For the insurance companies established within the year containing the

For the insurance companies established within the

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For the insurance companies, established within the year, containing the reporting quarter, the “n” is the number of month of
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operation of the given company. Furthermore, if the insurance company has operated for a non-full month, then “n” is considered as 1 in the calculation of the indicator. Total assets are being averaged on a monthly basis, from the beginning of the year. Furthermore, for the companies, established during the given year, the average is being calculated for the months of operation. Total assets are included in calculation of the ratio with their book value. The calculation of the ratio is conducted, based on the data of “Form 1”, “Form 5” statements of Regulation 3/04. E3 ((Accrued net insurance compensations + net regulatory expenses + change of Net RBNSR and Net IBNRR) / Net earned insurance premiums) * 100 E3 15% =5 15% < E3 ≤ 25% =4 25% < E3 ≤ 30% =3 30% < E3 ≤ 35% =2 35% < E3 =1 This ratio represents the “loss ratio”. The lower is the loss ratio of the company, the higher is the company’s profitability level. The ratio is being calculated only in the case, when the reporting quarter in the last quarter of the year. The indicators of the ratio are being calculated on an annual basis. Net regulatory expenses represent the expenses of the company on insurance compensations (expenses on determination of the size and reasons of the damage, other expenses, related to arrangement of the loss),
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deducted by the share of participation of reinsurers in those expenses. Net RBNSR and Net IBNRR are being calculated as the difference of the amounts of RBNSR and IBNRR, calculated in accordance with Regulation 3/03, and the share of the reinsurer in those reserves. The net earned insurance premiums are being calculated as the difference between the accrued insurance premium (deducted by the share of the reinsurer and the amount of insurance premiums, returned due to terminated contracts) and the change of the amount of reserve of non-earned insurance premiums (deducted by the share of the reinsurer in that reserve). This ratio is not being calculated for the funding activity of life insurance companies. The calculation of the indicators of the ratio is conducted, based on the “Form 1”, “Form 4”, “Form 5” statements of Regulation 3/04. E4 (Operational expenses / accrued insurance premiums) * 100 E4 15% =5 15% < E4 ≤ 25% =4 25% < E4 ≤ 35% =3 The ratio shows the operational efficiency of pure insurance activity (underwriting) of the company. The lower the level of this ratio is, the higher is the profitability level of the company. The amounts, accumulated from beginning of
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35% < E4 ≤ 50% =2 50% < E4 =1 the year, are used in the calculation of the ratio. Operational expenses include the non-interest expenses of the company (administrative and PR expenses, training expenses, etc.) and other expenses on insurance, except for the insurance premiums, subject to return due to terminated insurance contracts.
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