I. AFSA Institutional Overview

Transcription

‘06
annual report
© 2007
Albanian Financial Supervisory Authority
Any use of data included on this publication should be subject of the reference to AFSA.
Please contact us for any further information.
Address : Rr. “Perlat Rexhepi”, Kati II, Tirana / ALBANIA
Tel : +355-4-247148, 250686
Fax : +355-4-250686
E-mail : [email protected]
URL : www.amf.gov.al
Graphic Design: Studio Grafi ke Elsi Kongo
Press: PEGI
Table of Contents
Chairperson’s Statement
4
Executive Summary
5
AFSA Institutional Overview
6
1.1
1.2
1.3
AFSA Set Up
AFSA as a Regulatory Entity
AFSA Management and Organization
6
8
10
AFSA Activity
2.1
2.2
2.3
2.4
2.5
18
Regulatory Activity
Licensing Activity
Supervisory Activity
Institutional Relations
Information and Technology
18
21
27
45
49
Future Perspective
51
Appendixes
53
A.
B.
C.
D.
AFSA Organizational Structure
Non- Banking Sector Legal and Regulatory Framework
List of Supervised Institutions
Statistical Tables
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S U P E R V I S O R Y
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Chairperson’s Statement
Honorable ladies and gentleman,
It is a great pleasure for me to present the fi rst Annual Report of the
Albanian Financial Supervisory Authority.
The AFSA was established by the Parliament of Albania as a unique
independent regulatory and supervisory institution of non-bank financial markets and started its operation as of October 2006. AFSA
establishment demonstrated the commitment of Albanian authorities in terms of improvement and strengthening of non-bank fi nancial markets in the frame of fi nancial system in Albania and in the
overall country economy.
Approximation to European standards in the context of the commitment made by Albania through Stabilization and Association Agreement, dynamic development and markets best practices efficiency have laid out the need
of revising the legal framework, which regulates the supervised sectors, as well as, the
supervisory traditional methodology. Drafting of compliant codes concerning markets’
regulation area associated with risk based modern supervisory methodology and with
increasingly improved expertise by maintaining a flexible regulatory environment will
promote non-bank fi nancial market development to protect public interests.
The Report focuses on two directions: the AFSA institutional establishment by means of
describing the establishment, the organization structure and its functions – The following
part of the Report addresses the non-bank financial markets activity over 2006 and the steps
taken by the respective supervisory institutions and, further on, by AFSA in terms of regulation and supervision. Additionally, the Report presents the AFSA vision for the future.
The activity, which is described in this report, has been a challenge for the AFSA staff
members, who covered it with a serious commitment. In addition, Board members have,
provided their contribution through their constructive and professional role to establish an
efficient and modern institution. I express my gratitude to all of those who assisted and
supported AFSA and, specifically, the World Bank.
I hope that this report will be of interest and valuable to the readers.
Ms. Elisabeta GJONI
Chairperson
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Executive Summary
The Albanian Financial Supervisory Authority (AFSA) was established in 2006. The Authority consolidated the regulatory – supervisory functions of fi nancial non-banking activities, which were previously carried out by Insurance Supervisory Authority, Albanian
Securities Commission and by the Inspectorate of Supplementary Pensions Private Institutions. Protection of consumers’ interests, promotion of sustainability, transparency and
reliability of non-banking fi nancial institutions as well as ensuring law enforcement constitute the goals of the Authority. World Bank has played a significant role in supporting
the Government initiative regarding AFSA design and institutional establishment.
Insurance market is the largest and most developed market across non-banking financial
markets, whereas securities and private pensions markets are in their initial development
stage. Albanian insurance market, despite challenges and issues, has recently been subject to a positive development trend and it presents a large potential in terms of quality and
quantity expansion. This potential is based on the favorable economic conditions, improved
regulatory and supervisory system, low market penetration rate, as well as, on business community and population, which are dynamic and easily adaptable. It is important to point out
that foreign investors see the insurance market as very attractive. Premiums volume in 2006
increased by 11.95% compared to 2005, while the total assets amounted to about 11,4 billion
ALL1 marking an increase to an extent of 11,69%. Although Premiums Income to GDP ratio
at 0.50% and Assets to GDP ratio at about 1.3% are lower than in similar markets, they indicate potential for market development Premiums structure, although under improvement,
consists of motor compulsory insurance, which takes up about 66% of it. Life insurance
takes up about 7% of gross written premiums. Loss ratio for the market remains at a low rate
of about 35%, which is still far from the international minimum standard consisting of a rate
of 50%. Bringing loss ratio to industry standards is one of the main AFSA priorities. There are
seven non-life insurance companies, two life insurance companies and one company which
conducts both life and non-life activity that operate in the market.
Three pensions companies operate in the private and supplementary pensions market.
Range of activity in this market is limited. Pensions accumulated fund amounted to about
13.15 million ALL and the number of contributors was above 2600. Future development of
this market is part of a wide reform with regard to the development of pensions’ fi rst and
second pillar. Securities market is mainly focused on retail trading of the Government papers, while stocks market remains still undeveloped.
Improvement of regulatory framework by ensuring an approximation to the European Union
Directives for the three financial sectors under jurisdiction, transition to a risk based supervisory system associated with introduction of the IT developed platforms, as well as, promotion
of the markets development along with the outputs provided by these markets constitute
some of Albanian Financial Supervisory Authority future priorities. In addition, AFSA institutional consolidation pursuant to standards of a financial regulator remains a priority task.
1)
Albanian Lek – ALL (as of December 29th, 2006 1 Euro=123,85 ALL)
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I. AFSA Institutional Overview
1.1 AFSA Set Up
1.1.1 Establishment of a Unified Regulatory Entity
Year 2006 marked a significant step in terms of the reformation of supervision and regulation
relating non-banking financial system. Based on the Government’s initiative to reform the nonbanking financial regulatory system towards unification into a consolidated regulatory entity,
and based on the close consultancy and assistance of World Bank, the integration of regulatorysupervisory entities was accomplished in October 2006 including markets and legal entities
performing activities in the insurance area, securities market, as well as, supplementary private
pension schemes. In this context, the unification of Insurance Supervisory Authority (ISA), Albanian Securities Commission (ASC), as well as, I this led to the establishment of the Albanian
Financial Supervisory Authority (AFSA) as the unique institution responsible for licensing, supervision and regulation of the overall non-banking financial sector activity in Albania.
All component elements of the regulators’ unification process in the non-banking sector, including drafting of the strategy, AFSA establishment, building of institutional capacities, and
selection of trained staff, as well as, Authority’s vision for the future were accomplished upon
the World Bank permanent support. This cooperation continues in relation to the improvement of both, the regulatory-supervisory framework and the functions of the institution.
AFSA was established pursuant to Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory Authority”, which came into effect as of 10 August 2006 following its
decreeing by the President of the Republic and its publishing in the Official Journal. The
Parliament of Albania appointed 7 members of AFSA Board as of 27 September 2006, thus
allowing the Albanian Financial Supervisory Authority to start its activity as of 11 October
2006. Authority is a central institution, which is independent from the Government and
reports to the Parliament on its activity performed over the prior year.
Financial Supervision Integration Advantages
Integrated supervision is an approach, which is based on the assumption that, in a global economy, changes to institutions that provide fi nancial services are becoming decreasingly smaller and they are often causing confl icting
regulative practices, which may leave room form violations or negative influences on the fi nancial markets development. Financial markets’ fast development and launching into the market of increasingly more complex fi nancial
services instruments are factors, which, in several cases, have caused an overlapping of these markets’ supervisory
coverage scope. A new and highlighted trend of fi nancial regulators’ unification can be observed over the last decade,
which is also a characteristic of the Eastern Europe.
A fully integrated supervisory structure is better than a fragmented structure due to the following reasons:
• Integration ensures equivalent regulation and addressing standards across different sectors;
• Integration provides synergy between different regulators’ functional areas either from the personnel or from
the regulatory impartiality point of view;
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•
Integration facilitates international cooperation better.
Integration can be a complete unification, or into two regulatory structures. Albania pursued the model of two fi nancial regulators (Bank of Albania and AFSA), to be reviewed at a second stage towards a complete unification.
Integration Models
Relevant experiences from developed countries have demonstrated that there are two models of fi nancial system
regulatory institutions integration:
a. Horizontal Integration – unified regulator’s organization structure is built according to the supervisory processes functions (on site, off site supervisions, licensing),
b. Vertical Integration – organization structure is built according to sectors (insurance, investments, pensions).
Both to date theoretical analysis and experiences speak in favor of a functional or “horizontal” integration, which,
in fact, has greater administration challenges at the initial transfer stage, although it has a series of advantages
during the activity of the institution. Albania applied the “horizontal” model for a functional integration.
.
1.1.2 Integration in the Case of Albania and the Chosen Model
After taking into consideration the development of the fi nancial sector (especially the nonbanking sector) and the number of fi nancial institutions operating in 2006, it was concluded that Albania had too many fi nancial regulators. In addition, the fi nancial sector
regulatory and supervisory function was shared among the Bank of Albania, which supervises the banking sector and a series of regulatory entities with different statuses that
supervised various areas of non-banking fi nancial sector (ISA, ASC, ISPPI). This had led to
fragmentation of authority and responsibilities, sharp differences in terms of standards as
well as inefficient use of regulatory and supervisory skills.
The establishment of the Albanian Financial Supervisory Authority, division and standardization of fi nancial sector regulation and supervision into two main pillars based on the
banking sector supervised by the Bank of Albania and the non-banking sector supervised
by an integrated regulatory entity (AFSA) is the best and most appropriate solution for the
country’s fi nancial system. On the other hand, non-banking fi nancial system regulatory
and supervisory integration will enhance the opportunities for a more rapid and sustainable development of this important sector of the economy.
Albania chose the “horizontal integration”, which is a combination of the functional integration at high levels of the organization unit of AFSA structure and, inside them, a sector
division. Thus, the main departments are defi ned by the key functions of the following integrated institutions: licensing department, off-site department, on-site department, legal
affairs department, etc. They include the sector divisions such as, for example, insurance
activities licensing, securities investment activities, etc.
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1.2 AFSA as a Regulatory Entity
Mission
The AFSA’s fundamental mission is to protect the consumers’ and investors’ rights closely
linked with the safety of the supervised operators by means of ensuring law enforcement.
Vision
Promoting and fostering higher standards to protect the consumers and licensees’ integrity, non-banking fi nancial market stability and efficiency increase, as well as, improvement
of professional degree by means of permanent enhancement of supervisory and regulatory
level in the market make up our targets.
Key Objectives
Within the frame of performing its functions and exercising its authorities set forth in the
law, the Albanian Financial Supervisory Authority is led by the following objectives:
1. Protection of consumers’ interests;
2. Enhancement of sustainability, transparency and reliability
of non-banking fi nancial markets;
3. Ensuring law enforcement.
Institutions under jurisdiction
•
•
•
•
Life and Non-Life Insurance Companies;
Reinsurance Companies;
Brokers and Insurance Agents;
Tirana Stock Exchange;
•
•
•
•
Albanian Share Register;
Securities Financial Intermediaries;
Investments Advisers;
Supplementary Pensions Private Institutions
AFSA’S Main Functions
AFSA’s main functions consist of the regulation and supervision of the following:
a. Insurance market and the activity of this market, which includes all insurance, reinsurance, intermediary activities and operations that stem from these activities.
b. Securities market and the activity of this market, which includes the activity of entities,
linked with securities investments which operate in this market.
c. Supplementary pensions market and the activity of this market, where all supplementary pensions’ insurance activities provided by the supplementary private pensions
institutions are included.
d. Other non-banking fi nancial institutions in compliance with the defi nitions set forth in
special laws of the area.
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ACCOUNTABILITY
Financial System Supervisory and Regulatory Structure in Albania
Financial Supervisory
Authority (Non-banking Sector)
Bank of Albania
(Banking Sector)
Banks
Insurance
Market
Other
Institutions
Securities
Market
Private
Pensions
Market
Supplement Private Pensions Institutes
Investments Advisors
Securities Registers
Securities Business Intermediaries
Securities Markets
Insurance Service Suppliers
Insurance Business Intermediaries
Insurance Companies
Other Financial Institutions
Foreign Exchange Offices
Universal Banks
MARKET OPERATORS
FIELDS
REGULATORS
Parliament
The AFSA’s regulatory and supervisory basic functions are set forth basically in Articles
2 and 13 of the Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory
Authority”, and partially in the laws of the area (Law No. 9267, date 29 July 2004, “On the
Insurance, Re-insurance and Intermediary Activity in Insurance and Reinsurance”, Law
No. 8080, date 01 March 1996, ”On Securities”, and in Law No. 7943, date 01 June 1995,
“On Supplementary Pensions and Private Pensions Institutions”. However, a series of regulatory functions stipulated by the laws of the area are addressed in various manners as a
result of the heritage of different dependencies of the three prior regulators. Legal revisions
in terms of clear defi nition of authorities on standards issuance or recommendation, laws
and by-laws of the areas make up an ongoing process of institutional integration.
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1.3 AFSA Management and Organization
1.3.1 AFSA Board Activity
The board is the Albanian Financial Supervisory Authority’s leading and decision making
organism. It is a collegial body composed of 7 members, three of which, the chairperson
and two deputy chairpersons are full time executive members. The chairperson of the
Board and one of the two deputy chairpersons are elected for a 5-year term, whereas the
other deputy chairperson is elected for a 4-year term. The term for the four other Board
members is as follows: the fi rst – 5 years, the second – 4 years and two others – 3 years.
All board members are elected by the Parliament of Albania. The Council of Ministers recommends the chairperson, the two chairpersons and two members (the Bank of Albania,
Ministry of Finance and National Accounting Council recommend three out of these five
members), whereas the Parliament recommends two other members.
The Albanian Financial Supervisory Authority Board has the following composition:
1. Ms. Elisabeta GJONI
Chairperson
2. Mr. Keler GJIKA
Deputy Chairperson
3. Ms. Ermela GUXHOLLI
Deputy Chairperson
4. Ms. Miranda RAMAJ
Member
5. Ms. Diana LAMANI
Member
6. Ms. Raimonda KARAPICI
Member
7. Ms. Silvana BELLO
Member
During 2006 the Board had conducted frequent meetings to discuss a series of legal duties
connected with AFSA set-up and institutional functioning. The purpose of the meetings
has been the merging and consolidation of three existing regulators into one entity. Simultaneously the Board has cautiously tracked market developments utilizing the work and
experience of AFSA’s staff and WB assistance, by responsibly exercising its authorities in
relation to attentive market supervision through making a series of important decisions.
The Board’s activity has consisted in passing a series of regulations concerning functioning or the market, implementing a series of administrative measures targeting regulation
of the market and operators which conduct their activity in this market.
Non-executive members of the Board have provided a special contribution in the relevant
areas by means of committing a considerable amount of time and energy.
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AFSA Board Members
Ms. Elisabeta GJONI / Chairperson
Mr. Keler GJIKA / Deputy Chairperson
Ms. Miranda RAMAJ / Member
Ms. Ermela GUXHOLLI / Deputy Chairperson
Ms. Diana LAMANI / Member
Ms. Rajmonda KARAPICI / Member
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Ms. Silvana BELLO / Member
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Financial Supervisory Authority Board Main Competences
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Drafts the rules for the description and scope of work of every department and unit.
Drafts and adopts key principles of its activity.
Drafts and adopts rules and guidelines as set forth in the law.
Hands out written guidelines concerning interpretation and enforcement of laws and by-laws.
Issues, refuses, cancels or revokes licenses of exercising activity in the non-banking financial market.
Limits or interrupts investments of insurance and re-insurance companies when they do not comply with regulatory rules or when they put the financial position of the company into risk.
Reviews insurance contract terms before they are launched into the market by the operators.
Adopts the financial statements of insurance and re-insurance companies.
Adopts and distributes accounting standards and financial reporting formats, which are binding on the licensees.
Defines supervisory and control policies of the supervised entities and of the non-bank financial market development.
Adopts the list of accounting experts for the Companies that operate in the non-bank financial markets.
Annually adopts the report on industry in connection with the condition and the prospect of the non-bank
financial market.
Adopts inspection handbooks.
Pursuant to the law, makes a decision to start, the bankruptcy procedures for the supervised companies and
appoints the liquidator.
Adopts the AFSA draft budget and the annual report.
Makes decisions on entering into cooperation and information exchange memorandums with authorities inside
and outside the country.
Makes decisions about hiring area experts to provide consultancy service.
Adopts the salary and remuneration policy of AFSA staff.
Adopts rules regarding staff appointment and dismissal.
1.3.2 AFSA Structure
The Parliament of Albania adopts, upon the AFSA Board recommendation, the Authority’s
organizational structure.
The Board adopts the regulation of internal administrative organization, special functions
and responsibilities of departments and directories, communication procedures among
them, as well as, responsibilities of technical staff and
other employees. AFSA, in the frame of its staff strucAFSA Structure
turing and organization, is inclined towards ensuring
the required inputs and human resources to perform a
Completion of tasks and meeting the objectives
is ensured by the authority’s staff, which is orhighly efficient supervision and regulation of various
ganized based on a structure adopted by the
non-banking fi nancial sectors.
Council of Ministers Decision No. 551, date 02
August 2006 “On the Albanian Financial Supervisory Structure”.
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AFSA commenced its activity as of October 2006 with
an organizational structure adopted pursuant to the
Council of Ministers Decision No. 551, date 02 August 2006 and with a level of salaries for
the executive or non-executive Board members as set forth in Law No. 9584, date 17 July
2006, “On Salaries”. The AFSA 2006 organizational structure consisted of 37 employees.
The level of salaries decreased for several staff members. This did not prove to be very
appropriate in terms of integration challenges and in terms of covering all regulatory functions that a regulatory entity should perform. This structure is expected to improve and
the staff number is expected to increase over time, starting from 2007 , based on the needs
and best practices.
1.3.3 Management Activity
The AFSA management has worked towards the establishment the operation of this new
regulatory entity within a short time. Initially, the attention of the executive bodies of
AFSA focused on the selection of professional staff consisting essentially of specialists,
who have a long experience in different sectors, subject to AFSA’s supervisory activity.
In this context, a great attention has been paid to motivate the selected staff, therefore a
salary and supplementary benefits policy has been drafted essentially based on the experience, training and responsibilities. Despite the efforts, it is difficult to keep the skilled
employees due to the low salary ceiling. Consequently, AFSA drafted terms of reference
in order to prepare a better organizational and salary structure to meet the goals of the
institution. The new AFSA recommended structure has been approved by the Board and
presented to the Parliament of the Republic of Albania for ratification.
In order to ensure an efficient supervision, AFSA leadership has been provided with foreign
technical assistance and it has enjoyed the close cooperation of international fi nancial donors and institutions like World Bank (WB), Financial Services Volunteer Corps (FSVC) regarding the drafting of a well-studied strategy concerning non-banking fi nancial market in
Albania. On one hand, the AFSA has paid special attention to the institutional presentation
to the public and various stakeholders. On the other hand, AFSA, although newly established, has continued its day-to-day supervisory activity by regularly monitoring the nonbanking fi nancial market and the operators, which conduct their activity in this market.
1.3.4 Human Resources Policy
The human resources area bears a special importance, because the attainment of targets
set by AFSA depends on the quality and motivation of every employee. The main target in
the area of human resources during 2006 was the professional development of the employees and their motivation to meet the institution goals.
The Human Resources Sector, as a part of a FSVC program, has received very useful as-
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sistance and support from experts with long experience in the human resources management area. This program focused on important key issues:
•
•
•
•
•
The drafting of Human Resources Strategy;
The defi ning of policy directions in human resources area;
The drafting of staff capacity building programs including training needs analysis;
The drafting of job description in compliance with the AFSA organizational structure;
The establishment of a salary structure that allows flexibility based on job performance.
The main human resources policies in 2006 have focused on encouragement and promotion at work, selection of a well-trained staff, as well as, the professional development of
staff through training.
FSVC experts recommendations on important
issues regarding human resources area
Recruitment
• Drafting of a more attractive package about staff recruitment, which, apart from the salary, must include career
promotion opportunities, professional training, better work and communication conditions and means, appraisal
and motivation at work (rewards) etc.
• Drafting and application of uncomplicated and reasonable tests for the recruitment process.
• Drafting of a plan about gradual increase of the staff number and defining of higher priority sectors where more
staff is needed.
Performance Appraisal
Developing a simple and effective form of performance appraisal and linking this to the salary.
Career Promotion
Finding and offering opportunities to build professional capacities of the specialists that work for AFSA through
training not only inside, but also abroad. This is also a good opportunity concerning motivation enhancement.
Staff motivation at work
The crucial objective of such a policy is to increase staff motivation to work and enhance
the work quality. The key element of motivation at work is material remuneration in the
form of salary and fringe benefits. In this context, restructuring of salary system, which
will be supported by a detailed job assessment based on the performance appraisal of
every staff member, will be carried out.
The human resources department has focused on creating a friendly and efficient job
environment which would provide a balance of the professional and private life of staff
members.
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Employment
Employment is one of the key elements that directly affect work efficiency and quality. Professional skills, communication skills and personal qualities, which help to employ skillful
and motivated individuals, are considered significantly important in the employment process. Employment of young individuals, graduated with outstanding results or, who have
received best training inside or abroad have been a priority in selecting AFSA staff. Such
guide makes up a real source of development regarding work in this institution.
In order to support the employment policy, staff shortlists procedures and rules have
been drafted and they have been presented to the AFSA Board for approval. According
to these rules, competition will be the main approach of attracting professionals. In addition, the aim will be to apply methods, which will allow selection of potential candidates, whose profi le would match the required job descriptions.
On-job staff training
Training through work is an ongoing process, which aims at conveying knowledge to
ensure the continuity of professional activity. Human Resources Sector has focused its
attention on short-term training either in the country and abroad, relying also on the assistance and support provided by donors such as World Bank and FSVC.
Staff training has essentially consisted in attending conferences and workshops, which
are linked to various sectors of the non-banking fi nancial system and whose activity is
subject to AFSA supervision and regulation. Additionally, the Authority aims at promoting and funding, to a certain extent, the long term training of its staff, especially in areas
that allow successful accomplishment of major tasks and goals of the institution.
1.3.5 Internal Auditing
Pursuant to the duties defined by Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory Authority”, and Law No. 9009, date 13 February 2003 “On Internal Audition
of Public Sector” the Internal Auditing Unit has checked and verified the merging procedures of three prior regulatory entities. Through the audits conducted is concluded that legal
requirements set forth in the effective legislation have been respected in terms of economic,
financial, administrative and managerial aspects. These audits, which were conducted in
the frame of special aspects of AFSA legal operation, have verified adherence to the law.
1.3.6 Financial Statements
2006 AFSA Funding and Budget
Pursuant to Article 26 of Law No. 9572, date 03 July 2006 “On the Albanian Financial
Supervisory Authority”, the AFSA is an independent institution, which is mainly funded
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by its own resources, except for any short-falls between fund resources and operation
expenses. In that case the short-falls are funded by the State Budget up to the level
when revenues are deemed sufficient to ensure its normal operation. State Budget funding allocation is approved by the Parliament of Albania in the form of an independent
part of the State Budget. The budget surplus of the fi nancial year is transferred to the
State Budget revenues within 4 months following the end of fi nancial year, apart from the
funds set apart for investments which are in an ongoing phase.
Pursuant to Articles 33 and 37 of Law No. 9572, date 03 July 2006 “On the Albanian
Financial Supervisory Authority”, as well as, to Ministry of Finance Memo No. 8663/1,
date 21 November 2006, the 2006 AFSA budget was drafted based on the budget of prior
regulatory entities consisting of ASC, ISPPI and ISA respectively. AFSA opening balance sheet was certified by an external certified accounting expert.
AFSA drafts the fi nancial statements and holds its accounts pursuant to the Council of
Ministers Decision No. 248, date 10 April 1998 “On the Adoption of Local Government,
State Central and Local Institutions and the Subsidiary Units Public Accounts”, as well
as, the Ministry of Finances Guideline No. 14, date 28 December 2006 “On Drafting Annual Financial Statements”.
The approved resources and funds covering the AFSA establishment and operation (10
October - 31 December 2006) are presented in the following table:
Table 1: AFSA Revenue Resource
AFSA Funds Resource (11 October - 31 December 2006)
1. Carried forward from three institutions (10 October 2006)
000/ALL
36,598
1.1. Own revenues
24,932
1.2. Budget financing
11,666
1.2.1 Operating expenses
10,666
1.2.2 Investment budget
1,000
2. Revenues generated by AFSA (11 Oct. .06 – 31 Dec. .06)
21,475
Total
58,073
Pursuant to Articles No. 26 and 27 of Law No. 9572, date 03 July 2006, “On the Albanian
Financial Supervisory Authority”, revenues generated by the Authority from 11 October
2006 through 31 December 2006 includes revenues from insurance market, from trade of
securities, from pensions market, 20% of the collected fi nes, as well as, other revenues.
According to the fi nancial plan for 2006, expenses to cover payments for the staff members who lost their jobs in the frame of three prior institutions reforms take up 14% of sala-
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Table 2: Use of AFSA Funds
Use of AFSA Funds (11 October - 31 December 2006)
000/ALL
1 . Funds for operating expenses
23,027
2 . Funds for investment
31,153
2.1. Completed investments
1,663
2.2. Ongoing investments
29,490
3 . Payments to State Budget
3,893
Total
58,073
ries’ fund or 9% of operating expenditures.
Investments are carried out according to the adopted fi nancial plan pursuant to stipulations set forth in the Strategy for the establishment of the institution. Investments have
focused on IT programs, whereas the issue of office building remains still pending for the
coming year due to delays linked with the availability of office buildings.
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II. AFSA Activity
2.1 Regulatory Activity
2.1.1 Legal Changes
The adoption of the Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory Authority” led to an actual change of the non-banking fi nancial market supervision because of the regulatory functions’ unification of the three former regulatory
institutions. This law defi nes the establishment, the responsibilities and the functioning
of the Albanian Financial Supervisory Authority, as well as, it regulates the scope of
activity of this institution.
The changing of non-banking fi nancial market regulatory and supervisory structure made
it necessary to also amend the entire legal and regulatory framework related to different areas of this sector. In this context, the end provisions of Law No. 9572 stipulate the
changes to be made regarding relevant laws, as well as, they defi ne the responsible structures for their implementation, notably:
a. In insurance area
– Law No. 9267, date 29 July 2004, “On the Insurance, Reinsurance
and Intermediary Activity in Insurance and Reinsurance”,
b. In securities area
– Law No. 8080, date 01 March 1996 “On Securities”
c. In private pensions area
– Law No. 7943, date 01 June 1995 “On Supplementary Pensions
and Private Pensions Institutions”.
Insurance Law Changes regarding the Guarantee Fund
In the frame of adhering to the National Plan on Implementation of Stabilization and Association Agreement with European Union (EU), amendments to Law No. 9267, date 29
July 2004 “On the Insurance, Reinsurance and Intermediary Activity in Insurance and Reinsurance” have been prepared during 2006. These amendments reflect a very important
aspect of EU directives about the insurance companies’ guarantee fund. These changes consist of the
amendment of Article 98 of this law, on the increase
EU Directives about Insurance
of the guarantee fund to 3 million Euros, a process,
Companies Guarantee Fund
which has been planned to be completed in three
According to EU directives on “life” activity
stages in the future.
2002/12 and on “non life” activity 373 L 0239 it
results that the guarantee fund has to be no less
than 3 million €. Time required to meet this legal
obligation is 5 years starting from the date of coming into effect of this directive.
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Another important change, which has come up as a
need of implementing the law, is the amendment of
the annual report delivery deadline by the insurance
companies on their authorized accounting expert.
2.1.2 Regulatory Framework Changes
Once the Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory Authority” came into effect, all the by-laws pursuant to laws covering the respective areas, which
were not in compliance with the provisions of this law, were repealed. In order to manage
the lack of regulation coming as a consequence of the aforementioned abrogation in terms
of internal administrative organization, specific functions, responsibilities of departments
and directorates and the communication procedures among them, the following were
drafted and adopted in two months time following coming into effect of the law:
• AFSA internal rules,
• AFSA Board functioning regulations.
Regulations adopted by FSA over 2006
In Insurance Area
1. Regulation “On the Limits of Insurance Companies Capital Investment”,
2. Regulation “On the Content of Reinsurance Program of Insurance Companies and the Timeframe
of its Delivery to AFSA”,
3. Regulation “On the Rules, Manners and Conditions of Insurance Companies Reporting to AFSA”
4. Regulation “ On Authorized Accounting Experts of Insurance Companies”,
5. Regulation “On the Basis, Calculation Methods and the Manners of Recording Mathematical Provisions”,
6. Regulation “On the Basis, Calculation Methods and the Manners of Recording Technical Provisions
of Non Life Insurance”,
7. Regulation “On the Criteria that must be met by Individuals Elected or Appointed in the Leading
Bodies of Insurance or Reinsurance Companies”
8. Guideline “On the List of Documents of Insurance and Reinsurance Companies Annual Mandatory
and Regular Reporting”,
9. Guideline “On the Rules of Disclosing the Data of Insurance Companies and Broker Companies in
the Frame of Transparency to the Public and Consumer Protection”,
10. Guideline “On Setting the Criteria of Reinsurance Companies, with which Insurance Companies
Conduct that operate in the Republic of Albania can enter into Reinsurance Agreements”,
In the Securities Area
1. Regulation “On the Financial Resources Requirements re: Licensed Individuals Who Operate
in Securities Area”,
2. Regulation “On Licensing, Fees and Commissions of Subjects that Operate in the Securities Market”,
3. Regulation “On Take-Over”,
4. Regulation “On Illegal Practices of Securities Trade” ,
5. Regulation “On Prospect”,
6. Regulation “On Conducting the Test of Individuals Applying for Receiving License as Dealer Agents”,
7. Regulation “On Procedures of Monitoring Retail Market on Securities of the Republic of Albania Government”,
In the Private Pensions Area
1. Regulation “On Procedures of Licensing and Reviewing the Applications about Issuing the Permit
to Operate as a Supplementary Private Pensions Institution”,
2. Regulation “On Supervision of and Financial Control of Supplementary Private Pensions Institutions”.
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Within a period of time of 6 months AFSA has reconsidered and adopted all relevant bylaws adopted by prior regulatory authorities according to the areas. Their revision was conducted based on the legal changes, new adopted rules and by reflecting market needs.
2.1.3 Legal Changes Plan
The non-banking fi nancial market regulatory structure changed once the Law No.
9572, date 03 July 2006 “On the Albanian Financial Supervisory Authority” came into
effect. However, this change was not accompanied with adequate legal infrastructure
to meet the targets and responsibilities assigned by law, and therefore, resulted in difficulties in the interaction of market players. While enjoying a more independent status,
the target of the regulatory entity is to play a more active role towards taking the initiatives and issuing the regulatory measures. The target of establishing the institutional
infrastructure in insurance area will be to clearly defi ne the role of stakeholders’, AFSA,
Minister of Finance, Bank of Albania, supervised companies and of the operators’ organizations. This process is to be associated with the proposal for legal changes and
drafting of necessary legislation.
The fulfi llment of commitments made in the context of the National Plan regarding Implementation of Stabilization and Association Agreement and fulfi llment of obligations deriving from it in terms of implementing similar legislation will continue to remain a priority
across the three areas: insurance, securities and private pensions institutions.
Regarding the securities market, besides changes made to Law No. 8080, date 01 March
1996 “On Securities”, a cooperation program with European Bank for Reconstruction
and Development (EBRD which aims at drafting the necessary legislative and regulatory
framework on bonds issuance by joint-stock companies and local government units), is in
progress at this time.
The private pension institutions are also a target of the reform and therefore, the law
“On Supplementary Pensions and Private Pensions Institutions” and by-laws pursuant
to it are under drafting process in compliance with the government’s national reform in
pension’s area.
In order to apply Risk-Based methodologies and International Financial Reporting Standards (IFRS), drafts of sub-legislation regarding the insurance market are in progress. This
sub-legislation will reflect, according to market developments, most recent directives.
The AFSA is discussing on the following:
• Draft/Regulation “On Defi ning Procedures to Attract Influential Participation
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in Insurance and Reinsurance Companies”;
• Draft/Regulation “On Defi ning the Conditions and Criteria for Issuing and
Revoking the Actuary’s Authorization ”;
• Draft/Regulation “On Defi ning the Conditions and Criteria for Intermediaries
in Insurance ”;
• Draft/Regulation “On Defi ning the Claims Assessment Methodology”;
• Draft/Regulation “On Defi ning the Criteria of Licensing Loss Adjusters” seeking
here independence and better supervision;
• Draft/Manual “On Inspection Procedures”;
• Draft/Regulation “On Defi ning how to manage the Guarantee Fund ”;
• Draft/Regulation “On Defi ning the Procedures of Prohibiting the Insurance
Company Property Free Transfer”.
2.2 Licensing Activity
The target of AFSA is to ensure, by means of adhering to the requirements of the Law “On
the Albanian Financial Supervisory Authority” and the licensing requirements pursuant
to the respective area laws (insurance, securities, and supplementary private pensions), a
fair and regulated market through a process developed on the basis of justice, fairness and
equality.
The key principle of the Authority in the licensing process for the entities operating in the
non-banking fi nancial market is to set forth requirements, which are clear, fair and transparent to the public.
2.2.1 Insurance Licensing Activity
Pursuant to the effective legislation, the Authority has responded in a timely fashion to
the applications for license by market operators, mainly regarding the activity expansion,
or changes to the capital stock and leading staff. This has involved careful examination
regarding consideration of the proper documentation, which has been presented by the
interested parties.
• Insurance Intermediaries Licensing
The intermediary activity, as a negotiating and selling of insurance contracts by individual or juristic entities licensed by AFSA, is focused on agents’ activity. The insurance brokering activity is not present yet in the Albanian insurance market.
A L B A N I A N
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The licensing of the following entities was accomplished over 2006 in the frame of
insurance intermediaries licensing process:
1) “Motor Insurance Agency – ASA” S.A. - ASA was established as a joint-stock
company according to Law “On Commercial Companies” and it was issued by
the respective regulatory Authority with license No. 4, date 12 April 2006 to
operate as an agents’ company in the area of selling non-life insurance products. Established by 7 shareholders, where each of them owns equal number of
shares, ASA developed an online system, which enabled online trading of nonlife insurance products through a computerized system pursuant to the Council
of Ministers Decision No. 192, date 25 March 2005 “On the Licensing Criteria and
Procedures for Insurance Agents and the Rules of Supervising their Activity”.
This online system provided for the fi rst time a fast and reliable service to the
companies and also to their customers.
In 2006, ASA operated as trading network for 7 insurance companies by applying
fi xed fees according to the contracts signed with these companies. During this
period, there were about 50 trading locations, which covered the entire territory of
Albania. The locations were connected online with ASA central office and companies, with which contracts had been made regarding the sale of internal TPL motor
compulsory policies.
2) “Albanian Post S.A. - was issued with license Nr. 2; date 10 Mars 2006 to operate
as a trading agent for non-life insurance business. Additionally, Albanian Post met
all requirements of effective regulatory framework for individuals, which were accepted to operate as agents at the premises of this institution.
3) 16 individual agents of Insig S.A.. – They were licensed to operate as non-life
insurance agents on behalf of “Insig S.A.” insurance company on a 3-years license
term with the right of renewing the license. The license validity is linked with signing the contract with the insurance company and with the installation of online
trading program.
• Approvals regarding insurance companies:
1) The AFSA approved, upon Decision No. 5, date 03 March 2006, the changing of the
insurance company name from “Dukagjini Al S.A.” into “Eurosig S.A.”, following
changes in company shareholders and leading staff. The changing of the name
came as a result of the company’s strategy change in the management and operational aspect in the insurance market.
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2) The AFSA approved, upon Decision No. 6, date 03 March 2006, the license to perform reinsurance activity by “Sigal S.A..” insurance company. Point 3/c of Article 20
of Law No. 9267, date 29 July 2004, “On the Insurance, Reinsurance and Intermediary Activity in Insurance and re-Insurance” stipulates the case when a company
can be licensed by the Authority both as an insurance and reinsurance company at
the same time.
3) As of December 2006, AFSA approved establishment of representation office in Tirana for the insurance company “Intersalonika” General Insurance S.A. , which has
its headquarters located in Thessalonica in Greece. The goal of establishing this
office is to conduct a market research and to set up the preparatory documentary
conditions to start its operation in the future as an insurance company in Albania.
The establishment of foreign companies’ representation offices is a new development of the national insurance market.
Table 3: List of licensed insurance companies
Licensed
Companies
Type
of Activity
Ownership
1.
Insig S.A.
Life Insurance
+ Non-Life Insurance
Government of
Albania + EBRD + IFC
08.06.2000
2.
Sigma S.A.
Non-Life Insurance
National Private Capital
03.02.1999
3.
Sigal S.A.
Non-Life Insurance
+ Albanian-American Fund
23.06.1999
4.
Atlantik S.A.
Non-Life Insurance
01.06.2001
5.
Intersig S.A.
Non-Life Insurance
13.09.2001
6.
Interalbanian S.A.
Non-Life Insurance
10.09.2004
7.
Albsig S.A.
Non-Life Insurance
10.09.2004
8.
Eurosig S.A.
Non-Life Insurance
10.09.2004
9.
Sigal Life S.A.
Life Insurance
+ Albanian-American Fund
10.09.2004
10.
Sicred S.A.
Life Insurance
10.09.2004
No.
Time of receiving
the license
During the last quarter of 2006, international insurance companies showed interest in
the Albanian insurance market in investing in Albanian insurance companies. Therefore,
changes are accepted to happen with the shareholder-structure of “Interalbanian”, “Albsig”, ‘Sigal” and possibly other insurance companies.
A L B A N I A N
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23
2.2.2 Licensing Activity in Securities Market
In 2006, the Authority’s target in relation to securities market has been to expand Government securities (T-Bills & T-Bonds) retail market by increasing the number of licensed
entities operating in this market.
AFSA is the regulatory body for Government securities
retail market in the Republic of Albania
Government securities retail market is an OTC market where the trade is conducted through the physical or virtual
counters of the banks and other entities licensed to carry out transactions, with investors who can be individual or
legal entities, resident and non-resident persons.
Undertaking the activity of retail trade and keeping of the analytical register is performed by the entities licensed for
this purpose by the Albanian Financial Supervisory Authority. Keeping of the analytical register makes up one of the
conditions regarding licensing of dealers to operate in Government securities retail market.
The register ensures keeping of the records in an analytical manner for investors on Government securities ownership,
transactions carried out in connection with securities or data concerning their pledging as guarantees.
By end of 2006 securities market consisted of the following:
• 10 licensed companies which operate as securities dealers, of which
5 banks were entitled to the right of trade also in the T-Bills retail market.
• 14 licensed representatives of securities dealers.
• 5 licensed registrars of Government securities.
• Albanian Share Register, and
• Tirana Stock Exchange.
At the beginning of 2006, ALFA Bank commenced its activity as securities dealer and,
at the same time as T-Bills registrar. Credins Bank, which was licensed as of 08 May
2006 was added to the list of registrars in Government securities, thus increasing to 5 the
number of entities licensed for this activity.
In May 2006, the relevant Authority licensed the Italian-Albanian Bank as a securities
dealer. Based on the entity’s application, the license was issued for one year term. In December 2006, AFSA re-licensed as securities dealers two agents of “American Bank of
Albania”, which represent the entity in the trading activities conducted in the Stock Exchange and in the Government securities retail market.
The existence and development of Government securities retail market has raised the interest of several entities either inside the country and abroad, which have demonstrated
their interest to become participants of this market.
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Table 4: Government Securities Dealers in 2006
No.
Companies Description
No. of Representatives
License Term
1.
Tirana Bank S.A.
1
No expiration term
2.
Triumph Group S.A.
1
No expiration term
3.
Credins Bank S.A.
1
No expiration term
4.
Balkan Group-01 S.A.
2
No expiration term
5.
Raiffesen Bank S.A.
1
No expiration term
6.
National Commercial Bank S.A.
2
No expiration term
7.
Popular Bank S.A.
1
No expiration term
8.
Italian-Albanian S.A.
1
No expiration term
9.
American Bank of Albania S.A.
2
No expiration term
10.
Alfa Bank
2
No expiration term
Pursuant to Law No. 8080, date 01 March 1996 “On Securities”, to Regulation “On Securities Registrars Licensing” and to Regulation “On the Government of the Republic of Albania Securities Retail Trade”, the following entities have been licensed to operate in the
capacity of registrar:
Table 5: Government Securities Registrars in 2006
No.
Licensed Entity
Type of License
License Term
1.
Raiffesen Bank S.A.
Government Securities Registrar
No expiration term
2.
American Bank of Albania S.A.
No expiration term
3.
National Commercial Bank S.A.
No expiration term
4.
Alfa Bank S.A.
Treasury Bonds Registrar
No expiration term
5.
Credins Bank S.A.
Treasury Bonds Registrar
No expiration term
2.2.3 Entities Operating in the Supplementary Private Pensions Market
Pursuant to the Law No. 7943, date 01 June 1995, “On Supplementary Pensions and Private
Pensions Institutions” and to by-laws, there are 3 companies that operate in the supplementary private pensions’ market. The law sets forth the requirements for establishing
pensions’ institutions by more than one employer. According to this law, one of these
employers should have at least more than 100 employees and no less than 500 employees.
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25
The following supplementary private pensions’ institutions, which are established and
operate in the Albanian market, meet this legal requirement:
• “GARANTSIG Pensions Private Institution”, was licensed by the relevant
Authority upon Decision No. 1, date 01 July 2005,
• “APFA – American Pension Fund of Albania”, was licensed by the relevant
Authority upon Decision No. 2, date 01 July 2005,
• “Pensions Private Institution CAPITAL” Company was licensed by the relevant
Authority upon Decision No. 3, date 12 December 2005.
2.2.4 Corporate Governance
In the frame of its efforts to increase its role in terms of improving the climate of corporate
governance, AFSA has targeted promotion and implementation of the OECD White Paper
“On the Principles of Corporate Governance in Southeastern Europe” through simultaneously identifying the most important areas, where reforms must be taken for proper corporate governance.
In order to increase its role over corporate governance, the Authority has aimed at defi ning
clear criteria about the elected persons in the Supervisory Boards of the licensed entities,
in leading positions or in the auditing committee by insisting on improving integrity, professionalism, experience and training.
The Albanian Financial Supervisory Authority is a member of Albanian Corporate Governance Forum. Activities
and meetings of the Forum continued during 2006, where
the following are worth of mentioning:
AFSA - Member of
Albanian Corporate
Governance Forum
Albanian Securities Commission (now
AFSA), as a cofounder, endorsed in 14
June 2005 the resolution on the establishment of the Albanian Corporate Governance Forum.
The Forum was established as an organization similar to a network of institutions and
organizations with interests, impact and
joint will regarding necessary improvement
of corporate governance practices in Albania. The goal of the forum is to provide its
contribution to the implementation of contemporary principles and standards of Corporate Governance in Albania.
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1)
The analysis of the fi ndings of the observation conducted by OECD on the implementation status of
White Paper Recommendations.
2) The involvement of the Forum in providing knowledge regarding the contemporary standards of the
corporate governance.
3)
The signing of a Cooperation Memorandum between
the Albanian Corporate Governance Forum and International Financial Corporate (IFC) with the aim of meeting
short-term and long-term objectives regarding the improvement of overall corporate governance in Albania.
2.3 Supervisory Activity
The Albanian Financial Supervisory Authority performs its non-banking fi nancial markets
supervisory functions through monitoring markets in general, and market stakeholders’
performance, in particular. The Supervision department is increasingly focusing on identification, measuring, prevention and elimination of the scale of risks that threaten market
performance and, consequently, consumers’ interests. Risk-based supervision, as a new
model of non-banking fi nancial markets supervision, constitutes a detachment from the
traditional methods of static observation that included interventions only in cases of legal
infringements. Risk-based supervision is moving towards a contemporary analysis system, where regulatory interventions start right after receiving early warnings that may
lead to deterioration of one or several parameters of operators in the market.
Risk-Based Supervision
The analysis of a company’s operations has traditionally been the method of supervision to make sure that the
company has adhered to the effective legislation and regulations, as well as, to make sure that fi nancial data have
been prepared in compliance with appropriate reporting methods and that they accurately reflect the real fi nancial
condition of the company.
Risk-based supervision leads this method several steps ahead, so the supervisory process identifies and focuses
on the areas, which include a high risk presence for the company and, which jeopardize company’s fi nancial
progress. Risk-based supervision does not audit fi nancial outcomes of the insurance company. Its focus consists
in identifying risks that impact the business and the managerial processes to prevent and minimize these risks.
Risk-based supervision takes into consideration every risk that the company faces and it identifies risks through a
structured process. The supervision department checks how these risks are managed and it focuses on company
exposure against most critical risks. In this manner, the focus remains on the risks, managerial process, outcomes
uncertainty and their impact on the company’s progress.
The development and the stabilization of the market will bring, over time, a sophistication of these risk-based
supervisory methods.
AFSA performs its markets supervisory function through a) analyzing the documents (offsite supervision) presented by the supervised entities, regular or ad-hoc reports, and b)
initiating on-site inspections of the supervised entities with the purpose of identifying the
data. On-site supervision and analysis may include a large scope of issues, or it may focus
on specific issues.
A L B A N I A N
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27
Off-Site Monitoring Indicators in Albania
AFSA together with Word Bank held a Conference “On Insurance Financial Indicators Analysis” on 05-06 December in Hotel Tirana. Participants had the opportunity to attend a 1 day lecture on the Off-Site fi nancial indicators,
which are applied to review the fi nancial situation of non-life insurance companies. The goal of this conference was
to help all participants, companies’ representatives, external audits, and AFSA staff to have substantial knowledge on the fi nancial indicators importance, how some of these indicators are calculated, and how to interpret the
outcomes when assessing the activity and fi nancial situation of the insurance companies. Following the lecture,
AFSA conducted a test involving all participants concerning their knowledge on the Off-Site fi nancial indicators.
All participants successfully passed the test and they received a certificate of proficiency on the basic level of their
knowledge on fi nancial indicators. This lecture was attended by insurance companies’ managers, heads of different
AFSA sectors and by two auditing companies.
In 2006, AFSA has set as priority the insurance market regulation and supervision based
on the weight that this sector bears in the frame of fi nancial market, as well as based on
its size and dynamics. Meanwhile, attention was not detached from cautious monitoring
and support for a sound development of securities and supplementary private pensions.
On Site Supervision – IAIS Standards
On-site supervision is a very important part of the supervisory process, which is closely linked with the ongoing
monitoring process. On one hand, inspection provides information that is supplementary to fi nancial and statistical analysis information submitted by the entities. On the other hand, On Site inspection needs to be supported
by market information and statistics that stem from fi nancial statement analysis (revenues and expenses, annual
balance-sheet). On-site supervision allows the supervisor to gather information and identify the issues that can be
identified through continuous monitoring, notably as follows:
a. In the case of companies with problems concerning the activity, accounting irregularities or weaknesses
in management, on-site supervision allows the supervisor to identify problems that the company may have
willingly failed to take into consideration and, some times, even hiding them;
b. Provides the supervisors with the opportunity to establish a direct relationship with the company leaders,
which is very important in terms of being more closely familiarized with the efficiency of leaders’ work.
c. Allows the supervisors to make assessments both, in the frame of the decision making process by the
company leaders’ and in internal control effectiveness;
d. It may serve to advise companies to shun those types of activities, which may be illegal and inappropriate;
e. Provides the supervisors with the possibility of analyzing the impact of specific regulators and, very
often, gathering of information to conduct benchmarking against standards.
Reporting – IAIS Reporting Standards
a. Supervisory Authority:
• Sets criteria regarding presentation of financial information, actuarial reports and other information from all
licensed insurance companies under jurisdiction to the Authority in a regular fashion.
• Defines the goal and frequency of these reports and information including criteria that determine whether
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•
•
these reports and information must become subject to auditing, or not,
Requests, at least, an auditing report for every year,
Requests more frequent and more detailed information as per the necessity,
b. Supervisory Authority:
• Asks insurance companies to present information about their financial situation on individual and group
basis. It can request and gather information about every office of the supervised company,
• Asks insurance companies to report every exposure outside the financial balance sheet,
• Asks insurance companies to report on delegated functions as other companies outsource,
• Requests that the appropriate level of insurance companies managers report on the timeframe and their accuracy,
• Asks that inaccurate information gets remedied and it has authority to impose sanctions about reporting
with fraudulent purposes.
• Asks insurance companies to present information about their financial situation on individual and group
basis. It can request and gather information about every office of the supervised company,
• Asks insurance companies to report every exposure outside the financial balance sheet,
• Asks insurance companies to report on delegated functions as other companies outsource,
• Requests that the appropriate level of insurance companies managers report on the timeframe and their accuracy,
• Asks that inaccurate information gets remedied and it has authority to impose sanctions about reporting
with fraudulent purposes.
2.3.1 Insurance Market
The Market Structure and Size
There we ten insurance companies in the market in 2006, of which seven are non-life
insurance companies, two are life insurance companies and one company offers both nonlife and life insurance products. The number of policyholders in 2006 was 507,375 marking
an increase of about 9,5% compared to 2005. The increase in the number of policyholders
in 2006 led to an increase of the revenues from premiums written. Insurance gross written
premiums amounted to about 4,5 billion ALL, a figure 11,95% higher than that of 2005. The
market still remained inclined towards non-life insurance, which provided about 93% of
the premiums , thus leaving life insurance with about 7% of all the written premiums.
2006 Insurance Premiums Structure
7%
34%
Life
Insurance
Voluntary
93%
66%
Obligatory
A L B A N I A N
F I N A N C I A L
Non-life
Insurance
A U T H O R I T Y
29
Monthly Progress of Insurance Gross Written Premiums in 2006
600,000
500,000
400,000
300,000
200,000
100,000
Life
ec
.
D
ov
.
N
ct
.
O
pt
.
Se
Au
g.
Ju
ly
ne
Ju
ay
M
Ap
ri
l
ar
ch
M
Fe
b.
Ja
n.
0
Compulsory
Voluntary Non-Life
Compulsory Insurance
Compulsory insurance products continued to dominate Albanian market in 2006, thus
generating about 66% of revenues from insurance gross written premiums. Due to
development specifics, the compulsory insurance market has not been liberalized in
terms of prices. The minimum and maximum prices for internal TPL and border policy
are determined once a year by the Ministry of Finance following recommendations
made by market specialists. Fixed prices determined several years ago are still applied
to the green card business.
Compulsory Insurance Monthly Premiums (in thousand ALL)
500,000
2006
2005
400,000
300,000
200,000
100,000
30
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ec
.
D
ov
.
N
ct
.
O
pt
.
Se
Au
g.
Ju
ly
ne
Ju
ay
M
ri
l
Ap
ar
ch
M
Fe
b.
Ja
n.
0
• Insurance gross written premium revenues of internal TPL in 2006 was about 1,57
billion ALL. Revenues’ increase by 14,46% compared to 2005 was basically tied to the
increase of the floor price since May 2006, while the number of contracts remained
almost unchanged. The tendency of insurance companies to sell insurance TPL policies with prices lower than allowed floor levels decreased in 2006. This occurred as a
result of the following: a) enforcement of the Council of Ministers Decisions on real time
(online) insurance policies issuing and reporting and b) operators agreements concerning the functioning ways of their sale networks. These shifts were accompanied by the
changes across shares of the market dominated by the operators.
• Green card revenues’ increase was in line with contracts number increase. In 2006
gross written premiums amounted to about 648 million ALL, or 11,72% more than in
2005. Due to the particularities of this insurance class such as duration and unlimited liabilities, qualitative reinsurance remains a necessity for this class. In 2006, the
Authority decreased from five to four the number of operators licensed to trade the
green card policy. Intersig S.A. insurance company did not manage to fi nd appropriate
reinsurance to meet the criteria of maximum coverage per hazard set forth in the law.
Actually, the licensed companies which issue green card policies, are: Insig S.A., Sigal
S.A., Sigma S.A. and Atlantik S.A.
• Border insurance marked the highest increase in the group of compulsory insurance
business at 25% compared to 2005. The increase in this market was a result of the increased number of policies written in 2006, the increase of prices and the functioning
of a joint selling network for all market operators. In 2006 written premiums from border
policies amounted to about 528 million ALL.
Voluntary Insurance
In 2006, number of voluntary insurance contracts increased by roughly 17%, while premiums
increased by 6,25% compared to 2005, thus reaching 1,53 billion ALL. Non-life voluntary
insurance business revenues remained at the level of 2005, while there was a considerable
increase by 29% in life insurance business compared to the previous year. This increase in
life-insurance products reflects an increasing trend of consumer awareness regarding the
need of risk transfer in insurance companies. The voluntary insurance business market
remains still at low levels, however, we need to point out that we have unutilized potentials
in our country. Its development is closely linked not only with the economic level, but also
with the level of education and consumers’ trust on market operators.
• Property insurance during 2006 recorded 785 million ALL revenues. Fire and additional nature perils insurance products were ranked the fi rst with about 49% property
insurance revenues followed by guarantee insurance with 17%. There was a significant
increase of fi re insurance in the second half of 2006, which was linked to the banking
system as the commercial banks required that their customers insure their proper-
A L B A N I A N
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A U T H O R I T Y
31
Voluntary Insurance Premiums Monthly Progress (in thousand ALL)
180,000
160,000
2005
2006
140,000
120,000
100,000
80,000
60,000
40,000
20,000
ec
.
D
ov
.
N
ct
.
O
pt
.
Se
Au
g.
Ju
ly
ne
Ju
ay
M
Ap
ri
l
ar
ch
M
Fe
b.
Ja
n.
0
ties over the duration of the loan. Premiums and contracts increase from guarantee
insurance, based also on the specifics that they demonstrate, was associated with
the AFSA’s permanent monitoring and supervision towards determining the risk scale
undertaken by the operators, mainly through the phenomena of risk transfer from the
banks or other entities to the insurance companies..
• It is worth mentioning that, although the construction industry is well developed in
Albania, the engineering insurance products were at a low level within the group of
property insurance.
• Despite the importance they have at the existing stage of country’s development, liability insurance also remained at low levels. Operators’ activities in the fuel, building,
hotels & tourism, etc., markets are, in most cases, not insured against damages that it
may cause to third parties. Professional liability in various fields also remains uncovered by insurance.
• Revenues from personal accidents and health insurance in 2006 amounted to about
177 million ALL, thus marking an increase by 21% compared to 2005. Travel health
insurance made up most of this group with about 82% of this group revenues. The main
factor of the increase in travel health insurance written premiums is the continuous
increase in the number of individuals traveling abroad.
• Life insurance market in 2006 split into three following operators: Insig S.A., Sigal S.A.
and Sicred S.A.. Life insurance premiums were recorded at 308 million ALL.
Claims
• Total claims paid by insurance companies in 2006 were about 1,28 billion ALL, or 7.5%
32
A N N U A L
R E P O R T
‘ 0 6
Claims payment by non-life insurance companies in 2006 (in thousand ALL)
500,000
400,000
300,000
200,000
100,000
EU
RO
SI
G
AL
I
BA N T
N ER
IA N
BS
IG
AL
TE
RS
IG
IN
TI
K
AN
AT
L
IN
SI
G
AL
SI
G
SI
G
M
A
0
more than in 2005. Due to the market structure described above, majority of paid claims
belong to compulsory insurance with 928 million ALL, or 73% of the total claims.
• Technical provisions make up a considerable part of liabilities in all insurance companies balance sheets. They also reflect the incurred but not paid claims.
• It is worth noting that the Loss ratio at 35% is low compared to other countries
across the region. Moreover, this ratio is very low taking into consideration that compulsory insurance occupies the main place in insurance structure. This indicates
that customers’ indemnifications are not assessed and paid at the proper extent by
the insurance companies.
2006 Paid Claims Structure
1%
27%
Life
Voluntary
99%
73%
Non-Life
Mandatory
• While aiming at fulfi lling its key mission to protect consumers’ interests, the AFSA
is paying special attention to the addressing, assessment and payment process of insurance claims. All insurance companies became subject to on-site inspection con-
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
33
ducted by the Authority during October-December 2006, which focused on the issue
of addressing the claims and their payment. Once the conclusions from the on-site
inspection were drawn, AFSA took disciplinary and penalizing measures against
some companies. Meanwhile, AFSA in cooperation with Albanian Insurers Association and stakeholders’ representatives has started a program on standardizing
claims reporting, handling, and payment procedures, closely tied with the review
and improvement of insurance contracts terms and conditions. The establishing of
a database for claims recording is a priority, which will serve not only supervision,
but also insurance companies towards development of tariff differentiation systems
based on claims experience.
Reinsurance
• The amount of premiums ceded in reinsurance in 2006 was 486 million ALL, about
11% of gross written total premiums. Insurance companies have carried out portfolios or specific reinsurance contracts in order to build capacity alleviate some fi nancial
effects incurred by large claims. Insurance companies have entered into reinsurance
agreements regarding the transfer of green card, property, internal TPL and debtor’s
life responsibilities. Reinsurance facultative contracts have supported companies’
original insurance contracts mainly in engineering insurance, marine insurance,
aviation insurance and liability insurance. The Financial Supervisory Authority has
monitored the agreements and reinsurance facultative contracts in compliance with
legal requirements of risk maximum retention and the criteria related to reinsurers’
quality. It is worth mentioning the quality improvement of reinsurers participating
in the renewing of companies reinsurance agreements carried out during OctoberDecember 2006.
• An option to increase reinsurance efficiency is the establishment of a joint scheme,
or facility for reinsurance, which will serve as a tool to make qualitative reinsurance
agreements having qualitative re-insurers as a target. There are different experiences across the world such as pool reinsurance, or the existence of national reinsurance companies. Such an idea is supported also by the World Bank and it can be
applied in the near future, following the analyzing of potential options of administration approaches.
Insurance Companies’ Ranking in 2006
• In 2006, Sigal insurance company kept on leading the non-life insurance market
with 27,34% of insurance premiums total. Meanwhile, Insig recovered its position
by moving up to the second position with 18,64% of premiums, thus leaving Sigma
Company behind in the third place with 18,40%. Other companies continue respectively as follows: Atlantik – 11,39%; Intersig – 8,00%; Interalbanian – 7,05%; Albsig
– 5,95%; and Eurosig – 3,23%.
34
A N N U A L
R E P O R T
‘ 0 6
EUROSIG
ALBSIG
3.23%
5.95%
INSIG
INSIG
18.64%
42.39%
SICRED
INTERALBANIAN
22.47%
7.05%
INTERSIG
8.00%
ATLANTIK
11.39%
SIGAL
27.34%
SIGAL LIFE
SIGMA
35.14%
18.40%
• Insig insurance company maintained it position with 42,39% in life insurance,
followed by Sigal-Life with 35,14% and Sicred with 22,47% of premiums total.
• Sigma insurance company was ranked fi rst since it had paid 32,12% of the total claims
paid by companies. Other companies rank respectively as follows: Sigal – 25,28%; Insig – 17,63%; Intersig – 9,40%; Atlantik – 8,21%; Interalbanian – 3,61%; Albsig – 2,48%
and Eurosig – 1,28%.
Insurance Sector Financial Analysis
The AFSA conducted in November - December 2006 with the World Bank technical
assistance an insurance market due diligence by reviewing its experience and existing
condition. The analysis helped with the identification of market issues and phenomena
and the potential scenarios in the future.
The examining of the insurance sector fi nancial condition focused on companies’ assessment through Insurance Regulatory Information System (IRIS), standards adapted
to non-life insurance companies in Albania. This examining included assessment of
claims administration, risk retention and insurance companies’ solvency as the initial
step towards AFSA’s full strategy with the goal of drafting initial conclusions and continuation of the supervisory activity further.
Financial reports of the above model are considered very important in terms of setting up an early warning system as a key element of the modern model of risk-based
supervision. The target of early warning is to timely identify the issues that may affect
consumers’ interests and market stability, as well as, permanent monitoring and inter-
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
35
vention or taking of relevant measures by AFSA.
Ratio Importance
(IRIS financial indicators)
– Ratios Value Range
Ratio
High End % Low end %
Premium growth rate
Net Retention
Expense/Premiums Ratio
Claims/Premiums Ratio
Combined Ratio
Investment revenues
Other Revenues
Operating Ratio
Profit Ratio
Capital to Gross Premiums
Capital to Technical Provisions
Solvency Ratio
+ 40
80
50
80
105
8
1
101
20
50
30
300
- 40
40
25
50
85
4
N/A
80
-1
20
10
150
•
The majority of non-life insurance companies have a growth rate in compliance with
industry limits.
•
Net retention ratio is relatively high in the market. Industry standards are values between
40%– 80%, while the ratio in the Albanian
market is to an extent of degree of 87.8 %.
Although this would apparently be regarded
as low levels of ceding in reinsurance, large
amounts in absolute values are transferred
outside the territory. High rate of retention is
also connected with the insurance structure
in Albania. Internal TPL and border insurance
prevalence certainly has an impact on the high
retention rate by the companies.
IRIS tests on the fi nancial condition of insurance Companies in Albania in 2006
Premiums Increase Rate
80,00%
Net Retention Rate
60,00%
100.00%
40,00%
80.00%
60.00%
20,00%
Albsig
Eurosig
Albsig
Eurosig
InterAlbanian
Intersig
Atlantik
-60,00%
Sigal
0.00%
Sigma
20.00%
Insig
Eurosig
Albsig
InterAlbanian
Intersig
-40,00%
Atlantik
-20,00%
Sigal
Insig
0,00%
Sigma
40.00%
Expenditures Ratio
Claims Ratio
36
A N N U A L
R E P O R T
‘ 0 6
InterAlbanian
Intersig
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
0.00%
Sigal
0.00%
Sigma
20.00%
Insig
40.00%
20.00%
Atlantik
60.00%
40.00%
Sigal
80.00%
60.00%
Sigma
80.00%
Insig
100.00%
Combined Ratio
Revenue Investment Ratio
Other Revenue Ratio
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
10.00%
5.00%
0.00%
-5.00%
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
Insig
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Insig
30.00%
25.00%
20.00%
15.00%
Operating Ratio
8,00%
120.00%
100.00%
6,00%
80.00%
4,00%
60.00%
40.00%
2,00%
20.00%
Capital Ratio vs. Gross Premiums
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
0.00%
Insig
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
Insig
0,00%
Capital Ratio vs. Technical Provisions
InterAlbanian
Albsig
Eurosig
InterAlbanian
Albsig
Eurosig
Intersig
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
Insig
0.00%
Atlantik
100.00%
Sigal
200.00%
Sigma
300.00%
Insig
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
400.00%
Profit Ratio
Solvency Ratio
2100.00%
1800.00%
1500.00%
1200.00%
900.00%
600.00%
300.00%
0.00%
50.00%
40.00%
A L B A N I A N
F I N A N C I A L
Intersig
Atlantik
Sigal
Sigma
0.00%
-10.00%
Insig
Eurosig
Albsig
InterAlbanian
Intersig
Atlantik
Sigal
Sigma
Insig
30.00%
20.00%
10.00%
A U T H O R I T Y
37
• Positive trends of market indicators can be observed at fi rst sight; however, the Loss
ratio and Expense ratio, in general, still continue to be at levels which are far from acceptable. This is a situation, which has been inherited over several years, and, therefore, it will be in the AFSA’s focus of attention to normalize it through drafting new risk
management strategies and improving the legal framework that affects claims.
• The combined ratio across the majority of companies complies with the low end and
high end limits. The Authority’s goal is to maintain the combined ratios of companies
within industry limits by demanding modification of the trends of its component parts.
• The operating ratio for the majority of companies falls within the maximum and minimum limits set by industry.
• It is noticeable that the majority of insurance companies have an investment return,
which is lower than the industry minimum rate of 4% and, which is essentially linked
with the size of companies’ assets rather than with the premiums’ revenues.
• With regards to other income ratio, the majority of insurance companies have a higher
rate return than the minimum limit of 1% set for this ratio.
The monitoring of Companies Balance Sheets Elements
The AFSA has monitored the balance sheets of companies based on legal requirements
and accounting standards. The process was focused on verification of liabilities elements
(assets and liabilities of every company) and, then, on reviewing their compliance with
assets items in value and time.
• The AFSA has permanently pursued adherence to the legal requirement on insurance
companies guarantee fund and application of rules for its investment. Actually, insurance companies possess the guarantee fund invested in “frozen deposits” at second
tier banks on 1-year term basis and T-Bills as per the law requirements;
• The AFSA has verified by the end of every quarter the minimum limit of companies’
solvency margin as per the law requirements and solvency which makes up, at the
same time, also their capital and the investment policies;
• Companies’ fi nancial analysis has also included the auditing of database and calculations carried out in relation to technical and mathematical provisions of the companies
by the end of every quarter. The AFSA audit was accompanied by the respective comments and the assessment of technical provisions’ sufficiency. Once the sufficiency
has been assessed , the Authority has conducted verification of assets that would cover
the technical and mathematical provisions.
38
A N N U A L
R E P O R T
‘ 0 6
• Total of Insurance market assets by 31 December 2006 amounted to about 11,4 billion ALL marking an increase to an extent of 11,69%, compared to 2005. This increase was reflected mainly in investments in T-Bills and real estate by 30.89% and
23.97% respectively;
• The bank deposits amounted to about 3,3 billion ALL, thus comprising also the highest
item of market assets to an extent of 28.94 % of total assets. The receivables remain still
high at 1.118.206.723 ALL, making up about 9% of assets in the insurance sector;
• The compulsory insurance premium increase in 2006 led to a positive change of the
market fi nancial situation, to an improvement of cash flow, to the increase of the companies’ investment potential. The increase in investment potential has brought about
an improvement of assets quality towards liquid investments guaranteeing coverage
of technical and mathematical provisions with high quality assets.
Table 6: Insurance Market Balance Sheet
Balance Sheet
31.12.2005
31.12.2006 (*)
3.477.332.193
3.302.423.253
Land and constructions
848.259.652
1.051.585.476
Stock and Shares
854.111.519
948.707.019
Deposits
Treasury Bonds
1.752.811.221
2.294.279.103
955.121.772
1.118.206.723
2.327.975.749
2.694.262.335
1 0 .2 1 5 .6 1 2 .1 0 6
1 1 .4 0 9 .4 6 3 .9 0 9
4.917.078.725
5.378.670.605
609.889.355
300.160.934
Debtors-Receivables
Other Activities
Total Assets
Gross Technical Provisions
Other payables
Own Capital
Total Liabilities
4.688.644.026
5.730.632.370
1 0 .2 1 5 .6 1 2 .1 0 6
1 1 .4 0 9 .4 6 3 .9 0 9
(*) 2006 data are operational
2.3.2 Securities Market
The securities’ market continues to be prevailed by trading in the primary and secondary
market of the Government debt instruments (T-Bills and T-Bonds), while the securities
stock market remains still undeveloped and mainly limited in the off-exchange market
registered in the Albanian Share Register.
In the recent years, various national and international entities have shown an increasing
interest to operate in the securities market.
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
39
The Authority’s supervisory activity in the securities domain has mainly focused on permanent follow up of market indicators development. In addition, in order to have a more
confident and real assessment of these indicators, the AFSA has set as a priority the regular reporting process standardization to be performed by operators on the securities market day-to-day trading data.
The Government Securities Retail Market
The retail market of Government securities is the most developed securities market in the
country. Even during 2006 this market was totally dominated by short-term instruments
(T-Bills). The expansion of the market including other operators and deepening it further
with longer maturity term Government securities is expected to also increase the transactions’ volume in the retail market of these instruments.
2006 marked a relatively satisfactory flux of transactions in the Government securities
retail market, which has experienced an increase compared to the prior year. The total
amount of transactions in the Government securities retail (secondary) market in 2006
was roughly about 20.912,14 billion ALL (compared to 1.518,80 million ALL in 2005). The
total number of transactions carried out in this market over the same period was 6065
against 42 in 2005.
Table 7: Government Securities Retail Market in 2006
Quarter I
Type of Transaction
(in million ALL)
Nominal
Value
Quarter II
No.
Trans.
Nominal
Value
Quarter III
No.
Trans.
Nominal
Value
Quarter IV
No.
Trans.
Nominal
Value
No.
Trans.
1. Purchase in the
Primary Market
Individuals
2.058,93
992
756,97
272
695,18
239
1.649,37
686
706,76
17
880,25
13
874,64
14
1.939,81
19
2.891,33
1445
725,61
305
1.442,17
588
1.460,05
602
3. Purchase from
individuals prior
to maturity date
115,34
74
227,53
138
1.181,27
126
213,33
87
4. Payment of nominal
value in maturity date
209,36
48
814,77
78
940,89
66
1.094,00
195
5. Pledging of
Government securities
as collateral
2,53
2
7,72
18
8,12
18
16,11
23
5.984,25
2578
3.412,85
824
5.142,27
1051
6.372,67
1612
Juristic Persons
2. Selling from
Bank Portfolio
Total
40
A N N U A L
R E P O R T
‘ 0 6
Thus, the increase of the transactions’ volume in this market compared to 2005 has occurred as a result of the decentralization of the Government securities register and transferring of this activity to the banks licensed by the AFSA to exercise their activity in the
retail market. This has enhanced banks inclination to provide to their customers a fi nancial product, different from deposits. Additionally, experience has indicated that also the
increasing of public awareness on investing in Government securities has a special importance concerning boosting of transactions volume in this market.
Stock Market
The stock market still remains the most undeveloped sector of securities market in Albania. It consists of the formal market (Tirana Stock Exchange), licensed dealers to trade
securities and informal market of transactions on the shares of joint-stock companies.
Tirana Stock Exchange, which was established
since 1996, is a state-owned company with Ministry of Finance as the single shareholder and it was
licensed by Albanian Securities Commission (now
AFSA) as an organized market for shares and debentures. Despite permanent efforts, this institution has not managed to become attractive for the
domestic companies. Actually, there are no companies listed in Tirana Stock Exchange, while Government securities trading in this market is inexistent.
Tirana Stock Exchange
Tirana Stock Exchange S.A., has a license to
operate as a securities organized market for
2 years until 01July 2007. The license serves
for Government securities trading, companies
debt and shares. 2 year licensing is conditioned with the duty of drafting and reporting
to AFSA of the plan for taking steps to gradually shift from state ownership and preparing
of potential public companies to register them
in Tirana Stock Exchange.
The existing conditions, in which the economy of
the country is facing accompanied by the need for
a fast and sustainable growth, which implies an increase of the demand for investments
from the private and state sector, request the immediate start and not postponing of the
process of stock market development. In this context, the Government may play an important role towards encouraging the development of this sector mainly through privatizing any package of shares of state-owned strategic companies in the stocks market or, by
means of providing various fi scal and legal incentives to encourage domestic business to
utilize this market as a fi nancing alternative by listing in the stock exchange.
Off-exchange stock market is not an organized one and it mainly consists of transactions
executed between shareholders of privatized companies. This market continues to be
active, although it has kept declining over years as result of property consolidation these
privatized companies. Pursuant to Law No. 7638, date 19 November 1992 “On Commercial Companies” all companies, which consist of more than 50 shareholders, have to be
registered in a specialized independent registered. Therefore, registration together with
clearing and settlement of accounts for transactions executed in shares is conducted by
the Albanian Share Register (ASR).
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
41
Albanian Share Register (ASR)
ASR operates since 2002 since it was licensed having as its scope of work the registration of joint-stock
companies’ shares. These companies with over 50
shareholders are subject to the legal obligation of
keeping their stocks register in an independent
registration center. Albanian Share Register (ASR),
apart from keeping the register, also conducts its
record updating on executed transactions. Likewise, ASR provides also the following services:
• Announcement of general meeting of shareholders assembly,
• Dividends calculation.
ASR is a shareholding company registered with
AFSA as a registrar of property securities. Apart
from electronic registration (Book-Entry) of property rights for companies, ASR provides also other
corporate actions for the registered companies. 48
companies are actually registered in the ASR, of
which 15 are fi nancial institutions (4 commercial
banks, 9 insurance companies, 1 securities registrar and Social Insurance Institute).
The total number of registered companies in ASR
during 2006 experienced a decline of 31,4% compared to 2005. Only shares of 18 companies were
traded in the off-exchange market. A total of 140
transactions were executed including a total number of 1.637.755 shares compared to
554 transactions executed in 2005 with a total number of 1.002.886 shares. The number
of traded shares in the off-exchange market over 2006 makes up about 8.89% of all stock
of companies registered with ASR, something which indicates the low rate of liquidity
that characterizes this market.
Table 8: Statistics on the Off-Exchange Stock Market in 2006
No.
Classification
Statistic
1.
Total number of companies registered in Albanian Share Register
2.
Total number of stocks of companies registered in Albanian Share Register
3.
Total number of companies whose stocks have bee traded
4.
Total number of transactions executed over 2006
5.
Total number of stocks traded over 2006
6.
Percentage of transactions traded over 2006.
48
18.410.025
20
140
1.637.755
8.89 %
Source of Data: Albanian Share Register
It is difficult to assess the evolution of the off-exchange stock market in Albania, mainly
due to the lack of information on stock trade prices, which hinders calculation of real indicators of this market assessment. In addition, lack of information on the activity and fi nancial statements of these companies leaves room for “price distortions”, because it does not
present the real supply of these securities, thus leaving the minor investors who own stock
of these companies, without protection.
42
A N N U A L
R E P O R T
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2.3.3 The Supplementary Private Pensions’ Market
The Development of Supplementary Private Pensions Institutions
The pensions’ system in Albania is at a low level of development compared to the region
countries. This system is essentially based on state funded pillar, which is otherwise recognized as Social Insurance Scheme (PAYG or, Pay-As-You-Go System).
The existence of pensions third pillar in Albania is still in its earlier stages. Regardless
the adoption of the Law ”On Supplementary Pensions and Private Pensions Institutions”
as of 1995, the activity of the fi rst companies in private pensions area commenced in 2006.
Over this time, these companies have paid very much attention to marketing, work with
employers and individuals to attracts as many contributors as possible. Regardless of
this fact, the existing private pensions institutions have a number of contributors, which
stands at minimum levels required
by legal framework. On the other
Third Pillar
hand, lack of foreign companies in
this market, due to legal restricIt implies individual savings and supplementary contribution by the
tions, renders competition between
employer. This scheme provides supplementary incomes for individuals who are willing to benefi t higher pensions when they retire. Exdomestic companies insignificant.
perience from several countries has indicated that investing a part
In 2006, total of supplementary priof savings in pensions private funds is a good way of investment for
vate pensions market contributors
retirement. The Income from supplementary schemes are a very imis about 2621, thus accumulating a
portant component for the retirees.
fund of about 13,15 million ALL.
The Companies’ Market Data:
• “Garantsig Pensions Private Institution S.A.” has started its activity as of 01 January
2006. From January to December 2006, the company had a figure of about 892 contributors with about 2,62 million ALL of contributions.
• “APFA – American Pension Fund of Albania S.A.” started its activity as of 01 January 2006. From January to December 2006, the company had a figure of about 1122
contributors with about 9,27 million ALL from contributions, which were invested in
T-Bills.
• Private Pensions Institution “Capital S.A.” started its activity as of 01 March 2006. From
March to December 2006 this institution collected 1,26 million ALL from contributions,
totaling about 607 contributors. The contributions have been invested in T-Bills to an
extent of 90%, while the rest were invested in bank deposits.
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
43
Private Pensions’ Market Structure in 2006
10%
CAPITAL
23%
34%
CAPITAL
APFA
70%
20%
GRANTISIG
APFA
43%
GRANTISIG
Pensions Private Funds Market
(according to contributions)
Pensions Private Funds Market
(according to contributors number)
Supplementary and private pensions institutions have been subject to on-site supervision
by AFSA. The goal of inspections conducted on these companies has essentially consisted
in the verification of the following:
i) The respecting of legal requirements regarding pensions institutions in the course of
performing their activity;
ii) The investment of the guarantee fund;
iii) The collection of revenues from contributions and their investment;
iv) The members’ individual accounts;
v) The implementation of the business plan drafted by private pensions’ institutions.
Third Pillar Future Development
Based on the importance that third pillar presents in the frame of pensions’ system, as well
as, based on the limitations of the existing legal framework concerning the organization
of this pillar, the conclusion is that its development needs fundamental changes basically
focused on these following directions:
• The full revision of legal framework. The existing law needs significant improvements,
which must be brought up to international standards and, which must align with the country developments as a goal;
• The stimulation and involvement of employers and individuals in these schemes through
developing legal and fiscal incentives;
• The enhancement and strengthening of the elements of the guarantee and the proper administration of private pensions’ institutions;
• The promotion and development of stock market in the country, as this is closely connected
with pensions’ market development.
Taking measures to meet the aforementioned requirements will necessarily bring about
positive outcomes in the Albanian market of supplementary private pensions.
44
A N N U A L
R E P O R T
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2.4 Institutional Relations
2.4.1 Cooperation with Domestic Institutions
The Albanian Financial Supervisory Authority has an important role in development and
maintenance of solid fi nancial stability for the country’s economy. In this context, efforts
have been made to develop a positive climate of cooperation with important fi nancial institutions in the country, such as the Ministry of Finance and the Bank of Albania. In addition,
AFSA represents a serious partner for the Government in terms of supporting acceleration
of reforms, which have to do with non-banking fi nancial sector’s development. In 2006, the
AFSA has cooperated also with other domestic institutions regarding improvement and
coordination of work with stakeholders, which have connections with its activity.
An important element of institutional cooperation is also the signing of Memorandums of Cooperation and Understanding between the AFSA and other regulatory institutions in the country. The goal of these agreements consists in coordinating the regulatory activity among regulatory entities of similar domains, as well as, the exchange of information with other important
institutions, which play a determinant role in the development of the country (see Table 9).
Financial Stability Advisory Group (FSAG)
Article 30 of Law No. 9572, date 03 July 2006, “On the Albanian Financial Supervisory Authority” explicitly specifies
the establishment and functioning of a new structure, Financial Stability Advisory Group (FSAG), which:
•
•
•
Aims at coordinating the supervisory and regulatory work and assists in the development of joint policies in the
financial system of the country,
Ensures exchange of information between financial institutions, which are group members.
Assists in protection, stability and development of financial markets in the Republic of Albania, as well as, in the
improvement and increasing of efficiency of control over the operators of these markets.
FSAG Members
• Minister of Finance;
•
Chairperson of FSA Board;
•
Bank of Albania Governor
In December 2006, AFSA signed a Memorandum of Understanding with the Competition Authority. The scope of this
agreement consists in provision of bilateral assistance with
regard to information exchange. The target of this agreement
is to set bilateral rules to ensure a free and effective competition pursuant to nondiscrimination policies regarding entities that operate in areas, which are subject to the AFSA own
regulatory and supervisory functions.
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2.4.2 Cooperation with International Institutions
The rapid development of international fi nancial markets, the unification of regulatory and
supervisory standards, as well as, the involvement of regulators of relevant countries in the
implementation of these “general principles” has led to the intensification of the AFSA’s
contacts and the exchange of experiences with its counterparts and to the consideration
of participation in international organizations as priority task. International cooperation
becomes more intensive due to the need of enforcement of EU Directives and implementation of Stabilization and Association Agreement.
Table 9: Membership and Signed Cooperation Agreements
A.
B.
C.
Agreements Signed with Organizations Inside Albania
Year
Institution
- Faculty of Law
2002
ASC (now AFSA)
- Authorized Accounting Experts Institute (AAEI)
2003
ASC (now AFSA)
- General Directorate of Road Transportation Service
2003
ISA (now AFSA)
- Bank of Albania
2005
ISA, ASC (AFSA)
- Competition Authority
2006
AFSA
Agreements Signed with Counterpart Institutions outside Albania
Year
Institution
- Stock Market Commission of Greece
1999
ASC (now AFSA)
- Securities Commission of Quebec
2000
ASC (now AFSA)
- Securities and Stock Exchanges Commission of Italy
2000
ASC (now AFSA)
- Stock Market Agency of Slovenia
2003
ASC (now AFSA)
- Securities and Stock Exchanges Commission of Poland
2003
ASC (now AFSA)
- Stock Market Board of Turkey
2003
ASC (now AFSA)
- Financial Market Supervisory Commission of Bulgaria
2003
ASC (now AFSA)
- Kosovo Banking and Payments Authority
2004
ISA (now AFSA)
- National Securities Commission of Rumania
2005
ASC (now AFSA)
- Securities and Stock Exchanges Commission of Macedonia
2005
ASC (now AFSA)
- Securities and Stock Exchanges Commission of Montenegro
2005
ASC (now AFSA)
- Securities Commission of Croatia
2005
ASC (now AFSA)
Membership in Regulators International Organizations
Year
Institution
- IOSCO (International Organization of Securities Commissions)
1998
ASC (now AFSA)
- IAIS (International Association of Insurance Regulators)
2001
ISA (now AFSA)
- IOPS (International Organization of Pensions Regulators)
2006
AFSA
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Membership in International Organizations
The AFSA is a full member of regulators’ international organizations in the areas of insurance
and securities carried over from the respective prior authorities. Additionally, AFSA recently
signed an agreement on becoming a full member of the International Organization of Pension
Regulators (IOPS). The target of active participation in these organizations is to increase bilateral cooperation in support of most effective regulation of these markets at an international
level. This cooperation has consisted in the exchange of information and experiences, coordination of efforts regarding setting of regulatory and supervisory standards and provision of a
joint assistance in relation to protection of non-banking financial markets integrity.
International Association of Insurance Supervisors (IAIS) – Membership in this organization has assisted the AFSA basically to improve the insurance area regulatory legal
framework through introducing international standards and to apply this legal framework
in practice. From this perspective, AFSA has had permanent contacts with various IAIS
bodies through permanent participation in trainings, workshops, conferences, as well as, in
annual meetings of the members of this organization.
International Organization of Securities Commissions (IOSCO) – Enjoying the IOSCO
member status, AFSA has, in 2006, continued its cooperation with this organization by participating in the Committees and Working Groups established on various issues. Moreover,
the target of AFSA has been to become a signatory-country in the Multilateral Memorandum of Understanding and Assessment Methodology (MMoU), signed by majority of IOSCO
members, which are developed countries. The goal of this agreement is to boost international cooperation, establish the information exchange system in order to achieve an increasingly efficient supervision on the operators and financial services of stock markets in a
global scale. AFSA has to meet up to 2010 all legal and regulatory adjustments and become
subject to an assessment in order to be qualified to sign MMoU. Same process occurs also in
the case of MMoU in IAIS. Therefore, the AFSA faces major responsibilities and challenges
concerning revision of the overall legal package of the areas under its jurisdiction.
International Organization of Pensions Supervisors (IOPS) – Right after its establishment as new regulatory institution, the AFSA determined procedures to become e member
of IOPS and it accomplished its goal by becoming its full member in December 2006. The
functioning goal of this organization consists in the international promotion and cooperation in the area of pensions market regulation. In addition, IOPS serves as an open forum
for the discussion of development policies of this market, as well as, for the exchange of
experiences and information.
Cooperation with Counterpart Institutions
The AFSA has continued good bilateral relations with similar Authorities, which regulate and supervise non-banking fi nancial markets across countries. These efforts were
substantiated with the signing of the Memorandum of Understanding with several coun-
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terpart Authorities. The main benefit of signing and implementation of these agreements
consists of bilateral relations establishment to facilitate exchange of confidential information as a key instrument in terms of a friendly, fast and efficient functioning of best
international practices in the area of fi nancial markets regulation. Pursuant to this positive
situation, the AFSA is working on expanding cooperation with other similar institutions
through drafting of several new agreements with some of the developed countries.
Cooperation with Partners (Donors)
Donors have been serious partners and a very important supporting factor in relation to institutional establishment of the AFSA, as well as, promotion and development of particular
links of the activity of this institution.
Cooperation with World Bank (WB) – being the key and
most important partner, WB has assisted and supported the
overall regulators unification process and the AFSA institutional set-up. In addition, WB has provided a real support
also in connection with conducting of a series of trainings
by well-known international experts and lecturers. Developing human resources and providing further training on
specific issues not only involving AFSA staff, but also nonbanking fi nancial market operators has also been the goal
of these trainings.
Cooperation with FSVC (Financial Services Volunteer Corps) – has been efficient
especially in the frame of drafting human resources management policies and training of
specialists of a very specific area of insurance market such as actuary.
Cooperation with European Bank for Reconstruction and Development (EBRD)
– has focused in the area of drafting necessary legislation for the issuance of corporate
bonds, as well as, municipal bonds.
Activities, Conferences and Trainings
Membership in international organizations and cooperation
with counterpart Authorities is considered as an opportunity to exchange experiences, brainstorm on common issues
and to develop human resources through trainings, In this
sense, the AFSA has demonstrated its interest through an
active participation in meetings, conferences, workshops
and in various trainings held at regional and international
level where issues of insurance, securities and pensions
markets have been addressed.
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2.4.3 Public Relations Policies
The Albanian Financial Supervisory Authority considers public information very important in terms of protecting consumers’ interests to the best extent possible. Therefore,
a special attention is paid to transparency of supervisory and regulatory activity of the
AFSA as well as to the availability and accessibility of the information to the public. In
this context, the AFSA, following its establishment, went on with its successful practice
of prior regulatory entities in terms of publication of information and statistical reports on
the development of various non-banking market sectors.
A specific attention has been paid to the AFSA’s presentation in media essentially through
participation in conferences and workshops where important issues, which affect development of Albanian economy, are topics of discussion. In addition, in order to stay closer to
the community, work has already started on the AFSA’s official webpage, which will be an
important communication tool that would link the regulatory entity with the public.
2.5 Information Technology
The AFSA is working on a strategy regarding the development of Information and Technology (IT) that would apply to the institution itself and to the market. This IT strategy
would meet the supervisory needs of the market through implementing a risk-based
supervisory model application.
In order to efficiently meet legal obligations, the AFSA needs an Integrated Information
System, which completes and processes all the information needed as a part of the institution activity, while it ensures stability, certainty and continuation of work processes.
Such a system has the following advantages:
• The establishment of a database for the overall insurance market, which will be
used not only in daily monitoring of insurance companies, or in the case of on-site
inspections conducted by inspectors, but it will also be used by companies to avoid
fraudulent cases and misrepresentation of facts. This database will be useful in the
future in implementing more efficient methods in setting premiums based on policyholder’s background etc.
A L B A N I A N
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• The minimization of technical errors by the experts due to different platforms’ application, which will make the information released by the authority more reliable.
• It will provide higher efficiency of work-processes and it will decrease the time needed
to process information.
• It will enable the use of “software programs” in the AFSA fi nancial activities, which
are recognized by the tax authorities or auditing entities. The use of such software
programs will make the activity of AFSA more transparent.
• The computerization of the data and of all records to facilitate and enable faster processing of paper work.
• The data of non-banking fi nancial sector are in a computerization process.
• It will provide higher efficiency by shortening the manual process of data input. At
the same time, it will enable the experts to put in more efforts and time into other
projects.
• It will provide an opportunity to reconcile the statistical data from this database with
the fi nancial data, as well as it will enable cooperation with counterpart institutions
which operate in fi nancial markets.
• Insurance risk and investment risk will be assessed more accurately;
• Portfolio diversification of licensed entities will get more clarified.
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III. Future Perspective
The AFSA’s fundamental goal is to protect consumers’ interests along with ensuring financial stability of operators in the market as well as law enforcement. The Authority’s
focus in the future will be the regulation and improved supervision of non-banking fi nancial sector, which will have an impact on the significant increase of the role of insurance,
supplementary private pensions and securities in fi nancial market and overall Albanian
economy. This will have a positive impact in the stability of the economy of the country.
The revision of legislation in compliance with development needs and its harmonization
with European Union directives comprises one of basic priorities of the institution towards
markets’ regulation according to international standards. The increase of the guarantee
fund, already passed by the Parliament, and the introduction of international fi nancial
reporting standards (IFRS) by 2008 will be followed by other AFSA initiatives such as
improved legislation that would comply with EU directives. The target of improved legal
framework will be to build a safer environment for the operators’ activity across supervised
markets. On the other hand, the AFSA will closely cooperate with all the other structures
in terms of passing legislation in accordance with market development and market demands, as well as, ensuring Compliance with such legislation.
The transition from the traditional supervisory model to the risk based one relying on European countries practice will constitute AFSA’s priority in the supervisory perspective.
The new risk-based supervisory approach is expected to be backed up by a new electronic
reporting system, which will guarantee fast and reliable communication, improvement
of analysis’ capacity, improvement of warning system and, eventually, improvement of
quality and efficiency of the overall AFSA’s supervisory activity. The Authority is already
cooperating with counterpart institutions in Europe in order to examine various system
models and their efficiency in supervision in the respective countries. The drafting and
revision of AFSA’s regulation and internal manuals, regarding on-site supervision and
other risk based supervision activities, will take place at the same time of the application
of the new supervisory model.
The promotion and encouragement of markets’ development, and non-banking fi nancial
services and products will remain in the focus of AFSA work over the next period. Such
a goal will be attained not only through quality improvement of the existing services and
products, but also through improving the range of the products offered in order to meet
the consumers’ needs. Better quality of corporate governance is needed in the improvement of risk management and the reduction of administrative costs. The AFSA will pay a
special attention to quality improvement of corporate governance. Our goal is to ensure
the capability, possibility and good will in the governing of the supervised operators.
Increasing consumers’ awareness and knowledge regarding the products offered will
be part of a large campaign that the Authority will initiate in cooperation with market
operators. The goal of this campaign will consist in making consumers aware of the
role and importance of insurance, supplementary pensions and other fi nancial outputs
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in the market. This campaign will provide awareness and knowledge of products that
will ensure fi nancial stability of Albanian households and businesses and will improve
overall life quality in Albania.
The attainment of all the AFSA’s goals regarding regulation and supervision will be based
on close cooperation with all insurance, securities and supplementary private pensions
market structures. The target is to conduct programs, which promote efficiency and supervised markets integrity, in cooperation with businesses. Fruitful cooperation and regular communication established with insurers organization will be further enhanced upon
initiation and implementation of programs regarding expansion of businesses, insurance
of nature disasters, etc.
In conclusion, a solid macroeconomic development of the country and a fast growing banking sector tied with good potentials that insurance, securities and pensions
markets provide in Albania, are all factors, which enable solid growth of non-banking
fi nancial markets in a relatively short time. These factors, accompanied by the overall
improvement of the fi nancial markets supervision , have served at this time as the basis
of attracting the interest of international insurance companies and pension institutions.
It is worth mentioning that some of the best European insurance companies, have begun their cooperation with Albanian insurance companies. International companies
have indicated considerable interest regarding the privatization of the state-owned Insig
insurance company, which is set to be completed within 2007. Incorporation of international best practices combined with a modern regulatory and supervisory approach
will certainly play a very big role in non-banking fi nancial market capacity boost and its
overall safety and perfection.
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IV. Appendixes
APPENDIX A:
Financial Supervisory Authority Organization Structure
The Board of AFSA
Internal Audit
Adviser
Chairperson
Deputy Chairperson
Inspection &
Disciplinary
Department
Human Resources
& Other Supporting
Department
Deputy Chairperson
Licensing &
Monitoring
Department
International &
Public Relations
Department
Inspection
Department
IT Sector
Licensing
Department
Legal
Sector
Actuarial
Department
Finance &
Accounting
Sector
Monitoring
Department
International
& Public
Relat. Dept.
Disciplinary
Department
Human
Resources
Sector
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The CoMD defines the high end acceptable limits of the activities and
investments of activities to recover technical and mathematical
provisions in insurance companies.
This order defines earned premium rates of compulsory insurance by
motor vehicles owners in connection with liabilities to third parties.
Te goal of this regulation is the establishment of balance for the
insurance companies’ stock investment and compulsory adherence
to some supervisory relations.
The scope of this regulation is to determine basic rules of drafting
the reinsurance needs program for every financial year of the
insurance company.
On determining the high end acceptable
limits of the activities and investments of
activities to recover technical and
mathematical provisions in insurance companies.
On the adoption of motor compulsory
insurance premium regarding liabilities
to third parties
On trading and administration of border
polices by Albanian Insurance Bureau
On the limits of insurance
companies stock investment
On the reinsurance program content of
insurance companies and timelines of
presenting it to the Financial Supervisory
Authority
CoMD No. 268,
date 28 April 2005
Minister of Finance
Order No. 11
date 25 March 2005
Minister of Finance
Order No. 14
date 06 May 2005
Regulation adopted by
Decision No. 4, date 08
February 2007 of Financial
Supervisory Authority Board
On the insurance companies reporting
February 2007 of Financial rules, manners and conditions to AFSA
The CoMD defines the professional and reliability criteria of insurance
agents, as well as, it sets forth procedures regarding licensing of and
rules for the supervision of agents’ activity.
On the Licensing Criteria and Procedures
for Insurance Agents and the Rules of
Supervising Their Activity”.
CoMD No. 192,
date 25 March 2005
The scope of this regulation consists of the rules set by AFSA
concerning the insurance companies reporting manner.
The scope of this order is issuance, trading and administration of Border
Insurance Policies. The Albanian Insurance Bureau is assigned to carry out
these activities on behalf of insurance companies, which are members of it.
The CoMD defines the Ways of estimating the required level of solvency
concerning Life and Non-life Insurance of insurance companies and the
elements that compose it.
On the adoption of the approach on the
Ways of estimating the required level of
solvency concerning Life and Non-life
Insurance of insurance companies and
the elements that compose it.
Council of Ministers
Decision (hereinafter
referred to as CoMD) No.
191, date 25 March 2005
The Law defines obligations concerning compulsory insurance and
liability to third parties in cases of accidents by setting forth procedures
in relation to meting these obligations and it also sets forth
establishment of Albanian Insurance Bureau and the procedures of
its functioning and activity.
The scope of this Law is establishment of general principles and rules
concerning insurance, reinsurance, intermediary activity in insurance
and reinsurance and supervision by the state of entities which undertake
to exercise the activities set forth in this law.
“On the Insurance, Re-insurance and
Intermediary Activity in Insurance
and Reinsurance”
Law No. 9267,
date 29 July 2004
Decree No.295,
date 15 September1992
changes by Law No. 7461, On the Insurance of Motor Vehicle Owners
in connection with Liability to third parties
date 01 December 992,
and by Law No. 8729,
date 18 January 2001
Law/Regulation Description
Description
Legal/Regulatory
Reference
In Insurance Area
APPENDIX B: Non-Banking Legal-Regulatory Framework
On the reinsurance program content of
insurance companies and timelines of
presenting it to the Financial Supervisory
Authority
The goal of this regulation is to define requirements in connection
with professionalism and the reputation of persons, who conduct
administration, leading and controlling of the insurance company,
as well as, constraints to be applied in the frame of their appointment
and dismissal.
The scope of this regulation is listing of all mandatory documentation
for regular and annual reporting of insurance companies to the AFSA.
The goal of this instruction is definition of the rules of disclosure for
the necessary data to enable the public to become familiar with the
financial condition of insurance companies and to assess the insurance
companies affordability in terms of paying the claims and meeting other
obligations, as well as, defining the rules for providing information to
the consumers ahead of entering into the insurance contract, or over
the insurance contract validity time.
The scope of this instruction consist of the regulation of insurance
companies reinsurance activity, which can reinsure part of liabilities
that it has contracted with insurers, with national reinsurance
companies, with offices of foreign reinsurance companies licensed by
the AFSA or foreign reinsurance companies that meet the criteria set
forth in this instruction.
On some criteria to be met by persons
elected or appointed in the insurance
and reinsurance companies leading bodies.
Instruction adopted by
On the list of documents of regular and
annual mandatory reporting of insurance
and reinsurance companies.
On the rules of disclosing the insurance
and brokerage companies data in the
context of transparency to the public
and consumer protection.
On defining the criteria of reinsurance
companies, with which the insurance
companies that operate in the Republic
of Albania may enter into reinsurance
agreements.
Instruction adopted by
Instruction adopted
by Decision No. 12,
date 08 February 2007
of Financial Supervisory
Authority Board
The goal of this regulation is definition of the time limits and the
procedures of issuing the license to exercise activity as insurance and
reinsurance company and as an office of a foreign company, procedures
of establishing the representation office in the Republic of Albania by
the foreign insurance company, as well as, the procedures of licensing
and expansion of the insurance company insurance activity.
F I N A N C I A L
On the accepting and reviewing procedures
of applications about issuing the license
to exercise insurance or reinsurance
activity in the Republic of Albania
The scope of this regulation is the manner of calculation and keeping
of non-life insurance technical provisions by insurance companies.
The scope of this regulation is calculation methods and the manners
of keeping mathematical provisions by the insurance companies.
On the basis, calculation methods
and the manners of keeping
mathematical provisions.
On the basis, calculation methods
and the manners of keeping non-life
insurance technical provisions.
The scope of this regulation is definition of criteria and procedures for
authorized accounting experts companies, which will be appointed by
insurance companies following the approval of the AFSA and the content
of the control reports on insurance companies by the authorized
accounting experts companies.
The scope of this regulation consists of the rules set by AFSA
concerning the insurance companies reporting manner.
The scope of this regulation is to determine basic rules of drafting
the reinsurance needs program for every financial year of the
insurance company.
On the insurance companies
February 2007 of Financial authorized accounting experts
On the insurance companies reporting
February 2007 of Financial rules, manners and conditions to AFSA
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This decision defines the rules in connection with entities, which enjoy the right to make
announcements about securities and exemptions from this rule, rules in relation to orders
that must be issued by the regulatory body in cases when it finds out that a security related
announcement is fraudulent, the obligation to send a copy of announcements to the
regulator’s address, and the sanctions on cases, which are verifies as running against
this decision.
The goal of this decision is to stipulate an ethic, a behavior of persons licensed to operate
in securities market. It defines the obligations vis-à-vis customers, the obligation concerning
a clear and fair communication, the obligation to explain the risk to the customer, the
obligation to familiarize the customer with the fees that are applied, etc. The decision also
sets forth rules about execution upon priority principle of customer’s orders, quick and fair
registration of eh transaction carried out by the customer, etc.
The decision defines the obligations in terms of keeping the accounting records, their
renovation and maintenance, the obligation to draft financial statements and their form
and content. It provides the definition “customer money” and the operations linked with
them. In addition, the decision sets forth the obligation of licensed person to assign accounting
experts, thus reinforcing authorities and procedures regarding their appointment and dismissal.
On the rules of
leading securities
investment activity
On the financial
and accounting
requirements of
securities dealers
CoMD No. 440
date 17 June 2001
CoMD No. 441
date 17 June 2001
CoMD No. 442
date 17 June 2001
This regulation defines rules applicable to securities public proposals, which are shares, bonds
or guarantees, by providing the exceptions to the general rule. The regulation provides the
prospect mandatory form and content. It defines the data that must make up the narrative part
of the prospect such as responsible persons, advisors, securities data, with which the proposal
is linked, general information on the issues and its capital, etc. Additionally, the regulation
regulates in a detailed manner the procedures on the prospect registration; it sets forth the
maximum time limit of a public proposal, the obligation of the issuer to report to the AFSA
following proposal closure and the measures to eliminate irregularities during the public
proposal.
Regulation adopted
by Decision No. 12,
Authority Board
The regulation establishes the legal basis and it applies to all proposals to take possession of
the shares control package or to merge joint stock companies registered in Albania. Its goal is
This regulation sets forth rules concerning minimum capital, low end liquidity limit,
obligations of licensed persons, definitions with regard to approved inputs and liquid inputs
and their estimate.
On the requirements
Decision No. 12, date 29 re: financial resources
January 2007 of Financial
of licensed persons
On prospect
The goal of this regulation is to define the licensing procedures and the fees that entities
must pay case by case depending on the activity, for which they apply.
Decision No. 12, date 29 On licensing, fees
January 2007 of Financial and commissions
Law 8080 date
01.03.1996, changed
by Laws No. 8168,
date 05 December
1996 and Law No. 8745,
date 22 February 2001.
On the rules re:
form and content
of announcements
about investment
activity in securities.
On Securities
Description
The Law “On Securities” is the main regulatory framework for functioning of regulatory.
The object of this law is provision of investors’ protection in securities by establishing the
regulatory body, by regulating securities markets and persons engaged in securities investment
business, and by controlling the public issue of and trading in securities. This law establishes
the regulatory entity which has supervisory and licensing authority for the securities market,
and with further development of this market, the regulator will take the attributes of an
independent agency.
Legal/Regulatory
Reference
In Securities Area
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On securities
registrars licensing
Regulation adopted
by Decision No. 12,
Authority Board
On illegal practices
of trading
On the retail market
on Government
securities of the
Republic of Albania
Regulation adopted
by Decision No.5, date
07 December 2006 of
Authority Board
On licensing
securities dealer,
the investments
advisor and their
representative.
On securities
market licensing
Regulation adopted
by Decision No. 12,
Authority Board
Regulation adopted
by Decision No. 12,
Authority Board
Regulation adopted
by Decision No. 12,
Authority Board
Decision No. 12, date 29 On the organization of
January 2007 of Financial applicants examination
On take-over
On prospect
Regulation adopted
by Decision No. 12,
Authority Board
Regulation adopted
by Decision No. 12,
Authority Board
This regulation explicitly defines the manner of retail market functioning, the monitoring
and transparency procedures with the aim of protecting investors that invest in government
securities. The regulation provides an accurate definition of retail market, type of transactions
on this market, trading procedures, keeping of analytical register, obligation to inform and
report to AFSA. The regulation prohibits trading activity in the retail market of banks, which
are not licensed by the AFSA. Banks, which operate in retail market, must also organize
keeping of the Government securities analytical register by being issued with a license for
this type of activity or, by making an agreement with another bank, which is licensed for
The regulation reflects most recent guidance of CE re: trade violations and protection against
them. The regulation provides the definition of internal information by means of clearly
describing its two key elements, which are the accurate nature and influence on the price.
This definition considers it a market violation even if the person, who has performed the action,
did not make any profit. It is the first time that obligations such as drafting of the list of
persons with access to internal information, its updating and transparency to AFSA regarding
transactions carried out by company directors and persons linked with them. In addition, the
regulation sets forth preventive measures, which are connected with the obligations of persons
professionally involved in the transaction to condemn an illegal practice, as well as, the
obligation of journalists and financial analysts to make transparent conflicts of interest in their
securities related articles and analysis.
This regulation explicitly stipulates the actives for which the securities dealer, investments
advisor and their representative are licensed. Licensing criteria take up a considerable and
special part of the regulation. These criteria define all necessary documentation that
applicants must present in order to be licensed to conduct the activities, which fall under
the scope of this regulation. The AFSA right to accept or refuse the applications is applied in
the frame of procedures, which are followed in such a process. In addition, it sets forth fees
and commissions to be paid by the licensed entities both, at the moment when issued with
the license and during exercising the activity, for which they have received the license.
Definition of requirements, time limits and licensing procedures to be followed by the
entities applying to be provided license to operate in securities market make up the scope
of this regulation. In this frame, it is defined that no entity may operate as securities dealer
unless it is licensed in advance by AFSA. The securities market (stock exchange) organizes its
activity based on the statute and rules of trade operation, which become subject to adoption
by the AFSA.
The regulation defines the examination organization procedure for the securities dealer,
investments advisor and their representative.
The scope of this regulation is the definition of requirements, procedures and time limits
of licensing of persons who apply to be issued with license to operate as securities registrar.
Securities registrar is a juristic person licensed by AFSA, which has organization and
administration of securities registers as the scope of its activity.
The regulation establishes the legal basis and it applies to all proposals to take possession of
the shares control package or to merge joint stock companies registered in Albania. Its goal is
to ensure an equal and fair treatment of all shareholders, which are affected transactions
carried out to get possession of shares control package. This regulation imposes the rules of
the game. Proposals to get possession of the control package must be made by the defined
deadline in order to provide shareholders with the possibility of making a well-informed
decision. The public enjoys the right to be informed about any significant change (more or
less than 20% of the right to vote).
prospect mandatory form and content. It defines the data that must make up the narrative part
of the prospect such as responsible persons, advisors, securities data, with which the proposal
is linked, general information on the issues and its capital, etc. Additionally, the regulation
regulates in a detailed manner the procedures on the prospect registration; it sets forth the
maximum time limit of a public proposal, the obligation of the issuer to report to the AFSA
following proposal closure and the measures to eliminate irregularities during the public
proposal.
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The decision defines the necessary documentation to receive the permit to
operate as private institutions for pensions, the conditions of issuing and revoking
the permit, as well as, the supervisory and financial control procedures.
The scope of this regulation is the documentation presentation manner for
licensing and the procedure followed by the AFSA when issuing the permit to
operate as a supplementary pensions private institution.
On Supplementary pensions
and pensions private institutions.
On the licensing and supervisory
procedures of pensions private
institutions
On the procedures of licensing
and reviewing the applications of
issuing the permit to operate as a
supplementary pensions private
institution.
On supervision and financial
control of supplementary pensions
private institutions.
Law No. 7943, date
01 June 1995, changed
by Law No. 8393, date
02 September 1998 and
Law No. 9181, date
05 February 2004
CoMD No. 908,
date 29.12.2004
February 2007 of the
Authority Board
February 2007 of the
Authority Board
The goal of this regulation is to draft the program of the control exercised by
AFSA to the supplementary pensions private institutions, the control conducting
procedures, drafting of the control report and setting of control standards.
The scope of this law is the regulation of private pensions insurance by pensions
private institutions, their establishment activity, their licensing and control.
Description
Legal/Regulatory
Reference
Stipulation of conditions, manner and procedures of monitoring the entities licensed by
the AFSA to trade and keep the register on securities of the Republic of Albania Government
constitute the scope of this regulation. The target of this regulation is to protect securities
investors’ interests and improvement of the functioning conditions of Government securities
retail market.
This regulation explicitly defines the manner of retail market functioning, the monitoring
and transparency procedures with the aim of protecting investors that invest in government
securities. The regulation provides an accurate definition of retail market, type of transactions
on this market, trading procedures, keeping of analytical register, obligation to inform and
report to AFSA. The regulation prohibits trading activity in the retail market of banks, which
are not licensed by the AFSA. Banks, which operate in retail market, must also organize
keeping of the Government securities analytical register by being issued with a license for
this type of activity or, by making an agreement with another bank, which is licensed for
this purpose.
This definition considers it a market violation even if the person, who has performed the action,
did not make any profit. It is the first time that obligations such as drafting of the list of
persons with access to internal information, its updating and transparency to AFSA regarding
transactions carried out by company directors and persons linked with them. In addition, the
regulation sets forth preventive measures, which are connected with the obligations of persons
professionally involved in the transaction to condemn an illegal practice, as well as, the
obligation of journalists and financial analysts to make transparent conflicts of interest in their
securities related articles and analysis.
In Private Supplementary Pensions Area
On the procedures of
monitoring retail
market on Government
securities of the
Republic of Albania
On the retail market
on Government
securities of the
Republic of Albania
Regulation adopted
by Decision No.5, date
07 December 2006 of
Authority Board
Regulation adopted
by Decision No. 12,
Authority Board
On illegal practices
of trading
Regulation adopted
by Decision No. 12,
Authority Board
A L B A N I A N
F I N A N C I A L
Decision No. 03 and 04,
date. 08 June 2000
Date of Starting
Activity
A U T H O R I T Y
59
Life Insurance
Scope of Activity
10. SIGAL-LIFE S.A
9. SICRED S.A
Life Insurance
Edvin HOXHAJ
Court Decision No. 30756
date 09 September 2004
Decision No. 6,
Date of Starting
Activity
Genc KOXHAJ
[email protected]
[email protected]
E-mail
Executive Director
www.albsig.com.al
Webpage
+355 4 254 761,
+355 4 254 764
+355 4 235614,
+ 355 4 232462
Tel./Fax
National stock company
Rr.,”Punëtoret e Rilindjes”,
Nr.10, Tirana
Type of Ownership
Non-Life Insurance
Rr. “Barrikadave”
Pall. 122, Ap1/1, Tirana
Non-Life Insurance
Scope of Activity
Gezim HUQI
6. ALBSIG S.A
Decision No. 01,
date 03 March 1999
[email protected]
www.sigma-insurance.com
Office Address
Vangjel BIRBO
Executive Director
5. INTERSIG S.A
[email protected]
E-mail
www.insig.com.al
Webpage
+355 4 250 220
+355 4 258 254,
+355 4 258253
+355 4 234 170
Bul. “Zogu I”, Nr.1 ,
P.O.B. No.2387, Tirana
Rr “A . Frashëri”,
sheshi Willson,
P.O.B. No. 1714, Tirana
Rr. “Dibrës” Nr. 91, Tirana
Office Address
Tel./Fax
Domestic and foreign
stock company
Domestic stock company
State + foreign
stock company
Type of Ownership
Decison No. 9,
date 19 July 2004
[email protected]
www.interalbanian.com
+355 4 229 551,
+355 4 229578
Zayed Business Center,
Kutia Postare
Nr.277/1, Tirana
Non-Life Insurance
Bardhyl MINXHOZI
7. INTERALBANIAN S.A
Decision No. 02,
date. 23 June 1999
[email protected]
www.sigal.com.al
Non-Life Insurance
Non-Life Insurance
Life + Non-Life Insurance
Avni PONARI
3. SIGAL S.A
Scope of Activity
Qemal DISHA
2. SIGMA S.A
Saimir ZEMBLAKU
1. INSIG S.A
Executive Director
Insurance Market
20 September 2004
[email protected]
www.eurosig.al
+355 4 238 899,
+355 4 223 841
Rr “Lek Dukagjini”,
Nr. 5, Tirana
Non-Life Insurance
Myslym NELA
8. EUROSIG S.A
Decision No. 5,
date. 13 April 2001
[email protected]
www.atlantik.com.al
+355 4 230 506,
+355 4 235088
Rr. “Themistokli Gërmenji”,
3/1, Tirana
Shoqëri me kapital vendas
Non-Life Insurance
Dritan ÇELAJ
4. ATLANTIK S.A
APPENDIX C: List of Supervised Institutions
60
A N N U A L
R E P O R T
‘ 0 6
[email protected]
E-mail
Dimitris FRANGETIS
Dealer
Foreign Stock Company
Rr. “Dëshmorët e 4 Shkurtit”, Tirana
+355 4 269616, +355 4 269707
www.tiranabank .al
i n f o @ ti r a n a b a n k . n e t
05.11.2002
No expiration date
Scope of Activity
Type of Ownership
Office Address
Tel./Fax
Webpage
E-mail
License
Issuance Date
License
Expiration Date
1. TIRANA BANK S.A.
Decison No. 9,
date 19 July 2004
No expiration date
05.11.2002
No expiration date
24.11.2003
+355 68 2058275 / +355 4 256081
Rr. “M. Gjollesha”,
Kulla 2, ap.13, Tirana
Rr. “Punëtorët e Rilindjes”,
Nr.13, Tirana
+355 4 233442, +355 4 233425
Domestic private stock company
Treasury bonds dealer
Mirela ANGJELI
State stock company
Corporate registrar
Enton SHAHAJ
20 September 2004
[email protected]
3. TRIUMF GROUP S.A.
[email protected]
2. ALBANIAN SHARE
REGISTER S.A.
01 March 2005
[email protected]
www.sigal.com.al
+355 4 233 308
Bul. “Zogu I”,
Pall. Diplomatëve.
Nr 57, Tirana
National and foreign
stock company
Life Insurance
Edvin HOXHAJ
Executive Director
Securities Market
Decision No. 9,
date 26 July 2004
www.sicred.com.al
Webpage
Date of Starting
Activity
+355 4 237 549
Tel./Fax
Type of Ownership
Rr. “Sami Frashëri”,
Pall. 20, Tirana
Life Insurance
Scope of Activity
Office Address
Genc KOXHAJ
10. SIGAL-LIFE S.A
9. SICRED S.A
Executive Director
Court Decision No. 30756
Decision No. 6,
Date of Starting
Activity
[email protected]
[email protected]
E-mail
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
61
Rr. “Donika Kastrioti”,
Nr.11/1, Tirana
Rr. “Reshit Çollaku”, Pall. 7-katësh
tek Shallvaret, shk.2/6. Tirana
+355 4 233537, +355 4 233537
Type of Ownership
Office Address
Tel./Fax
No expiration date
11. CREDINS BANK S.A.
Artan SANTO
No expiration date
10. ALPHA BANK - Tirana S.A.
Andreas GALATOULAS
License
Expiration Date
Drejtor Ekzekutiv
24.11.2005
28.09.2005
www.ambankalb.com
License
Issuance Date
www.raiffeisen.al
Webpage
+355 4 248753/4/5/6/7, +355 4 220160
[email protected]
+355 4 224540, +355 4 230013
Tel./Fax
Rr. “Ismail Qemali”, Nr. 27, Tirana
E-mail
European Trade Center,
Bul. “Bajram Curri”, Tirana
Foreign stock company
Type of Ownership
Office Address
Dealer and Registrar of
Government bonds in Albania
Scope of Activity
Lorenco RONCARI
8. AMERICAN BANK
OF ALBANIA S.A.
7. RAIFFEISEN BANK S.A.
Steven GRUNERUD
9. NATIONAL COMMERCIAL
BANK S.A.
No expiration date
No expiration date
License
Expiration Date
Drejtor Ekzekutiv
01 July 2007
23 March 2005
24.11.2003
License
Issuance Date
Luigi MASTRAPASQUA
12. ITALIAN-ALBANIAN BANK S.A.
No expiration date
21.12.2005
[email protected]
www.bkt.com.al
+355 4 250955, +355 4 250956
Bul. “Zhan D’ark”, Tirana
Seyhan PENCAP LIGIL
01 July 2005
[email protected]
[email protected]
E-mail
www.tse.com.al
www.bpopullore.com
+355 4 265 058
Rr. “Dora D’Istria”, Nr.2,
P.O.B. 274/1, Tirana
State stock company
Securities organized trade
Anila FURERAJ
6. TIRANA STOCK EXHANGE S.A.
No expiration date
Webpage
+355 4 272790/1, +355 4 272781
Dealer
Government bonds dealer
Scope of Activity
Edvin LIBOHOVA
5. POPULAR BANK S.A.
4. BALLKAN GROUP-01 S.A.
Genci RAMAJ
No expiration date
No expiration date
Executive Director
License
Expiration Date
62
A N N U A L
R E P O R T
‘ 0 6
Issuance Date
Treasury bonds Dealer
and Registrar
Treasury bonds Dealer
and Registrar
Scope of Activity
[email protected]
0
13.02.2006
No expiration date
E-mail
License
Issuance Date
License
Expiration Date
Sheshi Skenderbej, Hotel “Tirana
International”, Kati 14, Tirana
Rr. “Mustafa Matohiti”,
P.11 katësh, kati 2, zyra 1, Tirana
+ 355 4 240 207/8
www.apfa.com.al
[email protected]
01 January 2006
Office Address
Tel./Fax
Webpage
E-mail
Date of
Starting Activity
01 January 2006
[email protected]
www.garantsig-al.com
+355 4 265 521, + 355 4 265 044
Domestic private stock
company + foreign stock
Type of Ownership
01 March 2006
[email protected]
www.capital.com.al
+ 355 4 348 000, + 355 4 363 003
Rr. “Dervish Hima”, Nr.2/1, Tirana
Supplementary Pensions Private Fund
Supplementary Pensions
Private Fund
Supplementary Pensions Private Fund
Scope of Activity
3. Private Pensions
Institution CAPITAL
Themistokli ADHAMI
2. Private Pensions
Institution GARANTSIG
08 May 2007
Kiço LOLI
Arjan KRAJA
Executive Director
1. American Pension
Fund of Albania
Supplementary Pensions Private Funds
[email protected]
www.bankacredins.com
Webpage
No expiration date
www.bia.com.al
+355 4 234096, +355 4 258752
+355 4 240 478, +355 4 232102
Tel./Fax
08 May 2006
+355 4 233966, +355 4 235700
Rr.”Ismail Qemali”, Nr. 21, Tirana
Bul. “Zogu I”, Nr. 47/1, Tirana
Rr. “Barrikadave”, Nr.1, Tirana
Treasury bonds dealer
Luigi MASTRAPASQUA
12. ITALIAN-ALBANIAN BANK S.A.
No expiration date
Office Address
Artan SANTO
Andreas GALATOULAS
Drejtor Ekzekutiv
11. CREDINS BANK S.A.
10. ALPHA BANK - Tirana S.A.
Type of Ownership
No expiration date
No expiration date
License
Expiration Date
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
63
17,4
%
End of period
Source: Ministry of Finance and INSTAT
33,2
%
increase (%)
Euro
increase (%)
42,1
32,1
-29,3
772,3
US$
1.092,5
0,7
increase (%)
8,7
20,9
17,3
906,0
18,7
136.487
-1,0
0,4
1.070,8
26,1
1.142,9
15,3
157.371
4,2
0,0
22,6
1.313,4
6,0
1.211,6
10,6
174.124
114.165
ALL
115.013
6,5
13,2
4.020
6,3
9,1
3.270
26,1
3.709
10,9
532.977
16,8
215
1.068
3.061
2000
%
8,6
16,6
3.490
15,2
480.581
18,4
240
1.065
3.054
1999
22,9
-10,9
-29,3
2.768
17,9
417.009
17,7
235
1.085
3.055
1998
increase (%)
mln Euro
increase (%)
2.375
3.360
mln US $
353.642
0,7
351.113
mln ALL
14,9
194
1.107
3.075
1997
increase (%)
12,3
%
Annual average
Inflation
GDP per capita
Real GDP Growth
Gross Domestic
Product (GDP)
Unemployment
158
1.116
000
Total number of employees
000
3.076
000
Population
Registered unempl. persons
1996
Measuring
Unit
General
Indicators
Main Macro-Economic Indicators 1996 - 2006
3,5
3,1
13,8
1.494,8
10,5
1.338,5
10,3
192.043
7,1
14,3
4.595
10,9
4.114
10,8
590.282
16,4
181
921
3.074
2001
1,7
5,2
2,7
1.535,0
8,3
1.449,7
5,8
203.177
4,3
3,3
4.749
9,0
4.485
6,5
628.527
15,8
173
921
3.094
2002
3,3
2,2
5,7
1.622,2
26,3
1.830,6
9,8
223.071
5,8
6,3
5.047
27,0
5.695
10,4
694.018
15,0
164
927
3.111
2003
2,2
2,9
16,2
1.884,6
27,9
2.341,0
7,9
240.603
6,2
16,8
5.893
28,5
7.320
8,4
752.367
14,4
157
931
3.127
2004
2,0
2,4
11,8
2.106,7
11,9
2.619,9
8,7
261.628
5,6
12,3
6.619
12,5
8.232
9,3
822.035
14,2
154
932
3.142
2005
2,5
2,4
9,8
2.314,2
10,8
2.903
8,9
284.805
5,0
10,4
7.310
11,4
9.170
9,4
899.700
13,8
150
934
3.159
2006
General Indicators
APPENDIX D: Statistical Tables
64
A N N U A L
R E P O R T
‘ 0 6
23,6
323,4
9,6
Million $
% of GDP
82.785
-10,1
-35.302
% of GDP
million ALL
% of GDP
million ALL
% of GDP
increase (%)
million ALL
14,6
347,5
34,1
120.527
-11,8
-41.781
3,9
13.859
28,5
% of GDP
24,9
15,0
100.730
increase (%)
million ALL
16,6
460,5
35,8
149.439
-9,4
-39.104
5,8
74,7
24.215
34,0
40,6
141.628
17,4
% of GDP
72.576
24,6
20,1
102.524
1998
59,2
12,9
45.579
16,7
73,9
58.949
1997
increase (%)
87.596
14,9
% of GDP
million ALL
12,7
52.294
1996
increase (%)
million ALL
Measuring Unit
Foreign Dept
Domestic Dept
Overall Deficit
Investments
Total Expenditures
Tax Revenues
Total Revenues
Indicators
15,8
550,1
36,9
177.490
-8,8
-42.531
7,1
40,9
34.120
34,5
17,0
165.692
17,4
15,1
83.566
25,6
6,1
123.161
1999
16,6
617,0
42,4
226.069
-7,5
-39.977
6,8
6,3
36.274
32,0
3,0
170.620
19,5
24,6
104.112
24,5
11,5
130.643
2000
17,0
697,7
40,9
241.161
-6,8
-40.410
7,4
19,6
43.397
31,5
9,0
186.049
19,4
9,8
114.294
24,7
6,1
145.639
2001
21,8
979,6
41,5
260.752
-6,0
-37.922
6,0
-12,6
37.925
30,6
3,5
192.517
20,5
12,8
128.948
24,6
8,2
154.595
2002
21,1
1.200,4
40,5
280.767
-4,9
-33.928
4,5
-17,0
31.472
29,0
4,5
201.152
20,9
12,7
145.388
24,1
10,2
167.224
2003
19,0
1.389,9
39,2
295.200
-5,1
-38.083
5,1
21,6
38.266
29,6
10,6
222.439
22,1
14,2
165.974
24,5
10,7
184.356
2004
16,5
1.356,1
39,8
327.353
-3,43
-28.176
4,7
0,3
38.375
28,3
4,5
232.339
22,4
10,7
183.816
24,8
10,8
204.163
2005
16,9
1.553,3
38,8
348.936
-3,17
-28.479
5,3
23,8
47.502
28,3
9,7
254.762
22,8
11,8
205.514
25,2
226.283
2006
Public Finances Indicators
A L B A N I A N
F I N A N C I A L
A U T H O R I T Y
65
243,7
Million $
Month imports
Reserves
In %
million ALL
In %
million ALL
In %
million ALL
Measuring Unit
Aggregate M3
Aggregate M2
Aggregate M1
Indicators
ALL/Euro
ALL/Euro
Million $
Reserves
Exchange rate
Million $
154.553
120.646
90.406
1996
104,50
559,4
2,7
-1,9
% of GDP
% of GDP
-62,3
Million $
90,1
27,4
% of GDP
Million $
35,6
922,0
Million $
increase (%)
7,3
% of GDP
19,0
-20,2
% of GDP
increase (%)
-678,3
1996
Million $
Measuring Unit
Transfer
Direct Foreign
Investments
Current Accounts
Balance
Import
Export
Commercial Balance
Indicators
28,5
198.547
34,5
162.221
1,4
91.667
1997
148,93
3,5
306,0
264,4
2,0
47,5
-10,7
-253,7
29,2
-24,8
693,5
6,7
-34,9
158,6
-22,5
-534,9
1997
20,6
239.526
22,8
199.264
-8,7
83.729
1998
150,64
3,7
384,0
523,9
1,6
45,0
-2,3
-65,0
29,3
17,0
811,7
7,5
31,1
208,0
-21,8
-603,7
1998
6,9
-7,2
255,4
-22,1
-821,0
2000
22,3
292.871
20,3
239.662
23,0
103.004
2001
12,0
328.101
10,4
264.497
20,4
124.041
20,2
394.316
15,4
305.302
15,2
142.926
2001
128,47
143,48
4,6
754,0
570,5
5,0
207,3
-5,3
-217,9
32,4
23,7
1.331,6
7,4
19,3
304,6
-25,0
-1.027,0
2000
132,58
143,71
4,2
608,0
533,0
3,9
143,0
-4,4
-163,1
29,0
14,8
1.076,4
1999
146,96
137,69
3,8
482,0
353,0
1,2
41,2
-3,8
-132,9
26,9
15,5
937,9
7,9
32,3
275,1
-19,0
-662,8
1999
5,7
416.685
6,4
324.727
6,9
152.741
2002
132,36
140,15
4,4
860,0
613,2
3,0
135,0
-9,4
-420,8
33,1
11,6
1.485,4
7,4
8,4
330,2
-25,8
-1.155,2
2002
7,6
448.427
7,6
349.513
-5,2
144.730
2003
137,51
121,86
3,9
1.026,0
842,0
3,1
178,0
-7,1
-406,7
31,3
20,1
1.783,4
7,9
35,4
447,1
-23,5
-1.336,3
2003
124,19
99,86
4,1
1.390
1.014
2,9
238,7
-7,0
-576,2
30,8
15,7
2.539
7,9
8,1
652
-22,9
-1.887,0
2005
123,07
98,11
4,2
1.536
1.065
3,2
293,5
-8,4
-770,3
29,2
5,3
2.674
7,9
10,6
721
-21,3
-1.953,0
2006
13,1
507.206
12,0
391.411
19,4
172.833
2004
14,0
578.036
8,9
426.150
31,7
227.684
2005
12,6
650.600
12,8
480.500
-0,1
227.500
2006
Monetary Aggregates
127,67
102,78
4,0
1.374,0
1.109,4
4,7
341,3
-4,9
-358,2
30,0
23,1
2.194,9
8,2
34,9
603,3
-21,7
-1.591,6
2004
Foreign Trade Indicators
Progress of Some Important Macroeconomic Indicators (1996-2007)
Gross Domestic Product and Rate of Growth
(mio Euro)
Gross Domestic Product and Rate of Growth
(mio ALL)
Foreign Debt
TB 3-months
2006 3-month Treasury Bonds
66
‘ 0 6
2007
2007
2006
2005
2004
In %
2006
4,00%
3,00%
2,00%
1,00%
0,00%
c.
R E P O R T
5,00%
r.
A N N U A L
6,00%
Ap
1,38%
1,35%
1,50%
2,37%
3,08%
2,43%
3,25%
2,82%
2,55%
2,25%
2,91%
2,51%
r.
5,36%
5,14%
5,13%
5,04%
5,07%
5,13%
5,19%
5,34%
5,69%
5,17%
6,23%
6,38%
3 Months T-Bills
Ma
4,33%
4,28%
3,96%
3,95%
3,85%
3,74%
3,62%
3,66%
3,65%
3,85%
3,86%
3,94%
TB 12-months
7,00%
Fe
b.
Inflation
Rate
n.
TB
Yield
Ja
January
February
March
April
May
June
July
August
September
October
November
December
Deposits
Interest
%
Month
2003
TB 6-months
2005
2006* 2007**
v.
2005
De
Internal Debt
2004
No
2003
2004
2002
t.
2001
Oc
2000
2003
15.8
1999
p.
20.2
Se
18
2002
16.5
g.
10
19
Au
15
21.1
17
16.6
2001
21.8
20
ly
25
Ju
30
2000
35
40%
35%
30%
25%
20%
15%
10%
5%
0%
ne
38.1
1999
38.8
Ma
y
39.8
39.2
as % to GDP
Ju
40.5
1998
40.9
1997
36.9
8
7
6
5
4
3
2
1
0
Yield T-Bills Primary Market
1996
40
41.5
1995
Public Debt as % to GDP
42.4
2002
mio ALL
End of period
Yearly Average
2001
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
2000
10
1999
20
1998
In million ALL
In %
30
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1997
Investments
40
45
2006
0
Inflation
50
-10
In %
5
2005
0
10
1999
2007
2005
2006
2003
2004
2002
2001
1999
2000
1997
1996
0
1998
200,000
15
2004
5
20
2003
400,000
25
2002
10
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2001
600,000
In %
In million ALL
15
800,000
In milliion Euro
20
2000
1,200,000
1,000,000
Months
Deposit Rates
Yield
Inflation Rate
A L B A N I A N
c.
De
t.
v.
Oc
No
.
g.
pt
Se
ly
Au
ne
Ju
Ju
r.
Ma
y
Ap
8,00%
6,00%
4,00%
2,00%
F I N A N C I A L
c.
De
t.
v.
No
.
Oc
g.
pt
Se
Au
ly
0,00%
Ju
1,38%
1,35%
1,50%
2,37%
3,08%
2,43%
3,25%
2,82%
2,55%
2,25%
2,91%
2,51%
Inflation Rate
12 Month T-Bills
Ma
y
Ju
ne
6,72%
6,33%
5,95%
5,62%
5,48%
5,43%
5,49%
5,72%
6,24%
6,68%
6,86%
7,06%
Yield
10,00%
r.
4,95%
4,71%
4,80%
4,60%
4,46%
4,35%
4,23%
4,26%
4,31%
4,50%
4,51%
4,64%
Deposit Rates
Ap
January
February
March
April
May
June
July
August
September
October
November
December
Months
Fe
b.
Ma
r.
Inflation
Rate
n.
TB
Deposits
Months
Yield
Interest
8,00%
7,00%
6,00%
5,00%
4,00%
3,00%
2,00%
1,00%
0,00%
Fe
b.
Ma
r.
1,38%
1,35%
1,50%
2,37%
3,08%
2,43%
3,25%
2,82%
2,55%
2,25%
2,91%
2,51%
Ja
6,72%
6,33%
5,95%
5,62%
5,48%
5,43%
5,49%
5,72%
6,24%
6,68%
6,86%
7,06%
January
February
March
April
May
June
July
August
September
October
November
December
n.
4,95%
4,71%
4,80%
4,60%
4,46%
4,35%
4,23%
4,26%
4,31%
4,50%
4,51%
4,64%
Months
Ja
Inflation
Rate
%
TB
Yield
%
6 Month T-Bills
Deposits
Interest
Months
Deposit Rates
Yield
A U T H O R I T Y
Inflation Rate
67

I. AFSA Institutional Overview

Transcription

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