIALS OF INSURANCE COMPANIES AND INSURANCE INTERMEDIARY; PROCEDURE OF ASSESSMENT OF PROFESSIONAL CONFORMITY Chapter 27. General Provisions 116. This Section shall regulate the criteria of professional conformity of officials of an insurance company and insurance intermediary, as set forth in the Armenia law On Insurance and Insurance Activities, as well as the procedure of the assessment of their professional conformity and their registration in the Central Bank. 117. The officials of an insurance company and responsible persons of an insurance intermediary (hereinafter the Manager), as specified in the Armenia law On Insurance and Insurance Activities (Article 21, paragraph 2, and Article 90, paragraphs 1 and 2), must have qualification certificate as set forth in this Regulation, except for managers of structural subdivisions (heads of department, division, unit, group, etc), responsible actuary, deputy director of branch, chief accountant of branch, director of representative office of insurance company, board member of insurance agent or member of the executive body or some similar body who are responsible for operations of the insurance agent, and natural persons acting as an insurance agent. 15

118. For the purpose to hold the respective position, the certificated officials of an insurance company and responsible persons of an insurance intermediary, as well as the responsible actuary of insurance company shall pass, by letter of request of insurance company or insurance intermediary, the registration in the Central Bank as set forth in Chapter 37 of this Regulation. 119. The Committee shall conduct an interview with a candidate and reasoning from the results shall register or refuse to register the candidate as a Manager in compliance with this Regulation. 120. The grounds for admitting the candidates in the position of a Manager, as specified in the Armenia law On Insurance and Insurance Activities (Article 21, paragraph 3), are defined in Chapter 41 of this Regulations. The compliance with the requirements specified in the Armenian law On Insurance and Insurance Activities (Article 23, paragraph 1, point 5, and Article 90, paragraphs 2, point 5) shall be checked pursuant to Chapter 42 of this Regulation, and the criteria of professional conformity specified in Chapter 23, paragraph 1, point 1 of the law, are determined in Chapter 38 of this Regulation. Chapter 28. Qualification Testing 121. The checking of the Manager s qualification shall be carried out in the Central Bank by a written examination (test) or by an interview at the meeting of the Board of the Central Bank. 122. The checking of qualification by a written examination (test) shall be carried out for the following officials: 1) Executive director of an insurance company, president and the members of the management, deputy executive director, chairman and the members of executive board, chief accountant and deputy chief accountant, head and the members of internal audit group, director of a branch, chief accountant of a branch. 2) Executive director of an insurance brokerage firm, chairman and the members of executive board, deputy executive director, chief accountant, natural person carrying out operations of an insurance broker. 123. The testing of qualification by an interview at the meeting of the Board of the Central Bank shall be carried out for the chairman and the members of the board of an insurance brokerage firm. 124. The written test of the candidates shall be carried out by the Committee. 125. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) Chapter 29. Documents to be Submitted for Participation in Qualification Examination 126. For participation in qualification examination through a written test or interview, the candidate shall submit: 1) An application pursuant to Annex 2f of this Regulation. 2) A copy of the passport. 3) (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) 4) A copy of document certifying the payment of state duty. 127. The Committee shall carry out the written test or the interview within 15 days upon registering the documents specified in paragraph 126 hereinabove in the Central Bank. Chapter 30. Consent to Participation in Qualification Examination 128. The Committee may not allow the applicant to take part in written test or interview, if within three years prior to the day of application for participation in qualification examination the applicant has been deprived of the certificate of qualification pursuant to the Armenia law On Insurance and Insurance Activities (Article 148). 129. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008). Chapter 31. Examination in Writing (the Test) 130. The examination in writing (the test) is carried out via software. The members of the Committee and, if agreed with the Committee, other members of the staff of the Central Bank may watch the process of the examination. 131. The test is a document containing questions based on a list of themes determined in Section 9 of this Regulation. 132. The tests, as well as the supplements and changes introduced thereto, shall be approved by the decision of the Chairman of the Central Bank and are not subject to release. The tests are revised in case of need. 133. The tests and the number of questions these contain depend on different group of officials (based on proposed professional conformity criteria), as follows: 16

Official / Responsible person Number of questions 1. Manager of insurance company, o/w 1.1 executive director, deputy executive director 1.2 president of the management, member of the management, chairman of executive board, member of executive board 1.3 executive director of a branch of foreign insurance company, deputy executive director 100 1.4 head of internal audit, member of internal audit 1.5 head of internal audit of foreign insurance company, member of internal audit 1.6 chief accountant, deputy chief accountant 1.7 chief accountant of a branch of foreign insurance company, deputy chief accountant 1.8 director of branch 80 1.9 chief accountant of branch 2. Responsible person of insurance broker, o/w 2.1 executive director 2.2 chairman of executive board 2.3 member of executive board 100 2.4 deputy executive director 2.5 chief accountant 2.6 natural person acting as insurance broker 40 134. The candidate is given 1,5 minutes on average to answer a question of the test. 135. Each question in the test has 3-4 variants of answer, one of which is correct. 136. A correct answer scores 1; an incorrect and non-answer scores 0. Incorrect answer is deemed to be indicating the wrong one, or ambiguous correct one, or more than one answer, or indicating no answers at all. 137. The candidates are allowed to participate in the test by presenting passport or any identification document. 138. During the test, non-armenian speakers are allowed to have a translator. During the test, by consent of a member of the Committee or the Committee, the presence of a member of staff of the Central Bank is mandatory. By consent of the Committee the time of test may be prolonged for candidates who do know Armenian. 139. The test is held in a special examining room with necessary equipment. 140. A member of the Committee or, by consent of the Committee, a member of staff of the Central Bank, checks the identity of the candidate and allows him to enter the examining room where the latter may sit down at any unoccupied desk. The entrance of the candidate into the room shall be forbidden 10 minutes before starting the test. 141. A member of the Committee or, by consent of the Committee, a member of staff of the Central Bank explains the candidate how the test will be held technically. 142. As soon as the test begins the candidate shall acquaint with the assignments and choose one of multiple answers (which he thinks to be unambiguously correct) for each question (task). 143. During the test the candidates are prohibited to use any printed, typed, or manuscript materials, electronic devices, as well as to make noise, to prompt, to talk, question other participants, leave the room. If the candidate wants to leave the room his test is deemed terminated. 144. Failure to meet any of the requirements specified in paragraph 143 shall entail discontinuation of the test and a negative conclusion on the participant. 145. When the candidate finishes the test or the testing time expires, he shall have the results of his own work with the computer aided analysis in percentage. Chapter 32. Test Scoring and Test Results 146. Scoring shall be made as follows: where the candidate scores 70 per cent and more of maximum possible scores, the conclusion will be positive, and a certificate of qualification will be issued to the candidate. 147. If the requirements of paragraph 146 are not meet, the Committee shall draw up negative conclusion. 148. The results of answers to test questions shall be approved by the Committee (using the computer data) Chapter 33. Interview 149. Reasoning from the results of the interview the Board of the Central Bank shall determine the compliance of the Manager, specified in paragraph 123 of this Regulation, with the professional qualification criteria specified in Chapter 38 of this Regulation. 17

Chapter 34. Appeal against the Test 150. The candidates may appeal against the results of test by presenting a written request to the Central Bank within 5 days upon the examination. The application will need to be reviewed by the liable subdivision and, where needed, to be submitted to the Committee for review. Chapter 35. List of Certificated Officials and Responsible Persons and Issuing of Certificate 151. Reasoning from the results of examination and the positive conclusion of the Committee, the certificate of qualification shall be issued to the candidate by a Chairman decision of the Central Bank for the following positions: 1) Chairman and the members of the board of insurance company. 2) Executive director of insurance company and branch of foreign insurance company, deputy director, president (chairman) and the members of the management (executive board). 3) Chief accountant of insurance company and branch of foreign insurance company, deputy accountant. 4) Director of a branch of insurance company. 5) Chief accountant of a branch of insurance company. 6) Executive director, deputy executive director, chairman (president) and the members of executive board (the management) of insurance brokerage firm. 7) Chief accountant of insurance brokerage firm. 8) Natural person acting as insurance broker. 9) Head and the members of internal audit group of branch insurance company and branch of foreign insurance company. 151.1. Qualification certificate shall be granted to a person who received a positive conclusion (opinion) based on the results of written, or oral examination, within 20 days after the written, or oral examination, through posting his name in the list qualification and professional proficiency of officials of insurance company and responsible persons of insurance brokerage firm published on the Central Bank web site. In addition to the certificate form defined in this clause, the qualification certificate may be also provided as a hard copy, based on the request provided in writing to the Central Bank (in conformity with Annex 8). 151.2. The Central Bank's list of proficiency and professional adequacy level of officials of insurance company and responsible persons of insurance brokerage firm shall indicate the name, family name, and the position of the qualified manager or the responsible person, serial number of the qualification certificate, and the date of issue. The list of persons granted with qualification certificate shall be updated within two working days after the period of qualification of the qualified person has expired, or the qualification certificate has been revoked. 152. Qualification certificates shall be granted according to their serial number. 153. Qualification certificates shall be granted for a 3-year period upon issuance, except for certificates of the chairman of the board and the members of the board. The qualification certificates for the chairman of the board and the members of the board shall be permanent. 154. The period of validity of qualification certificates of the executive director (chairman of executive board) of insurance company and insurance intermediary may be prolonged for another 3-(three) year period without assessment of the qualification and professional conformity, as specified in this Regulation, provided that during the period of their term no sanctions have been imposed against the Managers as set forth in the Armenian law On Insurance and Insurance Activities, and that the insurance company or the insurance intermediary have not violated prudential standards, and that the Managers have had at least 150 hours of training over the last three years, as well as in case if the Central Bank does not consider qualification examination to be necessary. 155. The issued certificate is recorded in the respective register of the Central Bank, along with the name, surname and patronymic name of the certificate holder, place of registration, place of residency (if it differs from place of residency), position, the number and the date of the decision of the Chairman of the Central Bank, the serial number of the certificate and the date of issue. 156. A person deprived of qualification must return to the Central Bank his certificate of qualification (if available) within 10 business days upon deprivation. 157. In case of loss of the certificate of qualification the Managers shall notify this to the Central Bank in writing by submitting an application to the Chairman of the Central Bank. The Committee will consider the lost certificate invalid, and will issue a new one with an indication Duplicate within a 10-day period upon receipt of the application. Chapter 36. Proxy Provided by the Certificate of Qualification 158. A person granted a certificate of qualification for holding positions as set forth in point 2 of paragraph 151 of this Regulation may work as an executive director, deputy executive director, president or a member of the management (executive board) of an insurance company and a branch of a foreign insurance company. 18

159. A person granted a certificate of qualification for holding positions as set forth in point 2 of paragraph 151 of this Regulation may work also as a director of a branch of an insurance company. 160. A person granted a certificate of qualification for holding positions as set forth in point 3 of paragraph 151 of this Regulation may work as a chief accountant, deputy chief accountant, head and a member of internal audit of an insurance company and a branch of a foreign insurance company, a swell as he may work as a chief accountant of a branch of an insurance company and an insurance brokerage firm. 161. A person granted a certificate of qualification for holding positions as set forth in point 6 of paragraph 151 of this Regulation may work as an executive director, deputy executive director, president or a member of the management (executive board) of an insurance brokerage firm. 162. The branch of an insurance company may not have a chief accountant, if the branch operates by such software which fully provides the reflection of all the transactions of the branch in the balance sheet of the insurance company. 163. A chief accountant of an insurance company, a branch of a foreign insurance company or of an insurance intermediary may also hold a position of a member of the management (executive board) of that company without a certificate of qualification for a member of the management (executive board). Chapter 37. Registration of Managers and Responsible Persons 164. For registration of a Manager or the changes in the management of an insurance company and insurance intermediary, the following documents shall be submitted to the Central Bank: 1) A letter of request from the insurance company and insurance intermediary on registering the Manager or on introducing changes in the management, signed by the party duly authorized by the management body, and certified by the seal of the insurance company or the insurance intermediary. 2) The decision of the authorized body on appointing of a Manager or introducing changes in the management. 3) The general list of Managers with introduced changes. 4) A reference on Manager s activity, pursuant to Annex 3 hereof. 5) If the person works in another organization, a written consent from that organization. 6) A copy of diploma/certificate of higher education, if not available a copy of diploma/certificate of other education. 7) A copy of work-book, except for foreign citizens. The certified director of the branch of insurance company shall not be registered in the Central Bank. 164.1. If the Manager has submitted to the Central Bank information concerning himself in the past and then he applies for registration (at the same or another insurance company/insurance brokerage firm) he may submit only a notice stating that there are no changes in the reference submitted for the last registration. If information has changed, he may submit only the changes. 164.2. If the Manager, who has been registered in the Central Bank before, applies for registration in another position (at the same or another insurance company/insurance brokerage firm) he shall be invited to the meeting of the Committee unless the Central Bank considers it necessary. 165. For registration of the Manager who has passed the test, the Committee shall hold an interview at the Committee s meeting. 166. (Annulled according to the CBA Board resolution No. 188-N, 01.07.2008) 167. The conformity of the candidate for Manager with the professional criterion as set forth in Chapter 38 hereinafter shall be checked during the interview at the Committee s meeting. 168. The registration of a Manager shall be waived by the decision of the Chairman of the Central Bank, if: 1) The candidate for Manager does not meet the requirements as set forth in the Armenian law On Insurance and Insurance Activities (Article 23, paragraph 1, or Article 90, paragraphs 3). 2) The candidate for Manager does not conform to at least one of criteria set forth in paragraph 170 of this Regulation. 3) The documents submitted are incomplete, inaccurate and do not comply with the requirements of the law, other normative legal acts and the requirements set forth by the Central Bank. Chapter 38. Professional Conformity Criteria 169. A candidate for Manager, submitted by a letter of request of an insurance company or insurance intermediary for registration, must be aware of the laws regulating insurance and insurance intermediary activities, the relevant regulations, and shall be aware of the business plan and internal normative regulations of the insurance company or insurance intermediary. 170. The candidate for Manager shall meet the following requirements, except for cases provided by paragraph 170.1 hereof: 19

Candidate for a Manager Criterion The Managers of an insurance company, of which: 1.1. Chairman of the board, member of the board a. in case of higher education - at least 5-year professional work experience, if not at least 10-year professional work experience, and b. the certificate of qualification issued by the Central Bank 1.2. Responsible actuary a. actuarial, statistical, mathematical, engineeringeconomical education affirmed by diploma/certificate of higher educational institution of the Republic of Armenia or a foreign country, or a respective document issued by a foreign organization certifying the qualification of an actuary; and/or b. at least 5-year professional work experience 1.3. Executive director, head of the management, member a. higher education, and of the management, chairman of the executive board, b. at least 5- year professional work experience, of which members of the executive board, deputy executive director, at least 2 years in a managerial capacity, and executive director of a branch of foreign insurance c. the certificate of qualification issued by the Central company, deputy executive director Bank 1.4. Director of branch a. in case of higher education - at least 1-year professional work experience, if not at least 2-year professional work experience in field of insurance, and b. the certificate of qualification issued by the Central Bank 1.5. Head of internal audit, head of internal audit of foreign insurance company, member of internal audit, member of internal audit of a branch of foreign insurance company 1.6. Chief accountant, deputy chief accountant, chief accountant of a branch of foreign insurance company, deputy chief accountant 20 a. higher education, and b. 3- year professional work experience, and c. the certificate of qualification issued by the Central Bank a. higher education, and b. 2-year professional work experience, and c. the certificate of qualification issued by the Central Bank 1.7. Chief accountant of a branch a. in case of higher education - at least 1-year professional work experience, if not- at least 2-year professional work experience, and b. the certificate of qualification issued by the Central Bank 1.8. Director of representative office, deputy director of none branch of insurance company, deputy chief accountant of branch The responsible person of an insurance broker, of which: 1.9. Executive director, chairman of the executive board, deputy executive director a. higher education, and b. at least 3-year professional work experience, and c. the certificate of qualification issued by the Central Bank 1.10. Chief accountant a. higher education, and b. 2-year professional work experience, and c. the certificate of qualification issued by the Central Bank 1.11. Natural person acting as an insurance broker the certificate of qualification issued by the Central Bank The responsible person of an insurance agent, of which: 1.12. Member of board or executive body or of any equal none body, liable for activities of an insurance agent 1.13. Natural person acting as an insurance agent none 170.1. If the candidate for Manager does not have the work experience and/or higher education specified in paragraph 170 herein he shall have the right to submit to the Central Bank relevant documents, materials