AIFC issues license to captive insurer firm, signaling support for Kazakh companies relocating operations, assets to Kazakhstan

NUR-SULTAN – Astana Financial Services Authority (AFSA) issued a license Kazakhstan Energy Reinsurance Company (KERC), a captive insurer firm, setting a precedence for the nation’s companies to transfer operations and capital to the country.

A captive insurer is a licensed insurance company created by a parent company to provide coverage for itself. As a captive insurer, KERC will conduct the regulated activities of effecting and carrying out insurance under Astana International Financial Centre (AIFC) acts.

“The transfer of incorporation of the Kazakhstan Energy Reinsurance Company to the AIFC gives a clear message that the legal framework of the AIFC supports Kazakh companies willing to relocate operations and assets to Kazakhstan through the AIFC, where a regulatory regime is well placed for doing financial services business and the protection of investments,” said AFSA Acting Chief Executive Officer Mukhtar Bubeyev.

Transferring KERC’s incorporation to the AIFC marks a positive process of relocating Kazakh capital and assets from foreign jurisdictions. According to AIFC regulations, the transfer allows KERC to continue to have all the property, rights and privileges and be subject to all the liabilities, restrictions and debts that it had before the incorporation.

KERC, an affiliated company of KazMunayGas, carries on insurance business within the company and Samruk Kazyna Sovereign Wealth Fund, its parent holding company.

KERC’s shareholder is Cooperative KazMunaiGaz U.A., which is registered outside Kazakhstan. As part of the country’s investment reforms, AIFC is working to accelerate the nation’s economic growth and has implemented a regulatory regime that allows attracting capital, including repatriating assets, to the country. KERC has been operating in Bermuda since 2004 and the incorporation transfer or re-domiciliation to AIFC will allow it to transfer all legal rights and liabilities to the new entity, which is the same legal entity as the original overseas-incorporated company, as well as become the subject of tax preferences and legal regulation in accordance with international standards.

“We believe that the AIFC opens new opportunities for large companies conducting international business. This is a good opportunity and we are pleased to take advantage of what this jurisdiction offers. This is not our first transaction on this platform, but we took advantage of the opportunity to transfer company incorporation to the AIFC jurisdiction for the first time. We hope that the AIFC will continue to be a flexible and convenient platform for business,” said KazMunayGas Managing Director/Financial Controller Aigul Beknazarova.

AFSA, AIFC’s independent regulator, was established to manage the centre’s financial services and is legal entity and statutory body of Kazakhstan.