‘06 - AMF · part of the Report addresses the non-bank ﬁ nancial markets activity over 2006 and the steps taken by the respective supervisory institutions and, further on, by

annual report‘06

© 2007Albanian 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 / ALBANIATel : +355-4-247148, 250686Fax : +355-4-250686E-mail : [email protected] URL : www.amf.gov.al

Graphic Design: Studio Grafi ke Elsi KongoPress: PEGI

A L B A N I A N F I N A N C I A L S U P E R V I S O R Y A U T H O R I T Y 3

Chairperson’s Statement 4

Executive Summary 5

AFSA Institutional Overview 6 1.1 AFSA Set Up 6

1.2 AFSA as a Regulatory Entity 8

1.3 AFSA Management and Organization 10

AFSA Activity 18 2.1 Regulatory Activity 18

2.2 Licensing Activity 21

2.3 Supervisory Activity 27

2.4 Institutional Relations 45

2.5 Information and Technology 49

Future Perspective 51

Appendixes 53 A. AFSA Organizational Structure 53

B. Non- Banking Sector Legal and Regulatory Framework 54

C. List of Supervised Institutions 59

D. Statistical Tables 63

Table of Contents

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 fi -

nancial markets and started its operation as of October 2006. AFSA

establishment demonstrated the commitment of Albanian authori-

ties in terms of improvement and strengthening of non-bank fi nan-

cial 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 commit-

ment made by Albania through Stabilization and Association Agree-

ment, dynamic development and markets best practices effi ciency 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 fl exible 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 fi nancial markets activity over 2006 and the steps

taken by the respective supervisory institutions and, further on, by AFSA in terms of regula-

tion 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

effi cient and modern institution. I express my gratitude to all of those who assisted and

supported AFSA and, specifi cally, the World Bank.

I hope that this report will be of interest and valuable to the readers.

Chairperson’s Statement

Ms. Elisabeta GJONI

Chairperson

4 A N N U A L R E P O R T ‘ 0 6

The Albanian Financial Supervisory Authority (AFSA) was established in 2006. The Au-

thority consolidated the regulatory – supervisory functions of fi nancial non-banking ac-

tivities, which were previously carried out by Insurance Supervisory Authority, Albanian

Securities Commission and by the Inspectorate of Supplementary Pensions Private Insti-

tutions. Protection of consumers’ interests, promotion of sustainability, transparency and

reliability of non-banking fi nancial institutions as well as ensuring law enforcement con-

stitute the goals of the Authority. World Bank has played a signifi cant role in supporting

the Government initiative regarding AFSA design and institutional establishment.

Insurance market is the largest and most developed market across non-banking fi nancial

markets, whereas securities and private pensions markets are in their initial development

stage. Albanian insurance market, despite challenges and issues, has recently been sub-

ject 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 com-

munity 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 in-

dicate 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 pa-

pers, while stocks market remains still undeveloped.

Improvement of regulatory framework by ensuring an approximation to the European Union

Directives for the three fi nancial sectors under jurisdiction, transition to a risk based supervi-

sory 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 institu-

tional consolidation pursuant to standards of a fi nancial regulator remains a priority task.

Executive Summary

1) Albanian Lek – ALL (as of December 29th, 2006 1 Euro=123,85 ALL)

5A L B A N I A N F I N A N C I A L S U P E R V I S O R Y A U T H O R I T Y

A N N U A L R E P O R T ‘ 0 66

1.1.1 Establishment of a Unifi ed Regulatory Entity

Year 2006 marked a signifi cant step in terms of the reformation of supervision and regulation

relating non-banking fi nancial system. Based on the Government’s initiative to reform the non-

banking fi nancial regulatory system towards unifi cation into a consolidated regulatory entity,

and based on the close consultancy and assistance of World Bank, the integration of regulatory-

supervisory 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 unifi cation of Insurance Supervisory Authority (ISA), Al-

banian 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, su-

pervision and regulation of the overall non-banking fi nancial sector activity in Albania.

All component elements of the regulators’ unifi cation process in the non-banking sector, in-

cluding 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 improve-

ment 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 Fi-

nancial 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 Offi cial 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.

I. AFSA Institutional Overview

1.1 AFSA Set Up

Financial Supervision Integration Advantages

Integrated supervision is an approach, which is based on the assumption that, in a global economy, changes to in-

stitutions 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 infl uences on the fi nancial markets develop-

ment. 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’ unifi cation 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;


• Integration facilitates international cooperation better.

Integration can be a complete unifi cation, or into two regulatory structures. Albania pursued the model of two fi nan-

cial regulators (Bank of Albania and AFSA), to be reviewed at a second stage towards a complete unifi cation.

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 proc-

esses 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 non-

banking sector) and the number of fi nancial institutions operating in 2006, it was con-

cluded 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 su-

pervises 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 ineffi cient use of regulatory and supervisory skills.

The establishment of the Albanian Financial Supervisory Authority, division and stand-

ardization 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 sustain-

able development of this important sector of the economy.

Albania chose the “horizontal integration”, which is a combination of the functional inte-

gration 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 in-

tegrated 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.

A N N U A L R E P O R T ‘ 0 68

1.2 AFSA as a Regulatory Entity

MissionThe 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.

VisionPromoting and fostering higher standards to protect the consumers and licensees’ integri-

ty, non-banking fi nancial market stability and effi ciency 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, reinsur-

ance, 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 supplemen-

tary 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.


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 regu-

latory 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.

Financial System Supervisory and Regulatory Structure in Albania

ACCO

UN

TABI

LIT

YRE

GU

LATO

RS

FIEL

DS

Parliament

Banks

Universal Banks

Foreign Exchange Offices

Other Financial Institutions

Insurance Companies

Insurance Business Intermediaries

Insurance Service Suppliers

Securities Markets

Securities Business Intermediaries

Securities Registers

Investments Advisors

Supplement Private Pensions Institutes

OtherInstitutions

SecuritiesMarket

Private Pensions Market

InsuranceMarket

Bank of Albania(Banking Sector)

Financial SupervisoryAuthority (Non-banking Sector)

MA

RKET

OPE

RAT

OR

S

A N N U A L R E P O R T ‘ 0 610

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 rec-

ommends the chairperson, the two chairpersons and two members (the Bank of Albania,

Ministry of Finance and National Accounting Council recommend three out of these fi ve

members), whereas the Parliament recommends two other members.

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. Si-

multaneously 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 function-

ing 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.

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

Ms. Ermela GUXHOLLI / Deputy Chairperson

Ms. Miranda RAMAJ / Member

Ms. Rajmonda KARAPICI / Member

Ms. Diana LAMANI / Member Ms. Miranda RAMAJ / Member

Mr. Keler GJIKA / Deputy Chairperson Mr. Keler GJIKA / Deputy Chairperson

Ms. Rajmonda KARAPICI / Member

Ms. Diana LAMANI / Member

Ms. Ermela GUXHOLLI / Deputy Chairperson

Ms. Silvana BELLO / Member

Ms. Elisabeta GJONI / Chairperson

AFSA Board Members


A N N U A L R E P O R T ‘ 0 612

Financial Supervisory Authority Board Main Competences

1. Drafts the rules for the description and scope of work of every department and unit.

2. Drafts and adopts key principles of its activity.

3. Drafts and adopts rules and guidelines as set forth in the law.

4. Hands out written guidelines concerning interpretation and enforcement of laws and by-laws.

5. Issues, refuses, cancels or revokes licenses of exercising activity in the non-banking financial market.

6. Limits or interrupts investments of insurance and re-insurance companies when they do not comply with regu-

latory rules or when they put the financial position of the company into risk.

7. Reviews insurance contract terms before they are launched into the market by the operators.

8. Adopts the financial statements of insurance and re-insurance companies.

9. Adopts and distributes accounting standards and financial reporting formats, which are binding on the licensees.

10. Defines supervisory and control policies of the supervised entities and of the non-bank financial market devel-

opment.

11. Adopts the list of accounting experts for the Companies that operate in the non-bank financial markets.

12. Annually adopts the report on industry in connection with the condition and the prospect of the non-bank

financial market.

13. Adopts inspection handbooks.

14. Pursuant to the law, makes a decision to start, the bankruptcy procedures for the supervised companies and

appoints the liquidator.

15. Adopts the AFSA draft budget and the annual report.

16. Makes decisions on entering into cooperation and information exchange memorandums with authorities inside

and outside the country.

17. Makes decisions about hiring area experts to provide consultancy service.

18. Adopts the salary and remuneration policy of AFSA staff.

19. 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 struc-

turing and organization, is inclined towards ensuring

the required inputs and human resources to perform a

highly effi cient supervision and regulation of various

non-banking fi nancial sectors.

AFSA commenced its activity as of October 2006 with

an organizational structure adopted pursuant to the

AFSA Structure

Completion of tasks and meeting the objectives

is ensured by the authority’s staff, which is or-

ganized based on a structure adopted by the

Council of Ministers Decision No. 551, date 02

August 2006 “On the Albanian Financial Super-

visory Structure”.


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 func-

tions 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 benefi ts policy has been drafted essentially based on the expe-

rience, training and responsibilities. Despite the efforts, it is diffi cult 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 ratifi cation.

In order to ensure an effi cient supervision, AFSA leadership has been provided with foreign

technical assistance and it has enjoyed the close cooperation of international fi nancial do-

nors and institutions like World Bank (WB), Financial Services Volunteer Corps (FSVC) re-

garding 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 estab-

lished, has continued its day-to-day supervisory activity by regularly monitoring the non-

banking 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 employ-

ees and their motivation to meet the institution goals.

The Human Resources Sector, as a part of a FSVC program, has received very useful as-

A N N U A L R E P O R T ‘ 0 614

sistance and support from experts with long experience in the human resources manage-

ment 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 fl exibility based on job performance.

The main human resources policies in 2006 have focused on encouragement and promo-

tion 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 benefi ts. 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 effi cient job

environment which would provide a balance of the professional and private life of staff

members.


Employment Employment is one of the key elements that directly affect work effi ciency and quality. Pro-

fessional skills, communication skills and personal qualities, which help to employ skillful

and motivated individuals, are considered signifi cantly important in the employment proc-

ess. 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 ad-

dition, the aim will be to apply methods, which will allow selection of potential candi-

dates, 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 as-

sistance 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 promot-

ing 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 defi ned by Law No. 9572, date 03 July 2006 “On the Albanian Finan-

cial Supervisory Authority”, and Law No. 9009, date 13 February 2003 “On Internal Audition

of Public Sector” the Internal Auditing Unit has checked and verifi ed the merging proce-

dures 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,

fi nancial, administrative and managerial aspects. These audits, which were conducted in

the frame of special aspects of AFSA legal operation, have verifi ed 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

A N N U A L R E P O R T ‘ 0 616

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 suffi cient to ensure its normal operation. State Budget fund-

ing 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 bal-

ance sheet was certifi ed by an external certifi ed 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 An-

nual Financial Statements”.

The approved resources and funds covering the AFSA establishment and operation (10

October - 31 December 2006) are presented in the following table:

000/ALLAFSA Funds Resource (11 October - 31 December 2006)

36,598Carried forward from three institutions (10 October 2006) .1

24,932Own revenues .1.1

11,666Budget financing .2.1

10,666 Operating expenses 1.2.1

1,000Investment budget 2.2.1

21,475Revenues generated by AFSA (11 Oct. .06 – 31 Dec. .06) .2

Total 58,073

Table 1: AFSA Revenue Resource

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 mem-

bers who lost their jobs in the frame of three prior institutions reforms take up 14% of sala-


Table 2: Use of AFSA Funds

000/ALLUse of AFSA Funds (11 October - 31 December 2006)

23,027Funds for operating expenses .1

31,153Funds for investment .2

1,663Completed investments .1.2

29,490Ongoing investments .2.2

3,893Payments to State Budget .3

Total 58,073

ries’ fund or 9% of operating expenditures.

Investments are carried out according to the adopted fi nancial plan pursuant to stipula-

tions set forth in the Strategy for the establishment of the institution. Investments have

focused on IT programs, whereas the issue of offi ce building remains still pending for the

coming year due to delays linked with the availability of offi ce buildings.

A N N U A L R E P O R T ‘ 0 618

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 Su-

pervisory Authority” led to an actual change of the non-banking fi nancial market su-

pervision because of the regulatory functions’ unifi cation 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 differ-

ent 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 struc-

tures 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 As-

sociation Agreement with European Union (EU), amendments to Law No. 9267, date 29

July 2004 “On the Insurance, Reinsurance and Intermediary Activity in Insurance and Re-

insurance” have been prepared during 2006. These amendments refl ect a very important

aspect of EU directives about the insurance compa-

nies’ guarantee fund. These changes consist of the

amendment of Article 98 of this law, on the increase

of the guarantee fund to 3 million Euros, a process,

which has been planned to be completed in three

stages in the future.

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.

EU Directives about Insurance Companies Guarantee Fund

According to EU directives on “life” activity

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 com-

ing into effect of this directive.


2.1.2 Regulatory Framework Changes

Once the Law No. 9572, date 03 July 2006 “On the Albanian Financial Supervisory Author-

ity” 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, specifi c 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”.

A N N U A L R E P O R T ‘ 0 620

Within a period of time of 6 months AFSA has reconsidered and adopted all relevant by-

laws adopted by prior regulatory authorities according to the areas. Their revision was con-

ducted based on the legal changes, new adopted rules and by refl ecting 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 dif-

fi culties 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 initia-

tives 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’ or-

ganizations. 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 Imple-

mentation of Stabilization and Association Agreement and fulfi llment of obligations deriv-

ing 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 Stand-

ards (IFRS), drafts of sub-legislation regarding the insurance market are in progress. This

sub-legislation will refl ect, according to market developments, most recent directives.

The AFSA is discussing on the following:

• Draft/Regulation “On Defi ning Procedures to Attract Infl uential Participation


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 trans-

parent 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 indi-

vidual or juristic entities licensed by AFSA, is focused on agents’ activity. The insur-

ance brokering activity is not present yet in the Albanian insurance market.

A N N U A L R E P O R T ‘ 0 622

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 prod-

ucts. Established by 7 shareholders, where each of them owns equal number of

shares, ASA developed an online system, which enabled online trading of non-

life 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 offi ce and compa-

nies, 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 ac-

cepted 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 sign-

ing 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 opera-

tional aspect in the insurance market.


2) The AFSA approved, upon Decision No. 6, date 03 March 2006, the license to per-

form 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 Intermedi-

ary 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 offi ce in Ti-

rana for the insurance company “Intersalonika” General Insurance S.A. , which has

its headquarters located in Thessalonica in Greece. The goal of establishing this

offi ce 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 offi ces is a new develop-

ment of the national insurance market.

Table 3: List of licensed insurance companies

Licensed Companies

Time of receiving the license

OwnershipType of Activity

0002.60.80 Government of Albania + EBRD + IFC

Life Insurance + Non-Life Insurance

S.A. gisnI .1

9991.20.30National Private CapitalNon-Life InsuranceS.A. amgiS .2

Non-Life Insurance3. Sigal S.A.

9. Sigal Life S.A.

National Private Capital + Albanian-American Fund

23.06.1999

1002.60.10National Private CapitalNon-Life InsuranceS.A. kitnaltA .4

1002.90.31National Private CapitalNon-Life InsuranceS.A. gisretnI .5

4002.90.01National Private CapitalNon-Life InsuranceS.A. nainablaretnI .6

4002.90.01National Private CapitalNon-Life InsuranceS.A. gisblA .7

4002.90.01National Private CapitalNon-Life InsuranceS.A. gisoruE .8

Life Insurance National Private Capital + Albanian-American Fund

10.09.2004

4002.90.01National Private CapitalLife InsuranceS.A. derciS .01

No.

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”, “Alb-

sig”, ‘Sigal” and possibly other insurance companies.

A N N U A L R E P O R T ‘ 0 624

2.2.2 Licensing Activity in Securities Market

In 2006, the Authority’s target in relation to securities market has been to expand Gov-

ernment 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 De-

cember 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 Ex-

change and in the Government securities retail market.

The existence and development of Government securities retail market has raised the in-

terest of several entities either inside the country and abroad, which have demonstrated

their interest to become participants of this market.


Table 4: Government Securities Dealers in 2006

Table 5: Government Securities Registrars in 2006

No. of RepresentativesCompanies Description No. License Term

No expiration term 1Tirana Bank S.A. .1

No expiration term 1Triumph Group S.A. .2

No expiration term 1Credins Bank S.A. .3

No expiration term 2Balkan Group-01 S.A. .4

No expiration term 1Raiffesen Bank S.A. .5

No expiration term 2National Commercial Bank S.A. .6

No expiration term 1Popular Bank S.A. .7

No expiration term 1Italian-Albanian S.A. .8

No expiration term 2American Bank of Albania S.A. .9

10. No expiration term 2Alfa Bank

Pursuant to Law No. 8080, date 01 March 1996 “On Securities”, to Regulation “On Securi-

ties Registrars Licensing” and to Regulation “On the Government of the Republic of Al-

bania Securities Retail Trade”, the following entities have been licensed to operate in the

capacity of registrar:

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. Government Securities Registrar No expiration term

3. National Commercial Bank S.A. Government Securities Registrar 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 supple-

mentary 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.

A N N U A L R E P O R T ‘ 0 626

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 simultane-

ously identifying the most important areas, where reforms must be taken for proper cor-

porate 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, pro-

fessionalism, experience and training.

The Albanian Financial Supervisory Authority is a mem-

ber of Albanian Corporate Governance Forum. Activities

and meetings of the Forum continued during 2006, where

the following are worth of mentioning:

1) The analysis of the fi ndings of the observation con-

ducted by OECD on the implementation status of

White Paper Recommendations.

2) The involvement of the Forum in providing knowl-

edge regarding the contemporary standards of the

corporate governance.

3) The signing of a Cooperation Memorandum between

the Albanian Corporate Governance Forum and Interna-

tional Financial Corporate (IFC) with the aim of meeting

short-term and long-term objectives regarding the im-

provement of overall corporate governance in Albania.

AFSA - Member of Albanian Corporate Governance Forum

Albanian Securities Commission (now

AFSA), as a cofounder, endorsed in 14

June 2005 the resolution on the establish-

ment of the Albanian Corporate Govern-

ance Forum.

The Forum was established as an organiza-

tion similar to a network of institutions and

organizations with interests, impact and

joint will regarding necessary improvement

of corporate governance practices in Alba-

nia. The goal of the forum is to provide its

contribution to the implementation of con-

temporary principles and standards of Cor-

porate 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 iden-

tifi cation, 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 sys-

tem, 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 refl ect the real fi nancial

condition of the company.

Risk-based supervision leads this method several steps ahead, so the supervisory process identifi es 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 identifi es 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 (off-

site 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 specifi c issues.

A N N U A L R E P O R T ‘ 0 628

Off-Site Monitoring Indicators in Albania

AFSA together with Word Bank held a Conference “On Insurance Financial Indicators Analysis” on 05-06 Decem-

ber 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 knowl-

edge 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 certifi cate of profi ciency 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.

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 statisti-

cal 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

identifi ed 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

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.


2.3.1 Insurance Market

The Market Structure and SizeThere 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 non-

life 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 fi gure 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

Voluntary

Obligatory

34%

66%

Life Insurance

7%

Non-lifeInsurance

93%

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.

A N N U A L R E P O R T ‘ 0 630

Monthly Progress of Insurance Gross Written Premiums in 2006

Compulsory Insurance Monthly Premiums (in thousand ALL)

0

100,000

Jan.

Feb.

March

Ap

ril MayJu

neJu

ly

Aug.

Sept

.Oct

.Nov

.De

c.

200,000

300,000

400,000

500,000

600,000

Life Voluntary Non-Life Compulsory

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 specifi cs, 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.

0

100,000

200,000

300,000

400,000

500,000

2006 2005

Jan.

Feb.

March

Ap

ril MayJu

neJu

ly

Aug.

Sept

.Oct

.Nov

.De

c.


• 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 fl oor price since May 2006, while the number of contracts remained

almost unchanged. The tendency of insurance companies to sell insurance TPL poli-

cies with prices lower than allowed fl oor 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 concern-

ing 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 unlim-

ited liabilities, qualitative reinsurance remains a necessity for this class. In 2006, the

Authority decreased from fi ve 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 in-

creased 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 refl ects 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 addi-

tional nature perils insurance products were ranked the fi rst with about 49% property

insurance revenues followed by guarantee insurance with 17%. There was a signifi cant

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 N N U A L R E P O R T ‘ 0 632

ties over the duration of the loan. Premiums and contracts increase from guarantee

insurance, based also on the specifi cs 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, li-

ability 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 fi elds also remains uncov-

ered 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%

Voluntary Insurance Premiums Monthly Progress (in thousand ALL)

0

40,000

60,000

100,000

140,000

180,000

20,000

80,000

120,000

160,0002006 2005

Jan.

Feb.

March

Ap

ril MayJu

neJu

ly

Aug.

Sept

.Oct

.Nov

.De

c.


Claims payment by non-life insurance companies in 2006 (in thousand ALL)

2006 Paid Claims Structure

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 compa-

nies balance sheets. They also refl ect 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 com-

pulsory insurance occupies the main place in insurance structure. This indicates

that customers’ indemnifi cations are not assessed and paid at the proper extent by

the insurance companies.

0

100,000

SIGMA

SIGAL

INSIG

ATLA

NTIK

INTE

RSIG

ALBS

IG

INTE

R-

ALBA

NIAN

EURO

SIG

200,000

300,000

400,000

500,000

Non-Life

Life

99%

1%Voluntary27%

Mandatory73%

• 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 in-

surance claims. All insurance companies became subject to on-site inspection con-

A N N U A L R E P O R T ‘ 0 634

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 Asso-

ciation 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 portfoli-

os or specifi c 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 October-

December 2006.

• An option to increase reinsurance effi ciency 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 experi-

ences across the world such as pool reinsurance, or the existence of national rein-

surance 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 adminis-

tration 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 respec-

tively as follows: Atlantik – 11,39%; Intersig – 8,00%; Interalbanian – 7,05%; Albsig

– 5,95%; and Eurosig – 3,23%.


SIGMA18.40%

ATLANTIK11.39%

ALBSIG5.95%

INTERALBANIAN7.05%

EUROSIG3.23%

SIGAL27.34%

INSIG18.64%

INTERSIG8.00%

INSIG42.39%SICRED

22.47%

SIGAL LIFE35.14%

• 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%; In-

sig – 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 identifi cation of market issues and phenomena

and the potential scenarios in the future.

The examining of the insurance sector fi nancial condition focused on companies’ as-

sessment 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 con-

tinuation of the supervisory activity further.

Financial reports of the above model are considered very important in terms of set-

ting 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 N N U A L R E P O R T ‘ 0 636

vention or taking of relevant measures by AFSA.

• The majority of non-life insurance compa-

nies have a growth rate in compliance with

industry limits.

• Net retention ratio is relatively high in the mar-

ket. 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.

Ratio Importance (IRIS fi nancial indicators) – Ratios Value Range

Ratio High End % Low end %

Premium growth rate + 40 - 40

Net Retention 80 40

Expense/Premiums Ratio 50 25

Claims/Premiums Ratio 80 50

Combined Ratio 105 85

Investment revenues 8 4

Other Revenues 1 N/A

Operating Ratio 101 80

Profi t Ratio 20 - 1

Capital to Gross Premiums 50 20

Capital to Technical Provisions 30 10

Solvency Ratio 300 150

IRIS tests on the fi nancial condition of insurance Companies in Albania in 2006

Net Retention Rate

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Premiums Increase Rate

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

-60,00%

-40,00%

-20,00%

0,00%

20,00%

40,00%

60,00%

80,00%

Claims Ratio

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Expenditures Ratio

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

0.00%

20.00%

40.00%

60.00%

80.00%


Combined Ratio

0.00%20.00%40.00%60.00%80.00%

100.00%120.00%

Revenue Investment Ratio

-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%30.00%

Insi

g

Sigm

a

Siga

l

Atla

ntik

Inte

r-Al

bani

an

Alb

sig

Euro

sig

Inte

rsig

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Other Revenue Ratio

0,00%

2,00%

4,00%

6,00%

8,00%Operating Ratio

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Insi

g

Sigm

a

Siga

l

Atla

ntik

Inte

r-Al

bani

an

Albs

ig

Euro

sig

Inte

rsig

Insi

g

Sigm

a

Siga

l

Atla

ntik

Inte

r-Al

bani

an

Albs

ig

Euro

sig

Inte

rsig

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Insi

g

Sigm

a

Siga

l

Atla

ntik

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Capital Ratio vs. Gross Premiums

0.00%

100.00%

200.00%

300.00%

400.00%

Capital Ratio vs. Technical Provisions

0.00%50.00%

100.00%150.00%200.00%250.00%

Insi

g

Sigm

a

Siga

l

Atla

ntik

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Insi

g

Sigm

a

Siga

l

Atl

anti

k

Inte

r-Alb

ania

n

Alb

sig

Euro

sig

Inte

rsig

Solvency Ratio

0.00%300.00%600.00%900.00%

1200.00%1500.00%1800.00%2100.00%

Profit Ratio

-10.00%0.00%

10.00%20.00%30.00%

40.00%50.00%

A N N U A L R E P O R T ‘ 0 638

• 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 ac-

ceptable. This is a situation, which has been inherited over several years, and, there-

fore, 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 modifi cation of the trends of its component parts.

• The operating ratio for the majority of companies falls within the maximum and mini-

mum 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 verifi cation 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, insur-

ance 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 verifi ed 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 calcula-

tions 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 com-

ments and the assessment of technical provisions’ suffi ciency. Once the suffi ciency

has been assessed , the Authority has conducted verifi cation of assets that would cover

the technical and mathematical provisions.


• Total of Insurance market assets by 31 December 2006 amounted to about 11,4 bil-

lion ALL marking an increase to an extent of 11,69%, compared to 2005. This in-

crease was refl ected 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 fl ow, to the increase of the com-

panies’ 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

(*) 2006 data are operational

31.12.2005 31.12.2006 (*)

352.324.203.3 391.233.774.3Deposits

674.585.150.1 256.952.848Land and constructions

910.707.849 915.111.458Stock and Shares

301.972.492.2 122.118.257.1Treasury Bonds

327.602.811.1 277.121.559Debtors-Receivables

533.262.496.2 947.579.723.2Other Activities

909.364.904.11 601.216.512.01Total Assets

506.076.873.5 527.870.719.4Gross Technical Provisions

439.061.003 553.988.906Other payables

073.236.037.5 620.446.886.4Own Capital

909.364.904.11 601.216.512.01Total Liabilities

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 N N U A L R E P O R T ‘ 0 640

The Authority’s supervisory activity in the securities domain has mainly focused on per-

manent follow up of market indicators development. In addition, in order to have a more

confi dent and real assessment of these indicators, the AFSA has set as a priority the regu-

lar reporting process standardization to be performed by operators on the securities mar-

ket 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 transac-

tions’ volume in the retail market of these instruments.

2006 marked a relatively satisfactory fl ux 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 Quarter II Quarter III Quarter IV Type of Transaction (in million ALL) Nominal

ValueNominal

ValueNominal

ValueNominal

Value

No.Trans.

No.Trans.

No.Trans.

No.Trans.

1. Purchase in the Primary Market

Individuals 2.058,93 992 756,97 272 695,18 239 1.649,37 686

Juristic Persons 706,76 17 880,25 13 874,64 14 1.939,81 19

2. Selling from Bank Portfolio 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

Total 5.984,25 2578 3.412,85 824 5.142,27 1051 6.372,67 1612


Thus, the increase of the transactions’ volume in this market compared to 2005 has oc-

curred as a result of the decentralization of the Government securities register and trans-

ferring 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 nan-

cial product, different from deposits. Additionally, experience has indicated that also the

increasing of public awareness on investing in Government securities has a special impor-

tance concerning boosting of transactions volume in this market.

Stock Market The stock market still remains the most undeveloped sector of securities market in Al-

bania. 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 Minis-

try of Finance as the single shareholder and it was

licensed by Albanian Securities Commission (now

AFSA) as an organized market for shares and de-

bentures. Despite permanent efforts, this institu-

tion has not managed to become attractive for the

domestic companies. Actually, there are no compa-

nies listed in Tirana Stock Exchange, while Govern-

ment securities trading in this market is inexistent.

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 im-

portant role towards encouraging the development of this sector mainly through privatiz-

ing 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 Commer-

cial 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).

Tirana Stock Exchange

Tirana Stock Exchange S.A., has a l icense 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 l icensing is condi-

tioned with the duty of drafting and reporting

to AFSA of the plan for taking steps to gradu-

ally shift from state ownership and preparing

of potential public companies to register them

in Tirana Stock Exchange.

A N N U A L R E P O R T ‘ 0 642

ASR is a shareholding company registered with

AFSA as a registrar of property securities. Apart

from electronic registration (Book-Entry) of prop-

erty 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 regis-

trar and Social Insurance Institute).

The total number of registered companies in ASR

during 2006 experienced a decline of 31,4% com-

pared 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.

Albanian Share Register (ASR)

ASR operates since 2002 since it was licensed hav-

ing 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. Like-

wise, ASR provides also the following services:

• Announcement of general meeting of share-

holders assembly,

• Dividends calculation.

Table 8: Statistics on the Off-Exchange Stock Market in 2006

Source of Data: Albanian Share Register

No. Classification Statistic

1. Total number of companies registered in Albanian Share Register 48

2. Total number of stocks of companies registered in Albanian Share Register 18.410.025

3. Total number of companies whose stocks have bee traded 20

4. Total number of transactions executed over 2006 140

5. Total number of stocks traded over 2006 1.637.755

6. Percentage of transactions traded over 2006. 8.89 %

It is diffi cult 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 indi-

cators of this market assessment. In addition, lack of information on the activity and fi nan-

cial 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.


2.3.3 The Supplementary Private Pensions’ Market

The Development of Supplementary Private Pensions InstitutionsThe 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 rec-

ognized 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

hand, lack of foreign companies in

this market, due to legal restric-

tions, renders competition between

domestic companies insignifi cant.

In 2006, total of supplementary pri-

vate pensions market contributors

is about 2621, thus accumulating a

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 fi gure of about 892 con-

tributors with about 2,62 million ALL of contributions.

• “APFA – American Pension Fund of Albania S.A.” started its activity as of 01 Janu-

ary 2006. From January to December 2006, the company had a fi gure 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.

Third Pillar

It implies individual savings and supplementary contribution by the

employer. This scheme provides supplementary incomes for individu-

als who are willing to benefi t higher pensions when they retire. Ex-

perience from several countries has indicated that investing a part

of savings in pensions private funds is a good way of investment for

retirement. The Income from supplementary schemes are a very im-

portant component for the retirees.

A N N U A L R E P O R T ‘ 0 644

Private Pensions’ Market Structure in 2006

GRANTISIG20%

GRANTISIG43%

CAPITAL10%

CAPITAL23%

APFA70%

APFA34%

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 verifi cation 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 signifi cant improvements,

which must be brought up to international standards and, which must align with the coun-

try developments as a goal;

• The stimulation and involvement of employers and individuals in these schemes through

developing legal and fi scal incentives;

• The enhancement and strengthening of the elements of the guarantee and the proper ad-

ministration 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.


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 insti-

tutions 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 Co-

operation and Understanding between the AFSA and other regulatory institutions in the coun-

try. The goal of these agreements consists in coordinating the regulatory activity among regu-

latory 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 specifi es

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 Under-

standing 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 compe-

tition pursuant to nondiscrimination policies regarding enti-

ties that operate in areas, which are subject to the AFSA own

regulatory and supervisory functions.

A N N U A L R E P O R T ‘ 0 646

2.4.2 Cooperation with International Institutions

The rapid development of international fi nancial markets, the unifi cation 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 intensifi cation 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 implementa-

tion of Stabilization and Association Agreement.

Table 9: Membership and Signed Cooperation Agreements

A. 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

B. 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)

C. 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


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 bi-

lateral 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, coordi-

nation of efforts regarding setting of regulatory and supervisory standards and provision of a

joint assistance in relation to protection of non-banking fi nancial markets integrity.

International Association of Insurance Supervisors (IAIS) – Membership in this or-

ganization 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 par-

ticipating 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 Memoran-

dum of Understanding and Assessment Methodology (MMoU), signed by majority of IOSCO

members, which are developed countries. The goal of this agreement is to boost interna-

tional cooperation, establish the information exchange system in order to achieve an in-

creasingly effi cient supervision on the operators and fi nancial 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 qualifi ed 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 establish-

ment 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 coopera-

tion 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 regu-

late and supervise non-banking fi nancial markets across countries. These efforts were

substantiated with the signing of the Memorandum of Understanding with several coun-

A N N U A L R E P O R T ‘ 0 648

terpart Authorities. The main benefi t of signing and implementation of these agreements

consists of bilateral relations establishment to facilitate exchange of confi dential infor-

mation as a key instrument in terms of a friendly, fast and effi cient 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 in-

stitutional 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 unifi cation process and the AFSA institu-

tional 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. Devel-

oping human resources and providing further training on

specifi c issues not only involving AFSA staff, but also non-

banking fi nancial market operators has also been the goal

of these trainings.

Cooperation with FSVC (Financial Services Volunteer Corps) – has been effi cient

especially in the frame of drafting human resources management policies and training of

specialists of a very specifi c 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 opportuni-

ty 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.


2.4.3 Public Relations Policies

The Albanian Financial Supervisory Authority considers public information very impor-

tant 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 specifi c attention has been paid to the AFSA’s presentation in media essentially through

participation in conferences and workshops where important issues, which affect develop-

ment 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 offi cial 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 Tech-

nology (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 effi ciently meet legal obligations, the AFSA needs an Integrated Information

System, which completes and processes all the information needed as a part of the institu-

tion 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 effi cient methods in setting premiums based on poli-

cyholder’s background etc.

A N N U A L R E P O R T ‘ 0 650

• The minimization of technical errors by the experts due to different platforms’ applica-

tion, which will make the information released by the authority more reliable.

• It will provide higher effi ciency 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 process-

ing of paper work.

• The data of non-banking fi nancial sector are in a computerization process.

• It will provide higher effi ciency 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 diversifi cation of licensed entities will get more clarifi ed.


III. Future Perspective

The AFSA’s fundamental goal is to protect consumers’ interests along with ensuring fi -

nancial 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 nan-

cial sector, which will have an impact on the signifi cant 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 de-

mands, as well as, ensuring Compliance with such legislation.

The transition from the traditional supervisory model to the risk based one relying on Eu-

ropean 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 effi ciency 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 effi ciency 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 improve-

ment 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

A N N U A L R E P O R T ‘ 0 652

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 effi ciency and su-

pervised markets integrity, in cooperation with businesses. Fruitful cooperation and regu-

lar 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 grow-

ing 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 be-

gun 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 inter-

national 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.

IV. Appendixes

APPENDIX A: Financial Supervisory Authority Organization Structure

Licensing & Monitoring Department

International & Public Relations

Department

Inspection & Disciplinary Department

Human Resources & Other Supporting

Department

Internal Audit

Inspection Department

ActuarialDepartment

DisciplinaryDepartment

Adviser Chairperson

Deputy Chairperson Deputy Chairperson

The Board of AFSA

Licensing Department

Monitoring Department

Legal Sector

International & Public

Relat. Dept.

IT Sector

Finance & Accounting

Sector

Human Resources

Sector


APPENDIX B: Non-Banking Legal-Regulatory Framework

Lega

l/Re

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tory

Re

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Law

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ulat

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Des

crip

tion

Des

crip

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Law

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8,

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9,

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08

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200

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anne

r of

cal

cula

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and

kee

ping

of

non

-lif

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ptin

g an

d re

view

ing

proc

edur

es

of a

pplic

atio

ns a

bout

issu

ing

the

licen

se

to e

xerc

ise

insu

ranc

e or

rei

nsur

ance

ac

tivi

ty in

the

Rep

ublic

of

Alba

nia

The

goal

of

this

reg

ulat

ion

is d

efin

itio

n of

the

tim

e lim

its

and

the

proc

edur

es o

f is

suin

g th

e lic

ense

to

exer

cise

act

ivit

y as

insu

ranc

e an

d re

insu

ranc

e co

mpa

ny a

nd a

s an

off

ice

of a

for

eign

com

pany

, pr

oced

ures

of

est

ablis

hing

the

rep

rese

ntat

ion

offi

ce in

the

Rep

ublic

of

Alba

nia

by

the

fore

ign

insu

ranc

e co

mpa

ny,

as w

ell a

s, t

he p

roce

dure

s of

lice

nsin

g an

d ex

pans

ion

of t

he in

sura

nce

com

pany

insu

ranc

e ac

tivi

ty.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

14,

dat

e 08

Fe

brua

ry 2

007

of F

inan

cial

Su

perv

isor

y Au

thor

ity

Boar

d

On

som

e cr

iter

ia t

o be

met

by

pers

ons

elec

ted

or a

ppoi

nted

in t

he in

sura

nce

and

rein

sura

nce

com

pani

es le

adin

g bo

dies

.

The

goal

of

this

reg

ulat

ion

is t

o de

fine

req

uire

men

ts in

con

nect

ion

wit

h pr

ofes

sion

alis

m a

nd t

he r

eput

atio

n of

per

sons

, w

ho c

ondu

ct

adm

inis

trat

ion,

lead

ing

and

cont

rolli

ng o

f th

e in

sura

nce

com

pany

, as

wel

l as,

con

stra

ints

to

be a

pplie

d in

the

fra

me

of t

heir

app

oint

men

t an

d di

smis

sal.

Inst

ruct

ion

adop

ted

by

Dec

isio

n N

o. 1

0, d

ate

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

list

of d

ocum

ents

of

regu

lar

and

annu

al m

anda

tory

rep

orti

ng o

f in

sura

nce

and

rein

sura

nce

com

pani

es.

The

scop

e of

thi

s re

gula

tion

is li

stin

g of

all

man

dato

ry d

ocum

enta

tion

fo

r re

gula

r an

d an

nual

rep

orti

ng o

f in

sura

nce

com

pani

es t

o th

e AF

SA.

Inst

ruct

ion

adop

ted

by

Dec

isio

n N

o. 1

1, d

ate

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

rule

s of

dis

clos

ing

the

insu

ranc

e an

d br

oker

age

com

pani

es d

ata

in t

he

cont

ext

of t

rans

pare

ncy

to t

he p

ublic

an

d co

nsum

er p

rote

ctio

n.

The

goal

of

this

inst

ruct

ion

is d

efin

itio

n of

the

rul

es o

f di

sclo

sure

for

th

e ne

cess

ary

data

to

enab

le t

he p

ublic

to

beco

me

fam

iliar

wit

h th

e fi

nanc

ial c

ondi

tion

of

insu

ranc

e co

mpa

nies

and

to

asse

ss t

he in

sura

nce

com

pani

es a

ffor

dabi

lity

in t

erm

s of

pay

ing

the

clai

ms

and

mee

ting

oth

erob

ligat

ions

, as

wel

l as,

def

inin

g th

e ru

les

for

prov

idin

g in

form

atio

n to

th

e co

nsum

ers

ahea

d of

ent

erin

g in

to t

he in

sura

nce

cont

ract

, or

ove

r th

e in

sura

nce

cont

ract

val

idit

y ti

me.

Inst

ruct

ion

adop

ted

by D

ecis

ion

No.

12,

da

te 0

8 Fe

brua

ry 2

007

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

defi

ning

the

cri

teri

a of

rei

nsur

ance

co

mpa

nies

, w

ith

whi

ch t

he in

sura

nce

com

pani

es t

hat

oper

ate

in t

he R

epub

lic

of A

lban

ia m

ay e

nter

into

rei

nsur

ance

ag

reem

ents

.

The

scop

e of

thi

s in

stru

ctio

n co

nsis

t of

the

reg

ulat

ion

of in

sura

nce

com

pani

es r

eins

uran

ce a

ctiv

ity,

whi

ch c

an r

eins

ure

part

of

liabi

litie

s th

at it

has

con

trac

ted

wit

h in

sure

rs,

wit

h na

tion

al r

eins

uran

ce

com

pani

es,

wit

h of

fice

s of

for

eign

rei

nsur

ance

com

pani

es li

cens

ed b

y th

e AF

SA o

r fo

reig

n re

insu

ranc

e co

mpa

nies

tha

t m

eet

the

crit

eria

set

fo

rth

in t

his

inst

ruct

ion.

In In

sura

nce

Area

A N N U A L R E P O R T ‘ 0 654

Lega

l/Re

gula

tory

Re

fere

nce

Law

/Reg

ulat

ion

Des

crip

tion

Des

crip

tion

Law

No.

926

7,

date

29

July

200

4

“On

the

Insu

ranc

e, R

e-in

sura

nce

and

Inte

rmed

iary

Act

ivit

y in

Insu

ranc

e an

d Re

insu

ranc

e”

The

scop

e of

thi

s La

w is

est

ablis

hmen

t of

gen

eral

pri

ncip

les

and

rule

s co

ncer

ning

insu

ranc

e, r

eins

uran

ce,

inte

rmed

iary

act

ivit

y in

insu

ranc

e an

d re

insu

ranc

e an

d su

perv

isio

n by

the

sta

te o

f en

titi

es w

hich

und

erta

ke

to e

xerc

ise

the

acti

viti

es s

et f

orth

in t

his

law

.

Dec

ree

No.

295,

da

te 1

5 Se

ptem

ber1

992

chan

ges

by L

aw N

o. 7

461,

da

te 0

1 D

ecem

ber

992,

an

d by

Law

No.

872

9,

date

18

Janu

ary

2001

On

the

Insu

ranc

e of

Mot

or V

ehic

le O

wne

rs

in c

onne

ctio

n w

ith

Liab

ility

to

thir

d pa

rtie

s

The

Law

def

ines

obl

igat

ions

con

cern

ing

com

puls

ory

insu

ranc

e an

d lia

bilit

y to

thi

rd p

arti

es in

cas

es o

f ac

cide

nts

by s

etti

ng f

orth

pro

cedu

res

in r

elat

ion

to m

etin

g th

ese

oblig

atio

ns a

nd it

als

o se

ts f

orth

es

tabl

ishm

ent

of A

lban

ian

Insu

ranc

e Bu

reau

and

the

pro

cedu

res

of

its

func

tion

ing

and

acti

vity

.

Coun

cil o

f M

inis

ters

D

ecis

ion

(her

eina

fter

re

ferr

ed t

o as

CoM

D)

No.

191,

dat

e 25

Mar

ch 2

005

On

the

adop

tion

of

the

appr

oach

on

the

Way

s of

est

imat

ing

the

requ

ired

leve

l of

solv

ency

con

cern

ing

Life

and

Non

-lif

e In

sura

nce

of in

sura

nce

com

pani

es a

nd

the

elem

ents

tha

t co

mpo

se it

.

The

CoM

D d

efin

es t

he W

ays

of e

stim

atin

g th

e re

quir

ed le

vel o

f so

lven

cy

conc

erni

ng L

ife

and

Non

-lif

e In

sura

nce

of in

sura

nce

com

pani

es a

nd t

he

elem

ents

tha

t co

mpo

se it

.

CoM

D N

o. 1

92,

date

25

Mar

ch 2

005

On

the

Lice

nsin

g Cr

iter

ia a

nd P

roce

dure

s fo

r In

sura

nce

Agen

ts a

nd t

he R

ules

of

Supe

rvis

ing

Thei

r Ac

tivi

ty”.

The

CoM

D d

efin

es t

he p

rofe

ssio

nal a

nd r

elia

bilit

y cr

iter

ia o

f in

sura

nce

agen

ts,

as w

ell a

s, it

set

s fo

rth

proc

edur

es r

egar

ding

lice

nsin

g of

and

ru

les

for

the

supe

rvis

ion

of a

gent

s’ a

ctiv

ity.

CoM

D N

o. 2

68,

date

28

Apri

l 200

5

On

dete

rmin

ing

the

high

end

acc

epta

ble

limit

s of

the

act

ivit

ies

and

inve

stm

ents

of

acti

viti

es t

o re

cove

r te

chni

cal a

nd

mat

hem

atic

al p

rovi

sion

s in

insu

ranc

e co

mpa

nies

.

The

CoM

D d

efin

es t

he h

igh

end

acce

ptab

le li

mit

s of

the

act

ivit

ies

and

inve

stm

ents

of

acti

viti

es t

o re

cove

r te

chni

cal a

nd m

athe

mat

ical

pr

ovis

ions

in in

sura

nce

com

pani

es.

Min

iste

r of

Fin

ance

O

rder

No.

11

date

25

Mar

ch 2

005

On

the

adop

tion

of

mot

or c

ompu

lsor

y in

sura

nce

prem

ium

reg

ardi

ng li

abili

ties

to

thi

rd p

arti

es

This

ord

er d

efin

es e

arne

d pr

emiu

m r

ates

of

com

puls

ory

insu

ranc

e by

m

otor

veh

icle

s ow

ners

in c

onne

ctio

n w

ith

liabi

litie

s to

thi

rd p

arti

es.

Min

iste

r of

Fin

ance

O

rder

No.

14

date

06

May

200

5

On

trad

ing

and

adm

inis

trat

ion

of b

orde

r po

lices

by

Alba

nian

Insu

ranc

e Bu

reau

The

scop

e of

thi

s or

der

is is

suan

ce,

trad

ing

and

adm

inis

trat

ion

of B

orde

r In

sura

nce

Polic

ies.

The

Alb

ania

n In

sura

nce

Bure

au is

ass

igne

d to

car

ry o

ut

thes

e ac

tivi

ties

on

beha

lf o

f in

sura

nce

com

pani

es,

whi

ch a

re m

embe

rs o

f it

.

Regu

lati

on a

dopt

ed b

y De

cisi

on N

o. 4

, dat

e 08

Fe

brua

ry 2

007

of F

inan

cial

Su

perv

isor

y Au

thor

ity

Boar

d

On

the

limit

s of

insu

ranc

e co

mpa

nies

sto

ck in

vest

men

t

Te g

oal o

f th

is r

egul

atio

n is

the

est

ablis

hmen

t of

bal

ance

for

the

in

sura

nce

com

pani

es’

stoc

k in

vest

men

t an

d co

mpu

lsor

y ad

here

nce

to s

ome

supe

rvis

ory

rela

tion

s.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

5,

date

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

rein

sura

nce

prog

ram

con

tent

of

insu

ranc

e co

mpa

nies

and

tim

elin

es o

f pr

esen

ting

it t

o th

e Fi

nanc

ial S

uper

viso

ry

Auth

orit

y

The

scop

e of

thi

s re

gula

tion

is t

o de

term

ine

basi

c ru

les

of d

raft

ing

the

rein

sura

nce

need

s pr

ogra

m f

or e

very

fin

anci

al y

ear

of t

he

insu

ranc

e co

mpa

ny.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

6,

date

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

insu

ranc

e co

mpa

nies

rep

orti

ng

rule

s, m

anne

rs a

nd c

ondi

tion

s to

AFS

A Th

e sc

ope

of t

his

regu

lati

on c

onsi

sts

of t

he r

ules

set

by

AFSA

co

ncer

ning

the

insu

ranc

e co

mpa

nies

rep

orti

ng m

anne

r.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

7,

date

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

insu

ranc

e co

mpa

nies

au

thor

ized

acc

ount

ing

expe

rts

The

scop

e of

thi

s re

gula

tion

is d

efin

itio

n of

cri

teri

a an

d pr

oced

ures

for

au

thor

ized

acc

ount

ing

expe

rts

com

pani

es,

whi

ch w

ill b

e ap

poin

ted

by

insu

ranc

e co

mpa

nies

fol

low

ing

the

appr

oval

of

the

AFSA

and

the

con

tent

of

the

con

trol

rep

orts

on

insu

ranc

e co

mpa

nies

by

the

auth

oriz

ed

acco

unti

ng e

xper

ts c

ompa

nies

.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

8,

date

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

basi

s, c

alcu

lati

on m

etho

ds

and

the

man

ners

of

keep

ing

mat

hem

atic

al p

rovi

sion

s.

The

scop

e of

thi

s re

gula

tion

is c

alcu

lati

on m

etho

ds a

nd t

he m

anne

rs

of k

eepi

ng m

athe

mat

ical

pro

visi

ons

by t

he in

sura

nce

com

pani

es.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

9,

date

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

basi

s, c

alcu

lati

on m

etho

ds

and

the

man

ners

of

keep

ing

non-

life

insu

ranc

e te

chni

cal p

rovi

sion

s.

The

scop

e of

thi

s re

gula

tion

is t

he m

anne

r of

cal

cula

tion

and

kee

ping

of

non

-lif

e in

sura

nce

tech

nica

l pro

visi

ons

by in

sura

nce

com

pani

es.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

13,

dat

e 08

Fe

brua

ry 2

007

of F

inan

cial

Su

perv

isor

y Au

thor

ity

Boar

d

On

the

acce

ptin

g an

d re

view

ing

proc

edur

es

of a

pplic

atio

ns a

bout

issu

ing

the

licen

se

to e

xerc

ise

insu

ranc

e or

rei

nsur

ance

ac

tivi

ty in

the

Rep

ublic

of

Alba

nia

The

goal

of

this

reg

ulat

ion

is d

efin

itio

n of

the

tim

e lim

its

and

the

proc

edur

es o

f is

suin

g th

e lic

ense

to

exer

cise

act

ivit

y as

insu

ranc

e an

d re

insu

ranc

e co

mpa

ny a

nd a

s an

off

ice

of a

for

eign

com

pany

, pr

oced

ures

of

est

ablis

hing

the

rep

rese

ntat

ion

offi

ce in

the

Rep

ublic

of

Alba

nia

by

the

fore

ign

insu

ranc

e co

mpa

ny,

as w

ell a

s, t

he p

roce

dure

s of

lice

nsin

g an

d ex

pans

ion

of t

he in

sura

nce

com

pany

insu

ranc

e ac

tivi

ty.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

14,

dat

e 08

Fe

brua

ry 2

007

of F

inan

cial

Su

perv

isor

y Au

thor

ity

Boar

d

On

som

e cr

iter

ia t

o be

met

by

pers

ons

elec

ted

or a

ppoi

nted

in t

he in

sura

nce

and

rein

sura

nce

com

pani

es le

adin

g bo

dies

.

The

goal

of

this

reg

ulat

ion

is t

o de

fine

req

uire

men

ts in

con

nect

ion

wit

h pr

ofes

sion

alis

m a

nd t

he r

eput

atio

n of

per

sons

, w

ho c

ondu

ct

adm

inis

trat

ion,

lead

ing

and

cont

rolli

ng o

f th

e in

sura

nce

com

pany

, as

wel

l as,

con

stra

ints

to

be a

pplie

d in

the

fra

me

of t

heir

app

oint

men

t an

d di

smis

sal.

Inst

ruct

ion

adop

ted

by

Dec

isio

n N

o. 1

0, d

ate

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

list

of d

ocum

ents

of

regu

lar

and

annu

al m

anda

tory

rep

orti

ng o

f in

sura

nce

and

rein

sura

nce

com

pani

es.

The

scop

e of

thi

s re

gula

tion

is li

stin

g of

all

man

dato

ry d

ocum

enta

tion

fo

r re

gula

r an

d an

nual

rep

orti

ng o

f in

sura

nce

com

pani

es t

o th

e AF

SA.

Inst

ruct

ion

adop

ted

by

Dec

isio

n N

o. 1

1, d

ate

08

Febr

uary

200

7 of

Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

rule

s of

dis

clos

ing

the

insu

ranc

e an

d br

oker

age

com

pani

es d

ata

in t

he

cont

ext

of t

rans

pare

ncy

to t

he p

ublic

an

d co

nsum

er p

rote

ctio

n.

The

goal

of

this

inst

ruct

ion

is d

efin

itio

n of

the

rul

es o

f di

sclo

sure

for

th

e ne

cess

ary

data

to

enab

le t

he p

ublic

to

beco

me

fam

iliar

wit

h th

e fi

nanc

ial c

ondi

tion

of

insu

ranc

e co

mpa

nies

and

to

asse

ss t

he in

sura

nce

com

pani

es a

ffor

dabi

lity

in t

erm

s of

pay

ing

the

clai

ms

and

mee

ting

oth

erob

ligat

ions

, as

wel

l as,

def

inin

g th

e ru

les

for

prov

idin

g in

form

atio

n to

th

e co

nsum

ers

ahea

d of

ent

erin

g in

to t

he in

sura

nce

cont

ract

, or

ove

r th

e in

sura

nce

cont

ract

val

idit

y ti

me.

Inst

ruct

ion

adop

ted

by D

ecis

ion

No.

12,

da

te 0

8 Fe

brua

ry 2

007

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

defi

ning

the

cri

teri

a of

rei

nsur

ance

co

mpa

nies

, w

ith

whi

ch t

he in

sura

nce

com

pani

es t

hat

oper

ate

in t

he R

epub

lic

of A

lban

ia m

ay e

nter

into

rei

nsur

ance

ag

reem

ents

.

The

scop

e of

thi

s in

stru

ctio

n co

nsis

t of

the

reg

ulat

ion

of in

sura

nce

com

pani

es r

eins

uran

ce a

ctiv

ity,

whi

ch c

an r

eins

ure

part

of

liabi

litie

s th

at it

has

con

trac

ted

wit

h in

sure

rs,

wit

h na

tion

al r

eins

uran

ce

com

pani

es,

wit

h of

fice

s of

for

eign

rei

nsur

ance

com

pani

es li

cens

ed b

y th

e AF

SA o

r fo

reig

n re

insu

ranc

e co

mpa

nies

tha

t m

eet

the

crit

eria

set

fo

rth

in t

his

inst

ruct

ion.

In In

sura

nce

Area


A N N U A L R E P O R T ‘ 0 656

Lega

l/Re

gula

tory

Re

fere

nce

Des

crip

tion

Law

/Reg

ulat

ion

Des

crip

tion

Law

808

0 da

te

01.0

3.19

96,

chan

ged

by L

aws

No.

816

8,

date

05

Dec

embe

r 19

96 a

nd L

aw N

o. 8

745,

da

te 2

2 Fe

brua

ry 2

001.

On

Secu

riti

es

The

Law

“O

n Se

curi

ties

” is

the

mai

n re

gula

tory

fra

mew

ork

for

func

tion

ing

of r

egul

ator

y.

The

obje

ct o

f th

is la

w is

pro

visi

on o

f in

vest

ors’

pro

tect

ion

in s

ecur

itie

s by

est

ablis

hing

the

re

gula

tory

bod

y, b

y re

gula

ting

sec

urit

ies

mar

kets

and

per

sons

eng

aged

in s

ecur

itie

s in

vest

men

t bu

sine

ss,

and

by c

ontr

ollin

g th

e pu

blic

issu

e of

and

tra

ding

in s

ecur

itie

s. T

his

law

est

ablis

hes

the

regu

lato

ry e

ntit

y w

hich

has

sup

ervi

sory

and

lice

nsin

g au

thor

ity

for

the

secu

riti

es m

arke

t,

and

wit

h fu

rthe

r de

velo

pmen

t of

thi

s m

arke

t, t

he r

egul

ator

will

tak

e th

e at

trib

utes

of

an

inde

pend

ent

agen

cy.

CoM

D N

o. 4

40

date

17

June

200

1

On

the

rule

s re

: fo

rm a

nd c

onte

nt

of a

nnou

ncem

ents

ab

out

inve

stm

ent

acti

vity

in s

ecur

itie

s.

This

dec

isio

n de

fine

s th

e ru

les

in c

onne

ctio

n w

ith

enti

ties

, w

hich

enj

oy t

he r

ight

to

mak

e an

noun

cem

ents

abo

ut s

ecur

itie

s an

d ex

empt

ions

fro

m t

his

rule

, ru

les

in r

elat

ion

to o

rder

s th

at m

ust

be is

sued

by

the

regu

lato

ry b

ody

in c

ases

whe

n it

fin

ds o

ut t

hat

a se

curi

ty r

elat

ed

anno

unce

men

t is

fra

udul

ent,

the

obl

igat

ion

to s

end

a co

py o

f an

noun

cem

ents

to

the

regu

lato

r’s

addr

ess,

and

the

san

ctio

ns o

n ca

ses,

whi

ch a

re v

erif

ies

as r

unni

ng a

gain

st

this

dec

isio

n.

CoM

D N

o. 4

41

date

17

June

200

1

On

the

rule

s of

lead

ing

secu

riti

es

inve

stm

ent

acti

vity

The

goal

of

this

dec

isio

n is

to

stip

ulat

e an

eth

ic,

a be

havi

or o

f pe

rson

s lic

ense

d to

ope

rate

in

sec

urit

ies

mar

ket.

It d

efin

es t

he o

blig

atio

ns v

is-à

-vis

cus

tom

ers,

the

obl

igat

ion

conc

erni

ng

a cl

ear

and

fair

com

mun

icat

ion,

the

obl

igat

ion

to e

xpla

in t

he r

isk

to t

he c

usto

mer

, th

e ob

ligat

ion

to f

amili

ariz

e th

e cu

stom

er w

ith

the

fees

tha

t ar

e ap

plie

d, e

tc.

The

deci

sion

als

o se

ts f

orth

rul

es a

bout

exe

cuti

on u

pon

prio

rity

pri

ncip

le o

f cu

stom

er’s

ord

ers,

qui

ck a

nd f

air

regi

stra

tion

of

eh t

rans

acti

on c

arri

ed o

ut b

y th

e cu

stom

er,

etc.

CoM

D N

o. 4

42

date

17

June

200

1

On

the

fina

ncia

l an

d ac

coun

ting

re

quir

emen

ts o

f se

curi

ties

dea

lers

The

deci

sion

def

ines

the

obl

igat

ions

in t

erm

s of

kee

ping

the

acc

ount

ing

reco

rds,

the

ir

reno

vati

on a

nd m

aint

enan

ce,

the

oblig

atio

n to

dra

ft f

inan

cial

sta

tem

ents

and

the

ir f

orm

an

d co

nten

t. It

pro

vide

s th

e de

fini

tion

“cu

stom

er m

oney

” an

d th

e op

erat

ions

link

ed w

ith

them

. In

add

itio

n, t

he d

ecis

ion

sets

for

th t

he o

blig

atio

n of

lice

nsed

per

son

to a

ssig

n ac

coun

ting

ex

pert

s, t

hus

rein

forc

ing

auth

orit

ies

and

proc

edur

es r

egar

ding

the

ir a

ppoi

ntm

ent

and

dism

issa

l.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

licen

sing

, fe

es

and

com

mis

sion

s Th

e go

al o

f th

is r

egul

atio

n is

to

defi

ne t

he li

cens

ing

proc

edur

es a

nd t

he f

ees

that

ent

itie

s m

ust

pay

case

by

case

dep

endi

ng o

n th

e ac

tivi

ty,

for

whi

ch t

hey

appl

y.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

ority

Boa

rd

On

the

requ

irem

ents

re

: fi

nanc

ial r

esou

rces

of

lice

nsed

per

sons

This

reg

ulat

ion

sets

for

th r

ules

con

cern

ing

min

imum

cap

ital

, lo

w e

nd li

quid

ity

limit

, ob

ligat

ions

of

licen

sed

pers

ons,

def

init

ions

wit

h re

gard

to

appr

oved

inpu

ts a

nd li

quid

inpu

ts

and

thei

r es

tim

ate.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

pros

pect

This

reg

ulat

ion

defi

nes

rule

s ap

plic

able

to

secu

riti

es p

ublic

pro

posa

ls,

whi

ch a

re s

hare

s, b

onds

or

gua

rant

ees,

by

prov

idin

g th

e ex

cept

ions

to

the

gene

ral r

ule.

The

reg

ulat

ion

prov

ides

the

pr

ospe

ct m

anda

tory

for

m a

nd c

onte

nt.

It d

efin

es t

he d

ata

that

mus

t m

ake

up t

he n

arra

tive

par

t of

the

pro

spec

t su

ch a

s re

spon

sibl

e pe

rson

s, a

dvis

ors,

sec

urit

ies

data

, w

ith

whi

ch t

he p

ropo

sal

is li

nked

, ge

nera

l inf

orm

atio

n on

the

issu

es a

nd it

s ca

pita

l, e

tc.

Addi

tion

ally

, th

e re

gula

tion

re

gula

tes

in a

det

aile

d m

anne

r th

e pr

oced

ures

on

the

pros

pect

reg

istr

atio

n; it

set

s fo

rth

the

max

imum

tim

e lim

it o

f a

publ

ic p

ropo

sal,

the

obl

igat

ion

of t

he is

suer

to

repo

rt t

o th

e AF

SA

follo

win

g pr

opos

al c

losu

re a

nd t

he m

easu

res

to e

limin

ate

irre

gula

riti

es d

urin

g th

e pu

blic

pr

opos

al.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

take

-ove

r

The

regu

lati

on e

stab

lishe

s th

e le

gal b

asis

and

it a

pplie

s to

all

prop

osal

s to

tak

e po

sses

sion

of

the

shar

es c

ontr

ol p

acka

ge o

r to

mer

ge j

oint

sto

ck c

ompa

nies

reg

iste

red

in A

lban

ia.

Its

goal

is

to e

nsur

e an

equ

al a

nd f

air

trea

tmen

t of

all

shar

ehol

ders

, w

hich

are

aff

ecte

d tr

ansa

ctio

ns

carr

ied

out

to g

et p

osse

ssio

n of

sha

res

cont

rol p

acka

ge.

This

reg

ulat

ion

impo

ses

the

rule

s of

th

e ga

me.

Pro

posa

ls t

o ge

t po

sses

sion

of

the

cont

rol p

acka

ge m

ust

be m

ade

by t

he d

efin

ed

dead

line

in o

rder

to

prov

ide

shar

ehol

ders

wit

h th

e po

ssib

ility

of

mak

ing

a w

ell-

info

rmed

de

cisi

on.

The

publ

ic e

njoy

s th

e ri

ght

to b

e in

form

ed a

bout

any

sig

nifi

cant

cha

nge

(mor

e or

le

ss t

han

20%

of t

he r

ight

to

vote

).

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

regi

stra

rs li

cens

ing

The

scop

e of

thi

s re

gula

tion

is t

he d

efin

itio

n of

req

uire

men

ts,

proc

edur

es a

nd t

ime

limit

s of

lice

nsin

g of

per

sons

who

app

ly t

o be

issu

ed w

ith

licen

se t

o op

erat

e as

sec

urit

ies

regi

stra

r.

Secu

riti

es r

egis

trar

is a

jur

isti

c pe

rson

lice

nsed

by

AFSA

, w

hich

has

org

aniz

atio

n an

d ad

min

istr

atio

n of

sec

urit

ies

regi

ster

s as

the

sco

pe o

f it

s ac

tivi

ty.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

orga

niza

tion

of

appl

ican

ts e

xam

inat

ion

The

regu

lati

on d

efin

es t

he e

xam

inat

ion

orga

niza

tion

pro

cedu

re f

or t

he s

ecur

itie

s de

aler

, in

vest

men

ts a

dvis

or a

nd t

heir

rep

rese

ntat

ive.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

mar

ket

licen

sing

Def

init

ion

of r

equi

rem

ents

, ti

me

limit

s an

d lic

ensi

ng p

roce

dure

s to

be

follo

wed

by

the

enti

ties

app

lyin

g to

be

prov

ided

lice

nse

to o

pera

te in

sec

urit

ies

mar

ket

mak

e up

the

sco

pe

of t

his

regu

lati

on.

In t

his

fram

e, it

is d

efin

ed t

hat

no e

ntit

y m

ay o

pera

te a

s se

curi

ties

dea

ler

unle

ss it

is li

cens

ed in

adv

ance

by

AFSA

. Th

e se

curi

ties

mar

ket

(sto

ck e

xcha

nge)

org

aniz

es it

s ac

tivi

ty b

ased

on

the

stat

ute

and

rule

s of

tra

de o

pera

tion

, w

hich

bec

ome

subj

ect

to a

dopt

ion

by t

he A

FSA.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

licen

sing

se

curi

ties

dea

ler,

th

e in

vest

men

ts

advi

sor

and

thei

r re

pres

enta

tive

.

This

reg

ulat

ion

expl

icit

ly s

tipu

late

s th

e ac

tive

s fo

r w

hich

the

sec

urit

ies

deal

er,

inve

stm

ents

ad

viso

r an

d th

eir

repr

esen

tati

ve a

re li

cens

ed.

Lice

nsin

g cr

iter

ia t

ake

up a

con

side

rabl

e an

d sp

ecia

l par

t of

the

reg

ulat

ion.

The

se c

rite

ria

defi

ne a

ll ne

cess

ary

docu

men

tati

on t

hat

appl

ican

ts m

ust

pres

ent

in o

rder

to

be li

cens

ed t

o co

nduc

t th

e ac

tivi

ties

, w

hich

fal

l und

er

the

scop

e of

thi

s re

gula

tion

. Th

e AF

SA r

ight

to

acce

pt o

r re

fuse

the

app

licat

ions

is a

pplie

d in

th

e fr

ame

of p

roce

dure

s, w

hich

are

fol

low

ed in

suc

h a

proc

ess.

In a

ddit

ion,

it s

ets

fort

h fe

es

and

com

mis

sion

s to

be

paid

by

the

licen

sed

enti

ties

bot

h, a

t th

e m

omen

t w

hen

issu

ed w

ith

the

licen

se a

nd d

urin

g ex

erci

sing

the

act

ivit

y, f

or w

hich

the

y ha

ve r

ecei

ved

the

licen

se.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

illeg

al p

ract

ices

of

tra

ding

The

regu

lati

on r

efle

cts

mos

t re

cent

gui

danc

e of

CE

re:

trad

e vi

olat

ions

and

pro

tect

ion

agai

nst

them

. Th

e re

gula

tion

pro

vide

s th

e de

fini

tion

of

inte

rnal

info

rmat

ion

by m

eans

of

clea

rly

desc

ribi

ng it

s tw

o ke

y el

emen

ts,

whi

ch a

re t

he a

ccur

ate

natu

re a

nd in

flue

nce

on t

he p

rice

. Th

is d

efin

itio

n co

nsid

ers

it a

mar

ket

viol

atio

n ev

en if

the

per

son,

who

has

per

form

ed t

he a

ctio

n,

did

not

mak

e an

y pr

ofit

. It

is t

he f

irst

tim

e th

at o

blig

atio

ns s

uch

as d

raft

ing

of t

he li

st o

f pe

rson

s w

ith

acce

ss t

o in

tern

al in

form

atio

n, it

s up

dati

ng a

nd t

rans

pare

ncy

to A

FSA

rega

rdin

g tr

ansa

ctio

ns c

arri

ed o

ut b

y co

mpa

ny d

irec

tors

and

per

sons

link

ed w

ith

them

. In

add

itio

n, t

he

regu

lati

on s

ets

fort

h pr

even

tive

mea

sure

s, w

hich

are

con

nect

ed w

ith

the

oblig

atio

ns o

f pe

rson

s pr

ofes

sion

ally

invo

lved

in t

he t

rans

acti

on t

o co

ndem

n an

ille

gal p

ract

ice,

as

wel

l as,

the

ob

ligat

ion

of j

ourn

alis

ts a

nd f

inan

cial

ana

lyst

s to

mak

e tr

ansp

aren

t co

nflic

ts o

f in

tere

st in

the

ir

secu

riti

es r

elat

ed a

rtic

les

and

anal

ysis

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

5, d

ate

07 D

ecem

ber

2006

of

Fina

ncia

l Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

reta

il m

arke

t on

Gov

ernm

ent

secu

riti

es o

f th

e Re

publ

ic o

f Al

bani

a

This

reg

ulat

ion

expl

icit

ly d

efin

es t

he m

anne

r of

ret

ail m

arke

t fu

ncti

onin

g, t

he m

onit

orin

g an

d tr

ansp

aren

cy p

roce

dure

s w

ith

the

aim

of

prot

ecti

ng in

vest

ors

that

inve

st in

gov

ernm

ent

secu

riti

es.

The

regu

lati

on p

rovi

des

an a

ccur

ate

defi

niti

on o

f re

tail

mar

ket,

typ

e of

tra

nsac

tion

s on

thi

s m

arke

t, t

radi

ng p

roce

dure

s, k

eepi

ng o

f an

alyt

ical

reg

iste

r, o

blig

atio

n to

info

rm a

nd

repo

rt t

o AF

SA.

The

regu

lati

on p

rohi

bits

tra

ding

act

ivit

y in

the

ret

ail m

arke

t of

ban

ks,

whi

ch

are

not

licen

sed

by t

he A

FSA.

Ban

ks,

whi

ch o

pera

te in

ret

ail m

arke

t, m

ust

also

org

aniz

e ke

epin

g of

the

Gov

ernm

ent

secu

riti

es a

naly

tica

l reg

iste

r by

bei

ng is

sued

wit

h a

licen

se f

or

this

typ

e of

act

ivit

y or

, by

mak

ing

an a

gree

men

t w

ith

anot

her

bank

, w

hich

is li

cens

ed f

or

this

pur

pose

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

proc

edur

es o

f m

onit

orin

g re

tail

mar

ket

on G

over

nmen

t se

curi

ties

of

the

Repu

blic

of

Alba

nia

Stip

ulat

ion

of c

ondi

tion

s, m

anne

r an

d pr

oced

ures

of

mon

itor

ing

the

enti

ties

lice

nsed

by

the

AFSA

to

trad

e an

d ke

ep t

he r

egis

ter

on s

ecur

itie

s of

the

Rep

ublic

of

Alba

nia

Gov

ernm

ent

cons

titu

te t

he s

cope

of

this

reg

ulat

ion.

The

tar

get

of t

his

regu

lati

on is

to

prot

ect

secu

riti

es

inve

stor

s’ in

tere

sts

and

impr

ovem

ent

of t

he f

unct

ioni

ng c

ondi

tion

s of

Gov

ernm

ent

secu

riti

es

reta

il m

arke

t.

In S

ecur

itie

s Ar

ea


Lega

l/Re

gula

tory

Re

fere

nce

Des

crip

tion

Law

/Reg

ulat

ion

Des

crip

tion

Law

808

0 da

te

01.0

3.19

96,

chan

ged

by L

aws

No.

816

8,

date

05

Dec

embe

r 19

96 a

nd L

aw N

o. 8

745,

da

te 2

2 Fe

brua

ry 2

001.

On

Secu

riti

es

The

Law

“O

n Se

curi

ties

” is

the

mai

n re

gula

tory

fra

mew

ork

for

func

tion

ing

of r

egul

ator

y.

The

obje

ct o

f th

is la

w is

pro

visi

on o

f in

vest

ors’

pro

tect

ion

in s

ecur

itie

s by

est

ablis

hing

the

re

gula

tory

bod

y, b

y re

gula

ting

sec

urit

ies

mar

kets

and

per

sons

eng

aged

in s

ecur

itie

s in

vest

men

t bu

sine

ss,

and

by c

ontr

ollin

g th

e pu

blic

issu

e of

and

tra

ding

in s

ecur

itie

s. T

his

law

est

ablis

hes

the

regu

lato

ry e

ntit

y w

hich

has

sup

ervi

sory

and

lice

nsin

g au

thor

ity

for

the

secu

riti

es m

arke

t,

and

wit

h fu

rthe

r de

velo

pmen

t of

thi

s m

arke

t, t

he r

egul

ator

will

tak

e th

e at

trib

utes

of

an

inde

pend

ent

agen

cy.

CoM

D N

o. 4

40

date

17

June

200

1

On

the

rule

s re

: fo

rm a

nd c

onte

nt

of a

nnou

ncem

ents

ab

out

inve

stm

ent

acti

vity

in s

ecur

itie

s.

This

dec

isio

n de

fine

s th

e ru

les

in c

onne

ctio

n w

ith

enti

ties

, w

hich

enj

oy t

he r

ight

to

mak

e an

noun

cem

ents

abo

ut s

ecur

itie

s an

d ex

empt

ions

fro

m t

his

rule

, ru

les

in r

elat

ion

to o

rder

s th

at m

ust

be is

sued

by

the

regu

lato

ry b

ody

in c

ases

whe

n it

fin

ds o

ut t

hat

a se

curi

ty r

elat

ed

anno

unce

men

t is

fra

udul

ent,

the

obl

igat

ion

to s

end

a co

py o

f an

noun

cem

ents

to

the

regu

lato

r’s

addr

ess,

and

the

san

ctio

ns o

n ca

ses,

whi

ch a

re v

erif

ies

as r

unni

ng a

gain

st

this

dec

isio

n.

CoM

D N

o. 4

41

date

17

June

200

1

On

the

rule

s of

lead

ing

secu

riti

es

inve

stm

ent

acti

vity

The

goal

of

this

dec

isio

n is

to

stip

ulat

e an

eth

ic,

a be

havi

or o

f pe

rson

s lic

ense

d to

ope

rate

in

sec

urit

ies

mar

ket.

It d

efin

es t

he o

blig

atio

ns v

is-à

-vis

cus

tom

ers,

the

obl

igat

ion

conc

erni

ng

a cl

ear

and

fair

com

mun

icat

ion,

the

obl

igat

ion

to e

xpla

in t

he r

isk

to t

he c

usto

mer

, th

e ob

ligat

ion

to f

amili

ariz

e th

e cu

stom

er w

ith

the

fees

tha

t ar

e ap

plie

d, e

tc.

The

deci

sion

als

o se

ts f

orth

rul

es a

bout

exe

cuti

on u

pon

prio

rity

pri

ncip

le o

f cu

stom

er’s

ord

ers,

qui

ck a

nd f

air

regi

stra

tion

of

eh t

rans

acti

on c

arri

ed o

ut b

y th

e cu

stom

er,

etc.

CoM

D N

o. 4

42

date

17

June

200

1

On

the

fina

ncia

l an

d ac

coun

ting

re

quir

emen

ts o

f se

curi

ties

dea

lers

The

deci

sion

def

ines

the

obl

igat

ions

in t

erm

s of

kee

ping

the

acc

ount

ing

reco

rds,

the

ir

reno

vati

on a

nd m

aint

enan

ce,

the

oblig

atio

n to

dra

ft f

inan

cial

sta

tem

ents

and

the

ir f

orm

an

d co

nten

t. It

pro

vide

s th

e de

fini

tion

“cu

stom

er m

oney

” an

d th

e op

erat

ions

link

ed w

ith

them

. In

add

itio

n, t

he d

ecis

ion

sets

for

th t

he o

blig

atio

n of

lice

nsed

per

son

to a

ssig

n ac

coun

ting

ex

pert

s, t

hus

rein

forc

ing

auth

orit

ies

and

proc

edur

es r

egar

ding

the

ir a

ppoi

ntm

ent

and

dism

issa

l.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

licen

sing

, fe

es

and

com

mis

sion

s Th

e go

al o

f th

is r

egul

atio

n is

to

defi

ne t

he li

cens

ing

proc

edur

es a

nd t

he f

ees

that

ent

itie

s m

ust

pay

case

by

case

dep

endi

ng o

n th

e ac

tivi

ty,

for

whi

ch t

hey

appl

y.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

ority

Boa

rd

On

the

requ

irem

ents

re

: fi

nanc

ial r

esou

rces

of

lice

nsed

per

sons

This

reg

ulat

ion

sets

for

th r

ules

con

cern

ing

min

imum

cap

ital

, lo

w e

nd li

quid

ity

limit

, ob

ligat

ions

of

licen

sed

pers

ons,

def

init

ions

wit

h re

gard

to

appr

oved

inpu

ts a

nd li

quid

inpu

ts

and

thei

r es

tim

ate.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

pros

pect

This

reg

ulat

ion

defi

nes

rule

s ap

plic

able

to

secu

riti

es p

ublic

pro

posa

ls,

whi

ch a

re s

hare

s, b

onds

or

gua

rant

ees,

by

prov

idin

g th

e ex

cept

ions

to

the

gene

ral r

ule.

The

reg

ulat

ion

prov

ides

the

pr

ospe

ct m

anda

tory

for

m a

nd c

onte

nt.

It d

efin

es t

he d

ata

that

mus

t m

ake

up t

he n

arra

tive

par

t of

the

pro

spec

t su

ch a

s re

spon

sibl

e pe

rson

s, a

dvis

ors,

sec

urit

ies

data

, w

ith

whi

ch t

he p

ropo

sal

is li

nked

, ge

nera

l inf

orm

atio

n on

the

issu

es a

nd it

s ca

pita

l, e

tc.

Addi

tion

ally

, th

e re

gula

tion

re

gula

tes

in a

det

aile

d m

anne

r th

e pr

oced

ures

on

the

pros

pect

reg

istr

atio

n; it

set

s fo

rth

the

max

imum

tim

e lim

it o

f a

publ

ic p

ropo

sal,

the

obl

igat

ion

of t

he is

suer

to

repo

rt t

o th

e AF

SA

follo

win

g pr

opos

al c

losu

re a

nd t

he m

easu

res

to e

limin

ate

irre

gula

riti

es d

urin

g th

e pu

blic

pr

opos

al.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

take

-ove

r

The

regu

lati

on e

stab

lishe

s th

e le

gal b

asis

and

it a

pplie

s to

all

prop

osal

s to

tak

e po

sses

sion

of

the

shar

es c

ontr

ol p

acka

ge o

r to

mer

ge j

oint

sto

ck c

ompa

nies

reg

iste

red

in A

lban

ia.

Its

goal

is

to e

nsur

e an

equ

al a

nd f

air

trea

tmen

t of

all

shar

ehol

ders

, w

hich

are

aff

ecte

d tr

ansa

ctio

ns

carr

ied

out

to g

et p

osse

ssio

n of

sha

res

cont

rol p

acka

ge.

This

reg

ulat

ion

impo

ses

the

rule

s of

th

e ga

me.

Pro

posa

ls t

o ge

t po

sses

sion

of

the

cont

rol p

acka

ge m

ust

be m

ade

by t

he d

efin

ed

dead

line

in o

rder

to

prov

ide

shar

ehol

ders

wit

h th

e po

ssib

ility

of

mak

ing

a w

ell-

info

rmed

de

cisi

on.

The

publ

ic e

njoy

s th

e ri

ght

to b

e in

form

ed a

bout

any

sig

nifi

cant

cha

nge

(mor

e or

le

ss t

han

20%

of t

he r

ight

to

vote

).

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

regi

stra

rs li

cens

ing

The

scop

e of

thi

s re

gula

tion

is t

he d

efin

itio

n of

req

uire

men

ts,

proc

edur

es a

nd t

ime

limit

s of

lice

nsin

g of

per

sons

who

app

ly t

o be

issu

ed w

ith

licen

se t

o op

erat

e as

sec

urit

ies

regi

stra

r.

Secu

riti

es r

egis

trar

is a

jur

isti

c pe

rson

lice

nsed

by

AFSA

, w

hich

has

org

aniz

atio

n an

d ad

min

istr

atio

n of

sec

urit

ies

regi

ster

s as

the

sco

pe o

f it

s ac

tivi

ty.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

orga

niza

tion

of

appl

ican

ts e

xam

inat

ion

The

regu

lati

on d

efin

es t

he e

xam

inat

ion

orga

niza

tion

pro

cedu

re f

or t

he s

ecur

itie

s de

aler

, in

vest

men

ts a

dvis

or a

nd t

heir

rep

rese

ntat

ive.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

mar

ket

licen

sing

Def

init

ion

of r

equi

rem

ents

, ti

me

limit

s an

d lic

ensi

ng p

roce

dure

s to

be

follo

wed

by

the

enti

ties

app

lyin

g to

be

prov

ided

lice

nse

to o

pera

te in

sec

urit

ies

mar

ket

mak

e up

the

sco

pe

of t

his

regu

lati

on.

In t

his

fram

e, it

is d

efin

ed t

hat

no e

ntit

y m

ay o

pera

te a

s se

curi

ties

dea

ler

unle

ss it

is li

cens

ed in

adv

ance

by

AFSA

. Th

e se

curi

ties

mar

ket

(sto

ck e

xcha

nge)

org

aniz

es it

s ac

tivi

ty b

ased

on

the

stat

ute

and

rule

s of

tra

de o

pera

tion

, w

hich

bec

ome

subj

ect

to a

dopt

ion

by t

he A

FSA.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

licen

sing

se

curi

ties

dea

ler,

th

e in

vest

men

ts

advi

sor

and

thei

r re

pres

enta

tive

.

This

reg

ulat

ion

expl

icit

ly s

tipu

late

s th

e ac

tive

s fo

r w

hich

the

sec

urit

ies

deal

er,

inve

stm

ents

ad

viso

r an

d th

eir

repr

esen

tati

ve a

re li

cens

ed.

Lice

nsin

g cr

iter

ia t

ake

up a

con

side

rabl

e an

d sp

ecia

l par

t of

the

reg

ulat

ion.

The

se c

rite

ria

defi

ne a

ll ne

cess

ary

docu

men

tati

on t

hat

appl

ican

ts m

ust

pres

ent

in o

rder

to

be li

cens

ed t

o co

nduc

t th

e ac

tivi

ties

, w

hich

fal

l und

er

the

scop

e of

thi

s re

gula

tion

. Th

e AF

SA r

ight

to

acce

pt o

r re

fuse

the

app

licat

ions

is a

pplie

d in

th

e fr

ame

of p

roce

dure

s, w

hich

are

fol

low

ed in

suc

h a

proc

ess.

In a

ddit

ion,

it s

ets

fort

h fe

es

and

com

mis

sion

s to

be

paid

by

the

licen

sed

enti

ties

bot

h, a

t th

e m

omen

t w

hen

issu

ed w

ith

the

licen

se a

nd d

urin

g ex

erci

sing

the

act

ivit

y, f

or w

hich

the

y ha

ve r

ecei

ved

the

licen

se.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

illeg

al p

ract

ices

of

tra

ding

The

regu

lati

on r

efle

cts

mos

t re

cent

gui

danc

e of

CE

re:

trad

e vi

olat

ions

and

pro

tect

ion

agai

nst

them

. Th

e re

gula

tion

pro

vide

s th

e de

fini

tion

of

inte

rnal

info

rmat

ion

by m

eans

of

clea

rly

desc

ribi

ng it

s tw

o ke

y el

emen

ts,

whi

ch a

re t

he a

ccur

ate

natu

re a

nd in

flue

nce

on t

he p

rice

. Th

is d

efin

itio

n co

nsid

ers

it a

mar

ket

viol

atio

n ev

en if

the

per

son,

who

has

per

form

ed t

he a

ctio

n,

did

not

mak

e an

y pr

ofit

. It

is t

he f

irst

tim

e th

at o

blig

atio

ns s

uch

as d

raft

ing

of t

he li

st o

f pe

rson

s w

ith

acce

ss t

o in

tern

al in

form

atio

n, it

s up

dati

ng a

nd t

rans

pare

ncy

to A

FSA

rega

rdin

g tr

ansa

ctio

ns c

arri

ed o

ut b

y co

mpa

ny d

irec

tors

and

per

sons

link

ed w

ith

them

. In

add

itio

n, t

he

regu

lati

on s

ets

fort

h pr

even

tive

mea

sure

s, w

hich

are

con

nect

ed w

ith

the

oblig

atio

ns o

f pe

rson

s pr

ofes

sion

ally

invo

lved

in t

he t

rans

acti

on t

o co

ndem

n an

ille

gal p

ract

ice,

as

wel

l as,

the

ob

ligat

ion

of j

ourn

alis

ts a

nd f

inan

cial

ana

lyst

s to

mak

e tr

ansp

aren

t co

nflic

ts o

f in

tere

st in

the

ir

secu

riti

es r

elat

ed a

rtic

les

and

anal

ysis

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

5, d

ate

07 D

ecem

ber

2006

of

Fina

ncia

l Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

reta

il m

arke

t on

Gov

ernm

ent

secu

riti

es o

f th

e Re

publ

ic o

f Al

bani

a

This

reg

ulat

ion

expl

icit

ly d

efin

es t

he m

anne

r of

ret

ail m

arke

t fu

ncti

onin

g, t

he m

onit

orin

g an

d tr

ansp

aren

cy p

roce

dure

s w

ith

the

aim

of

prot

ecti

ng in

vest

ors

that

inve

st in

gov

ernm

ent

secu

riti

es.

The

regu

lati

on p

rovi

des

an a

ccur

ate

defi

niti

on o

f re

tail

mar

ket,

typ

e of

tra

nsac

tion

s on

thi

s m

arke

t, t

radi

ng p

roce

dure

s, k

eepi

ng o

f an

alyt

ical

reg

iste

r, o

blig

atio

n to

info

rm a

nd

repo

rt t

o AF

SA.

The

regu

lati

on p

rohi

bits

tra

ding

act

ivit

y in

the

ret

ail m

arke

t of

ban

ks,

whi

ch

are

not

licen

sed

by t

he A

FSA.

Ban

ks,

whi

ch o

pera

te in

ret

ail m

arke

t, m

ust

also

org

aniz

e ke

epin

g of

the

Gov

ernm

ent

secu

riti

es a

naly

tica

l reg

iste

r by

bei

ng is

sued

wit

h a

licen

se f

or

this

typ

e of

act

ivit

y or

, by

mak

ing

an a

gree

men

t w

ith

anot

her

bank

, w

hich

is li

cens

ed f

or

this

pur

pose

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

proc

edur

es o

f m

onit

orin

g re

tail

mar

ket

on G

over

nmen

t se

curi

ties

of

the

Repu

blic

of

Alba

nia

Stip

ulat

ion

of c

ondi

tion

s, m

anne

r an

d pr

oced

ures

of

mon

itor

ing

the

enti

ties

lice

nsed

by

the

AFSA

to

trad

e an

d ke

ep t

he r

egis

ter

on s

ecur

itie

s of

the

Rep

ublic

of

Alba

nia

Gov

ernm

ent

cons

titu

te t

he s

cope

of

this

reg

ulat

ion.

The

tar

get

of t

his

regu

lati

on is

to

prot

ect

secu

riti

es

inve

stor

s’ in

tere

sts

and

impr

ovem

ent

of t

he f

unct

ioni

ng c

ondi

tion

s of

Gov

ernm

ent

secu

riti

es

reta

il m

arke

t.

In S

ecur

itie

s Ar

ea

Lega

l/Re

gula

tory

Re

fere

nce

Des

crip

tion

Law

/Reg

ulat

ion

Des

crip

tion

Law

808

0 da

te

01.0

3.19

96,

chan

ged

by L

aws

No.

816

8,

date

05

Dec

embe

r 19

96 a

nd L

aw N

o. 8

745,

da

te 2

2 Fe

brua

ry 2

001.

On

Secu

riti

es

The

Law

“O

n Se

curi

ties

” is

the

mai

n re

gula

tory

fra

mew

ork

for

func

tion

ing

of r

egul

ator

y.

The

obje

ct o

f th

is la

w is

pro

visi

on o

f in

vest

ors’

pro

tect

ion

in s

ecur

itie

s by

est

ablis

hing

the

re

gula

tory

bod

y, b

y re

gula

ting

sec

urit

ies

mar

kets

and

per

sons

eng

aged

in s

ecur

itie

s in

vest

men

t bu

sine

ss,

and

by c

ontr

ollin

g th

e pu

blic

issu

e of

and

tra

ding

in s

ecur

itie

s. T

his

law

est

ablis

hes

the

regu

lato

ry e

ntit

y w

hich

has

sup

ervi

sory

and

lice

nsin

g au

thor

ity

for

the

secu

riti

es m

arke

t,

and

wit

h fu

rthe

r de

velo

pmen

t of

thi

s m

arke

t, t

he r

egul

ator

will

tak

e th

e at

trib

utes

of

an

inde

pend

ent

agen

cy.

CoM

D N

o. 4

40

date

17

June

200

1

On

the

rule

s re

: fo

rm a

nd c

onte

nt

of a

nnou

ncem

ents

ab

out

inve

stm

ent

acti

vity

in s

ecur

itie

s.

This

dec

isio

n de

fine

s th

e ru

les

in c

onne

ctio

n w

ith

enti

ties

, w

hich

enj

oy t

he r

ight

to

mak

e an

noun

cem

ents

abo

ut s

ecur

itie

s an

d ex

empt

ions

fro

m t

his

rule

, ru

les

in r

elat

ion

to o

rder

s th

at m

ust

be is

sued

by

the

regu

lato

ry b

ody

in c

ases

whe

n it

fin

ds o

ut t

hat

a se

curi

ty r

elat

ed

anno

unce

men

t is

fra

udul

ent,

the

obl

igat

ion

to s

end

a co

py o

f an

noun

cem

ents

to

the

regu

lato

r’s

addr

ess,

and

the

san

ctio

ns o

n ca

ses,

whi

ch a

re v

erif

ies

as r

unni

ng a

gain

st

this

dec

isio

n.

CoM

D N

o. 4

41

date

17

June

200

1

On

the

rule

s of

lead

ing

secu

riti

es

inve

stm

ent

acti

vity

The

goal

of

this

dec

isio

n is

to

stip

ulat

e an

eth

ic,

a be

havi

or o

f pe

rson

s lic

ense

d to

ope

rate

in

sec

urit

ies

mar

ket.

It d

efin

es t

he o

blig

atio

ns v

is-à

-vis

cus

tom

ers,

the

obl

igat

ion

conc

erni

ng

a cl

ear

and

fair

com

mun

icat

ion,

the

obl

igat

ion

to e

xpla

in t

he r

isk

to t

he c

usto

mer

, th

e ob

ligat

ion

to f

amili

ariz

e th

e cu

stom

er w

ith

the

fees

tha

t ar

e ap

plie

d, e

tc.

The

deci

sion

als

o se

ts f

orth

rul

es a

bout

exe

cuti

on u

pon

prio

rity

pri

ncip

le o

f cu

stom

er’s

ord

ers,

qui

ck a

nd f

air

regi

stra

tion

of

eh t

rans

acti

on c

arri

ed o

ut b

y th

e cu

stom

er,

etc.

CoM

D N

o. 4

42

date

17

June

200

1

On

the

fina

ncia

l an

d ac

coun

ting

re

quir

emen

ts o

f se

curi

ties

dea

lers

The

deci

sion

def

ines

the

obl

igat

ions

in t

erm

s of

kee

ping

the

acc

ount

ing

reco

rds,

the

ir

reno

vati

on a

nd m

aint

enan

ce,

the

oblig

atio

n to

dra

ft f

inan

cial

sta

tem

ents

and

the

ir f

orm

an

d co

nten

t. It

pro

vide

s th

e de

fini

tion

“cu

stom

er m

oney

” an

d th

e op

erat

ions

link

ed w

ith

them

. In

add

itio

n, t

he d

ecis

ion

sets

for

th t

he o

blig

atio

n of

lice

nsed

per

son

to a

ssig

n ac

coun

ting

ex

pert

s, t

hus

rein

forc

ing

auth

orit

ies

and

proc

edur

es r

egar

ding

the

ir a

ppoi

ntm

ent

and

dism

issa

l.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

licen

sing

, fe

es

and

com

mis

sion

s Th

e go

al o

f th

is r

egul

atio

n is

to

defi

ne t

he li

cens

ing

proc

edur

es a

nd t

he f

ees

that

ent

itie

s m

ust

pay

case

by

case

dep

endi

ng o

n th

e ac

tivi

ty,

for

whi

ch t

hey

appl

y.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

ority

Boa

rd

On

the

requ

irem

ents

re

: fi

nanc

ial r

esou

rces

of

lice

nsed

per

sons

This

reg

ulat

ion

sets

for

th r

ules

con

cern

ing

min

imum

cap

ital

, lo

w e

nd li

quid

ity

limit

, ob

ligat

ions

of

licen

sed

pers

ons,

def

init

ions

wit

h re

gard

to

appr

oved

inpu

ts a

nd li

quid

inpu

ts

and

thei

r es

tim

ate.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

pros

pect

This

reg

ulat

ion

defi

nes

rule

s ap

plic

able

to

secu

riti

es p

ublic

pro

posa

ls,

whi

ch a

re s

hare

s, b

onds

or

gua

rant

ees,

by

prov

idin

g th

e ex

cept

ions

to

the

gene

ral r

ule.

The

reg

ulat

ion

prov

ides

the

pr

ospe

ct m

anda

tory

for

m a

nd c

onte

nt.

It d

efin

es t

he d

ata

that

mus

t m

ake

up t

he n

arra

tive

par

t of

the

pro

spec

t su

ch a

s re

spon

sibl

e pe

rson

s, a

dvis

ors,

sec

urit

ies

data

, w

ith

whi

ch t

he p

ropo

sal

is li

nked

, ge

nera

l inf

orm

atio

n on

the

issu

es a

nd it

s ca

pita

l, e

tc.

Addi

tion

ally

, th

e re

gula

tion

re

gula

tes

in a

det

aile

d m

anne

r th

e pr

oced

ures

on

the

pros

pect

reg

istr

atio

n; it

set

s fo

rth

the

max

imum

tim

e lim

it o

f a

publ

ic p

ropo

sal,

the

obl

igat

ion

of t

he is

suer

to

repo

rt t

o th

e AF

SA

follo

win

g pr

opos

al c

losu

re a

nd t

he m

easu

res

to e

limin

ate

irre

gula

riti

es d

urin

g th

e pu

blic

pr

opos

al.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

take

-ove

r

The

regu

lati

on e

stab

lishe

s th

e le

gal b

asis

and

it a

pplie

s to

all

prop

osal

s to

tak

e po

sses

sion

of

the

shar

es c

ontr

ol p

acka

ge o

r to

mer

ge j

oint

sto

ck c

ompa

nies

reg

iste

red

in A

lban

ia.

Its

goal

is

to e

nsur

e an

equ

al a

nd f

air

trea

tmen

t of

all

shar

ehol

ders

, w

hich

are

aff

ecte

d tr

ansa

ctio

ns

carr

ied

out

to g

et p

osse

ssio

n of

sha

res

cont

rol p

acka

ge.

This

reg

ulat

ion

impo

ses

the

rule

s of

th

e ga

me.

Pro

posa

ls t

o ge

t po

sses

sion

of

the

cont

rol p

acka

ge m

ust

be m

ade

by t

he d

efin

ed

dead

line

in o

rder

to

prov

ide

shar

ehol

ders

wit

h th

e po

ssib

ility

of

mak

ing

a w

ell-

info

rmed

de

cisi

on.

The

publ

ic e

njoy

s th

e ri

ght

to b

e in

form

ed a

bout

any

sig

nifi

cant

cha

nge

(mor

e or

le

ss t

han

20%

of t

he r

ight

to

vote

).

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

regi

stra

rs li

cens

ing

The

scop

e of

thi

s re

gula

tion

is t

he d

efin

itio

n of

req

uire

men

ts,

proc

edur

es a

nd t

ime

limit

s of

lice

nsin

g of

per

sons

who

app

ly t

o be

issu

ed w

ith

licen

se t

o op

erat

e as

sec

urit

ies

regi

stra

r.

Secu

riti

es r

egis

trar

is a

jur

isti

c pe

rson

lice

nsed

by

AFSA

, w

hich

has

org

aniz

atio

n an

d ad

min

istr

atio

n of

sec

urit

ies

regi

ster

s as

the

sco

pe o

f it

s ac

tivi

ty.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

12,

dat

e 29

Ja

nuar

y 20

07 o

f Fin

anci

al

Supe

rvis

ory

Auth

orit

y Bo

ard

On

the

orga

niza

tion

of

appl

ican

ts e

xam

inat

ion

The

regu

lati

on d

efin

es t

he e

xam

inat

ion

orga

niza

tion

pro

cedu

re f

or t

he s

ecur

itie

s de

aler

, in

vest

men

ts a

dvis

or a

nd t

heir

rep

rese

ntat

ive.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

secu

riti

es

mar

ket

licen

sing

Def

init

ion

of r

equi

rem

ents

, ti

me

limit

s an

d lic

ensi

ng p

roce

dure

s to

be

follo

wed

by

the

enti

ties

app

lyin

g to

be

prov

ided

lice

nse

to o

pera

te in

sec

urit

ies

mar

ket

mak

e up

the

sco

pe

of t

his

regu

lati

on.

In t

his

fram

e, it

is d

efin

ed t

hat

no e

ntit

y m

ay o

pera

te a

s se

curi

ties

dea

ler

unle

ss it

is li

cens

ed in

adv

ance

by

AFSA

. Th

e se

curi

ties

mar

ket

(sto

ck e

xcha

nge)

org

aniz

es it

s ac

tivi

ty b

ased

on

the

stat

ute

and

rule

s of

tra

de o

pera

tion

, w

hich

bec

ome

subj

ect

to a

dopt

ion

by t

he A

FSA.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

licen

sing

se

curi

ties

dea

ler,

th

e in

vest

men

ts

advi

sor

and

thei

r re

pres

enta

tive

.

This

reg

ulat

ion

expl

icit

ly s

tipu

late

s th

e ac

tive

s fo

r w

hich

the

sec

urit

ies

deal

er,

inve

stm

ents

ad

viso

r an

d th

eir

repr

esen

tati

ve a

re li

cens

ed.

Lice

nsin

g cr

iter

ia t

ake

up a

con

side

rabl

e an

d sp

ecia

l par

t of

the

reg

ulat

ion.

The

se c

rite

ria

defi

ne a

ll ne

cess

ary

docu

men

tati

on t

hat

appl

ican

ts m

ust

pres

ent

in o

rder

to

be li

cens

ed t

o co

nduc

t th

e ac

tivi

ties

, w

hich

fal

l und

er

the

scop

e of

thi

s re

gula

tion

. Th

e AF

SA r

ight

to

acce

pt o

r re

fuse

the

app

licat

ions

is a

pplie

d in

th

e fr

ame

of p

roce

dure

s, w

hich

are

fol

low

ed in

suc

h a

proc

ess.

In a

ddit

ion,

it s

ets

fort

h fe

es

and

com

mis

sion

s to

be

paid

by

the

licen

sed

enti

ties

bot

h, a

t th

e m

omen

t w

hen

issu

ed w

ith

the

licen

se a

nd d

urin

g ex

erci

sing

the

act

ivit

y, f

or w

hich

the

y ha

ve r

ecei

ved

the

licen

se.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

illeg

al p

ract

ices

of

tra

ding

The

regu

lati

on r

efle

cts

mos

t re

cent

gui

danc

e of

CE

re:

trad

e vi

olat

ions

and

pro

tect

ion

agai

nst

them

. Th

e re

gula

tion

pro

vide

s th

e de

fini

tion

of

inte

rnal

info

rmat

ion

by m

eans

of

clea

rly

desc

ribi

ng it

s tw

o ke

y el

emen

ts,

whi

ch a

re t

he a

ccur

ate

natu

re a

nd in

flue

nce

on t

he p

rice

. Th

is d

efin

itio

n co

nsid

ers

it a

mar

ket

viol

atio

n ev

en if

the

per

son,

who

has

per

form

ed t

he a

ctio

n,

did

not

mak

e an

y pr

ofit

. It

is t

he f

irst

tim

e th

at o

blig

atio

ns s

uch

as d

raft

ing

of t

he li

st o

f pe

rson

s w

ith

acce

ss t

o in

tern

al in

form

atio

n, it

s up

dati

ng a

nd t

rans

pare

ncy

to A

FSA

rega

rdin

g tr

ansa

ctio

ns c

arri

ed o

ut b

y co

mpa

ny d

irec

tors

and

per

sons

link

ed w

ith

them

. In

add

itio

n, t

he

regu

lati

on s

ets

fort

h pr

even

tive

mea

sure

s, w

hich

are

con

nect

ed w

ith

the

oblig

atio

ns o

f pe

rson

s pr

ofes

sion

ally

invo

lved

in t

he t

rans

acti

on t

o co

ndem

n an

ille

gal p

ract

ice,

as

wel

l as,

the

ob

ligat

ion

of j

ourn

alis

ts a

nd f

inan

cial

ana

lyst

s to

mak

e tr

ansp

aren

t co

nflic

ts o

f in

tere

st in

the

ir

secu

riti

es r

elat

ed a

rtic

les

and

anal

ysis

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

5, d

ate

07 D

ecem

ber

2006

of

Fina

ncia

l Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

reta

il m

arke

t on

Gov

ernm

ent

secu

riti

es o

f th

e Re

publ

ic o

f Al

bani

a

This

reg

ulat

ion

expl

icit

ly d

efin

es t

he m

anne

r of

ret

ail m

arke

t fu

ncti

onin

g, t

he m

onit

orin

g an

d tr

ansp

aren

cy p

roce

dure

s w

ith

the

aim

of

prot

ecti

ng in

vest

ors

that

inve

st in

gov

ernm

ent

secu

riti

es.

The

regu

lati

on p

rovi

des

an a

ccur

ate

defi

niti

on o

f re

tail

mar

ket,

typ

e of

tra

nsac

tion

s on

thi

s m

arke

t, t

radi

ng p

roce

dure

s, k

eepi

ng o

f an

alyt

ical

reg

iste

r, o

blig

atio

n to

info

rm a

nd

repo

rt t

o AF

SA.

The

regu

lati

on p

rohi

bits

tra

ding

act

ivit

y in

the

ret

ail m

arke

t of

ban

ks,

whi

ch

are

not

licen

sed

by t

he A

FSA.

Ban

ks,

whi

ch o

pera

te in

ret

ail m

arke

t, m

ust

also

org

aniz

e ke

epin

g of

the

Gov

ernm

ent

secu

riti

es a

naly

tica

l reg

iste

r by

bei

ng is

sued

wit

h a

licen

se f

or

this

typ

e of

act

ivit

y or

, by

mak

ing

an a

gree

men

t w

ith

anot

her

bank

, w

hich

is li

cens

ed f

or

this

pur

pose

.

Regu

lati

on a

dopt

ed

by D

ecis

ion

No.

12,

da

te 2

9 Ja

nuar

y 20

07

of F

inan

cial

Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

proc

edur

es o

f m

onit

orin

g re

tail

mar

ket

on G

over

nmen

t se

curi

ties

of

the

Repu

blic

of

Alba

nia

Stip

ulat

ion

of c

ondi

tion

s, m

anne

r an

d pr

oced

ures

of

mon

itor

ing

the

enti

ties

lice

nsed

by

the

AFSA

to

trad

e an

d ke

ep t

he r

egis

ter

on s

ecur

itie

s of

the

Rep

ublic

of

Alba

nia

Gov

ernm

ent

cons

titu

te t

he s

cope

of

this

reg

ulat

ion.

The

tar

get

of t

his

regu

lati

on is

to

prot

ect

secu

riti

es

inve

stor

s’ in

tere

sts

and

impr

ovem

ent

of t

he f

unct

ioni

ng c

ondi

tion

s of

Gov

ernm

ent

secu

riti

es

reta

il m

arke

t.

In S

ecur

itie

s Ar

ea

Lega

l/Re

gula

tory

Re

fere

nce

Law

/Reg

ulat

ion

Des

crip

tion

Des

crip

tion

Law

No.

794

3, d

ate

01 J

une

1995

, ch

ange

d by

Law

No.

839

3, d

ate

02 S

epte

mbe

r 19

98 a

nd

Law

No.

918

1, d

ate

05 F

ebru

ary

2004

On

Supp

lem

enta

ry p

ensi

ons

and

pens

ions

pri

vate

inst

itut

ions

. Th

e sc

ope

of t

his

law

is t

he r

egul

atio

n of

pri

vate

pen

sion

s in

sura

nce

by p

ensi

ons

priv

ate

inst

itut

ions

, th

eir

esta

blis

hmen

t ac

tivi

ty,

thei

r lic

ensi

ng a

nd c

ontr

ol.

CoM

D N

o. 9

08,

date

29.

12.2

004

On

the

licen

sing

and

sup

ervi

sory

pr

oced

ures

of

pens

ions

pri

vate

in

stit

utio

ns

The

deci

sion

def

ines

the

nec

essa

ry d

ocum

enta

tion

to

rece

ive

the

perm

it t

o op

erat

e as

pri

vate

inst

itut

ions

for

pen

sion

s, t

he c

ondi

tion

s of

issu

ing

and

revo

king

th

e pe

rmit

, as

wel

l as,

the

sup

ervi

sory

and

fin

anci

al c

ontr

ol p

roce

dure

s.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

16,

dat

e 08

Fe

brua

ry 2

007

of t

he

Fina

ncia

l Sup

ervi

sory

Au

thor

ity

Boar

d

On

the

proc

edur

es o

f lic

ensi

ng

and

revi

ewin

g th

e ap

plic

atio

ns o

f is

suin

g th

e pe

rmit

to

oper

ate

as a

su

pple

men

tary

pen

sion

s pr

ivat

e in

stit

utio

n.

The

scop

e of

thi

s re

gula

tion

is t

he d

ocum

enta

tion

pre

sent

atio

n m

anne

r fo

r lic

ensi

ng a

nd t

he p

roce

dure

fol

low

ed b

y th

e AF

SA w

hen

issu

ing

the

perm

it t

o op

erat

e as

a s

uppl

emen

tary

pen

sion

s pr

ivat

e in

stit

utio

n.

Regu

lati

on a

dopt

ed b

y D

ecis

ion

No.

15,

dat

e 08

Fe

brua

ry 2

007

of t

he

Fina

ncia

l Sup

ervi

sory

Au

thor

ity

Boar

d

On

supe

rvis

ion

and

fina

ncia

l co

ntro

l of

supp

lem

enta

ry p

ensi

ons

priv

ate

inst

itut

ions

.

The

goal

of

this

reg

ulat

ion

is t

o dr

aft

the

prog

ram

of

the

cont

rol e

xerc

ised

by

AFSA

to

the

supp

lem

enta

ry p

ensi

ons

priv

ate

inst

itut

ions

, th

e co

ntro

l con

duct

ing

proc

edur

es,

draf

ting

of

the

cont

rol r

epor

t an

d se

ttin

g of

con

trol

sta

ndar

ds.

In P

riva

te S

uppl

emen

tary

Pen

sion

s Ar

ea

A N N U A L R E P O R T ‘ 0 658

APPENDIX C: List of Supervised Institutions

Insu

ranc

e M

arke

t

1. IN

SIG

S.A

2. S

IGM

A S.

A

3. S

IGAL

S.A

4.

ATL

ANTI

K S

.A

Exec

utiv

e D

irec

tor

Saim

ir Z

EMBL

AKU

Q

emal

DIS

HA

Avni

PO

NAR

I D

rita

n ÇE

LAJ

Scop

e of

Act

ivit

y Li

fe +

Non

-Lif

e In

sura

nce

Non

-Lif

e In

sura

nce

Non

-Lif

e In

sura

nce

Non

-Lif

e In

sura

nce

Type

of

Ow

ners

hip

Stat

e +

fore

ign

stoc

k co

mpa

ny

Dom

esti

c st

ock

com

pany

D

omes

tic

and

fore

ign

stoc

k co

mpa

ny

Shoq

ëri m

e ka

pita

l ven

das

Off

ice

Add

ress

Rr

. “D

ibrë

s” N

r. 9

1, T

iran

a Rr

“A

. Fr

ashë

ri”,

sh

eshi

Will

son,

P.

O.B

. N

o. 1

714,

Tir

ana

Bul.

“Zo

gu I”

, N

r.1

, P.

O.B

. N

o.23

87,

Tira

naRr

. “T

hem

isto

kli G

ërm

enji

”,

3/1,

Tir

ana

Tel.

/Fax

+355

4 2

34 1

70

+355

4 2

58 2

54,

+355

4 2

5825

3 +3

55 4

250

220

+3

55 4

230

506

,+3

55 4

235

088

Web

page

w

ww

.ins

ig.c

om.a

l w

ww

.sig

ma-

insu

ranc

e.co

m

ww

w.s

igal

.com

.al

ww

w.a

tlan

tik.

com

.al

E-m

ail

info

@in

sig.

com

si

gma_

sha@

insu

rer.

com

in

fo@

siga

l.co

m.a

l at

lant

ik@

atla

ntik

.com

.al

Dat

e of

Sta

rtin

g A

ctiv

ity

Dec

isio

n N

o. 0

3 an

d 04

, da

te.

08 J

une

2000

Dec

isio

n N

o. 0

1,

date

03

Mar

ch 1

999

Dec

isio

n N

o. 0

2,

date

. 23

Jun

e 19

99D

ecis

ion

No.

5,

date

. 13

Apr

il 20

01

5. IN

TERS

IG S

.A

6.

ALB

SIG

S.A

7.

INTE

RALB

ANIA

N S

.A

8. E

URO

SIG

S.A

Exec

utiv

e D

irec

tor

Vang

jel B

IRBO

G

ezim

HU

QI

Bard

hyl M

INXH

OZI

M

ysly

m N

ELA

Scop

e of

Act

ivit

y N

on-L

ife

Insu

ranc

eN

on-L

ife

Insu

ranc

eN

on-L

ife

Insu

ranc

eN

on-L

ife

Insu

ranc

e

Type

of

Ow

ners

hip

Nat

iona

l sto

ck c

ompa

nyN

atio

nal s

tock

com

pany

Nat

iona

l sto

ck c

ompa

nyN

atio

nal s

tock

com

pany

Off

ice

Add

ress

Rr

. “B

arri

kada

ve”

Pall.

122

, Ap

1/1,

Tir

ana

Rr.,

”Pun

ëtor

et e

Rili

ndje

s”,

Nr.

10,

Tira

na

Zaye

d Bu

sine

ss C

ente

r,

Kuti

a Po

star

e N

r.27

7/1,

Tir

ana

Rr “

Lek

Duk

agji

ni”,

N

r. 5

, Ti

rana

Tel.

/Fax

+355

4 2

3561

4,+

355

4 23

2462

+3

55 4

254

761

,+3

55 4

254

764

+355

4 2

29 5

51,

+355

4 2

2957

8 +3

55 4

238

899

,+3

55 4

223

841

Web

page

la.gisorue.

ww

w

moc.nainablaretni.w

ww

la.moc.gisbla.

ww

w

E-m

ail

inte

rsig

@al

bani

aonl

ine.

net

info

@al

bsig

.com

.al

ttro

qe@

inte

ralb

ania

n.co

in

fo@

euro

sig.

al

Dat

e of

Sta

rtin

g A

ctiv

ity

Dec

isio

n N

o. 6

, da

te 1

3 Se

ptem

ber

2001

Cour

t D

ecis

ion

No.

307

56

date

09

Sept

embe

r 20

04

Dec

ison

No.

9,

date

19

July

200

420

Sep

tem

ber

2004

9. S

ICRE

D S

.A

10.

SIG

AL-L

IFE

S.A

Exec

utiv

e D

irec

tor

JAHX

OH nivdE

JAHX

OK cneG

Scop

e of

Act

ivit

y Li

fe In

sura

nce

Life

Insu

ranc

e

Type

of

Ow

ners

hip

Nat

iona

l sto

ck c

ompa

nyN

atio

nal a

nd f

orei

gn

stoc

k co

mpa

ny

Off

ice

Add

ress

Rr

. “S

ami F

rash

ëri”

,

Pall.

20,

Tir

ana

Bul.

“Zo

gu I”

,

Pall.

Dip

lom

atëv

e.

Nr

57,

Tira

na

Tel.

/Fax

803 332 4 553+ 945 732 4 553+

Web

page

la.

moc.lagis.w

ww

la.moc.dercis.

ww

w

E-m

ail

la.moc.lagis

@efilofni la.

moc.dercis@tcatnoc

Dat

e of

Sta

rtin

g A

ctiv

ity

Dec

isio

n N

o. 9

, da

te 2

6 Ju

ly 2

004

01 M

arch

200

5

Secu

riti

es M

arke

t

1. T

IRAN

A BA

NK

S.A.

2. A

LBAN

IAN

SH

ARE

REG

ISTE

R S.

A.3.

TRI

UM

F G

ROU

P S.

A.

Exec

utiv

e D

irec

tor

ILEJG

NA aleriM

JAHA

HS notnE SITE

GNARF sirti

miD

Scop

e of

Act

ivit

y D

eale

rCo

rpor

ate

regi

stra

r Tr

easu

ry b

onds

dea

ler

Type

of

Ow

ners

hip

Fore

ign

Stoc

k Co

mpa

ny

Stat

e st

ock

com

pany

D

omes

tic

priv

ate

stoc

k co

mpa

ny

Off

ice

Add

ress

Rr

. “D

ëshm

orët

e 4

Shk

urti

t”,

Tira

na

Rr.

“Pun

ëtor

ët e

Rili

ndje

s”,

Nr.

13,

Tira

na

Rr.

“M.

Gjo

llesh

a”,

Ku

lla 2

, ap

.13,

Tir

ana

Tel.

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Lice

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Issu

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Dat

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2002.11.50 2002.11.50

Lice

nse

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all.

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tek

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a D

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Dat

e 01

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y 20

0523

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l. “

Bajr

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a Bu

l. “

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355

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Lice

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Dat

e 5002.21.12

5002.11.42 5002.90.82

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nse

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Dat

e 08

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200

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ana

Rr “

Lek

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ni”,

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+355

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page

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Dec

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2001

Cour

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307

56

date

09

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04

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9,

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19

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200

420

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Rr

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ami F

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ëri”

,

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20,

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ana

Bul.

“Zo

gu I”

,

Pall.

Dip

lom

atëv

e.

Nr

57,

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na

Tel.

/Fax

803 332 4 553+ 945 732 4 553+

Web

page

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s”,

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na

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Web

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la.knabanarit.

ww

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ten.knabanarit@ofni

Lice

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Issu

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Dat

e 3002.11.42

2002.11.50 2002.11.50

Lice

nse

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Lice

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Issu

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Dat

e 01

Jul

y 20

0523

Mar

ch 2

005

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Expi

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Add

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an T

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Cen

ter,

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l. “

Bajr

am C

urri

”, T

iran

a Rr

. “I

smai

l Qem

ali”

, N

r. 2

7, T

iran

a Bu

l. “

Zhan

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ana

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/Fax

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2454

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355

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Web

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la.

moc.tkb.w

ww

moc.blaknab

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ww

la.nesieffiar.w

ww

E-m

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c.blaknabma

@knabnacirema

om

in

fo@

bkt.

com

.al

Lice

nse

Issu

ance

Dat

e 5002.21.12

5002.11.42 5002.90.82

Lice

nse

Expi

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l. “

Zogu

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a Rr

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l Qem

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r. 2

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a Rr

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Web

page

la.

moc.aib.w

ww

moc.snidercaknab.

ww

w

E-m

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la.moc.aib

@aitaib


Lice

nse

Issu

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Dat

e 08

May

200

60

6002.20.31

Lice

nse

Expi

rati

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naRr

. “T

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na

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sine

ss C

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a Po

star

e N

r.27

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ana

Rr “

Lek

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agji

ni”,

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r. 5

, Ti

rana

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Dat

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date

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9,

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19

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ami F

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ëri”

,

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20,

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ana

Bul.

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gu I”

,

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lom

atëv

e.

Nr

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na

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/Fax

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ibrë

s” N

r. 9

1, T

iran

a Rr

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. Fr

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sh

eshi

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ana

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gu I”

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naRr

. “T

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ana

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ndje

s”,

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na

Zaye

d Bu

sine

ss C

ente

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a Po

star

e N

r.27

7/1,

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ana

Rr “

Lek

Duk

agji

ni”,

N

r. 5

, Ti

rana

Tel.

/Fax

+355

4 2

3561

4,+

355

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254

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la.gisorue.

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moc.nainablaretni.w

ww

la.moc.gisbla.

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E-m

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bani

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info

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ttro

qe@

inte

ralb

ania

n.co

in

fo@

euro

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al

Dat

e of

Sta

rtin

g A

ctiv

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Dec

isio

n N

o. 6

, da

te 1

3 Se

ptem

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2001

Cour

t D

ecis

ion

No.

307

56

date

09

Sept

embe

r 20

04

Dec

ison

No.

9,

date

19

July

200

420

Sep

tem

ber

2004

9. S

ICRE

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.A

10.

SIG

AL-L

IFE

S.A

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stoc

k co

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ny

Off

ice

Add

ress

Rr

. “S

ami F

rash

ëri”

,

Pall.

20,

Tir

ana

Bul.

“Zo

gu I”

,

Pall.

Dip

lom

atëv

e.

Nr

57,

Tira

na

Tel.

/Fax

803 332 4 553+ 945 732 4 553+

Web

page

la.

moc.lagis.w

ww

la.moc.dercis.

ww

w

E-m

ail

la.moc.lagis

@efilofni la.

moc.dercis@tcatnoc

Dat

e of

Sta

rtin

g A

ctiv

ity

Dec

isio

n N

o. 9

, da

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Stoc

k Co

mpa

ny

Stat

e st

ock

com

pany

D

omes

tic

priv

ate

stoc

k co

mpa

ny

Off

ice

Add

ress

Rr

. “D

ëshm

orët

e 4

Shk

urti

t”,

Tira

na

Rr.

“Pun

ëtor

ët e

Rili

ndje

s”,

Nr.

13,

Tira

na

Rr.

“M.

Gjo

llesh

a”,

Ku

lla 2

, ap

.13,

Tir

ana

Tel.

/Fax

+355

4 2

6961

6, +

355

4 26

9707

+3

55 4

233

442,

+35

5 4

2334

25

+355

68

2058

275

/ +3

55 4

256

081

Web

page

la.knabanarit.

ww

w

E-m

ail

ten.knabanarit@ofni

Lice

nse

Issu

ance

Dat

e 3002.11.42

2002.11.50 2002.11.50

Lice

nse

Expi

rati

on D

ate

No

expi

rati

on d

ate

No

expi

rati

on d

ate

No

expi

rati

on d

ate

4. B

ALLK

AN G

ROU

P-01

S.A

.5.

PO

PULA

R BA

NK

S.A.

6. T

IRAN

A ST

OCK

EXH

ANG

E S.

A.

Exec

utiv

e D

irec

tor

JARERUF alinA

AVO

HOBIL nivdE

JAMAR icne

G

Scop

e of

Act

ivit

y Se

curi

ties

org

aniz

ed t

rade

D

eale

rG

over

nmen

t bo

nds

deal

er

Type

of

Ow

ners

hip

Dom

esti

c pr

ivat

e st

ock

com

pany

D

omes

tic

priv

ate

stoc

k co

mpa

ny

Stat

e st

ock

com

pany

Off

ice

Add

ress

Rr

. “R

eshi

t Ço

llaku

”, P

all.

7-k

atës

h

tek

Shal

lvar

et,

shk.

2/6.

Tir

ana

Rr.

“Don

ika

Kast

riot

i”,

N

r.11

/1,

Tira

na

Rr.

“Dor

a D

’Ist

ria”

, N

r.2,

P.

O.B

. 27

4/1,

Tir

ana

Tel.

/Fax

+355

4 2

3353

7, +

355

4 23

3537

+3

55 4

272

790/

1, +

355

4 27

2781

+3

55 4

265

058

Web

page

la.

moc.est.w

ww

moc.erollupopb.

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w

E-m

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moc.erollupopb

@ofni

Lice

nse

Issu

ance

Dat

e 01

Jul

y 20

0523

Mar

ch 2

005

24.1

1.20

03

Lice

nse

Expi

rati

on D

ate

01 J

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2007

No

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No

expi

rati

on d

ate

7. R

AIFF

EISE

N B

ANK

S.A.

8. A

MER

ICAN

BAN

K O

F AL

BAN

IA S

.A.

9. N

ATIO

NAL

CO

MM

ERCI

AL

BAN

K S.

A.

Dre

jtor

Ekz

ekut

iv

OR ocneroL

DURE

NUR

G nevetS LI

GILPACNEP nahyeS

IRACN

Scop

e of

Act

ivit

y D

eale

r an

d Re

gist

rar

of

Gov

ernm

ent

bond

s in

Alb

ania

D

eale

r an

d Re

gist

rar

of

Gov

ernm

ent

bond

s in

Alb

ania

D

eale

r an

d Re

gist

rar

of

Gov

ernm

ent

bond

s in

Alb

ania

Type

of

Ow

ners

hip

Fore

ign

stoc

k co

mpa

ny

Fore

ign

stoc

k co

mpa

ny

Fore

ign

stoc

k co

mpa

ny

Off

ice

Add

ress

Eu

rope

an T

rade

Cen

ter,

Bu

l. “

Bajr

am C

urri

”, T

iran

a Rr

. “I

smai

l Qem

ali”

, N

r. 2

7, T

iran

a Bu

l. “

Zhan

D’a

rk”,

Tir

ana

Tel.

/Fax

+355

4 2

2454

0, +

355

4 23

0013

+3

55 4

248

753/

4/5/

6/7,

+35

5 4

2201

60

+355

4 2

5095

5, +

355

4 25

0956

Web

page

la.

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ww

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ww

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ww

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@knabnacirema

om

in

fo@

bkt.

com

.al

Lice

nse

Issu

ance

Dat

e 5002.21.12

5002.11.42 5002.90.82

Lice

nse

Expi

rati

on D

ate

No

expi

rati

on d

ate

No

expi

rati

on d

ate

No

expi

rati

on d

ate

10.

ALPH

A BA

NK

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.11

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ANIA

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QSAPARTSAM igiuL

OT

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UOTALA

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Act

ivit

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easu

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ler

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Regi

stra

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easu

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ler

and

Regi

stra

r Tr

easu

ry b

onds

dea

ler

Type

of

Ow

ners

hip

Fore

ign

stoc

k co

mpa

nyFo

reig

n st

ock

com

pany

Dom

esti

c pr

ivat

e st

ock

com

pany

Off

ice

Add

ress

Bu

l. “

Zogu

I”,

Nr.

47/

1, T

iran

a Rr

.”Is

mai

l Qem

ali”

, N

r. 2

1, T

iran

a Rr

. “B

arri

kada

ve”,

Nr.

1, T

iran

a

Tel.

/Fax

+355

4 2

40 4

78,

+355

4 2

3210

2 +3

55 4

234

096,

+35

5 4

2587

52

+355

4 2

3396

6, +

355

4 23

5700

Web

page

la.

moc.aib.w

ww

moc.snidercaknab.

ww

w

E-m

ail

la.moc.aib

@aitaib


Lice

nse

Issu

ance

Dat

e 08

May

200

60

6002.20.31

Lice

nse

Expi

rati

on D

ate

08 M

ay 2

007

No

expi

rati

on d

ate

No

expi

rati

on d

ate

Supp

lem

enta

ry P

ensi

ons

Priv

ate

Fund

s

1. A

mer

ican

Pen

sion

Fu

nd o

f Al

bani

a2.

Pri

vate

Pen

sion

s In

stit

utio

n G

ARAN

TSIG

3.

Pri

vate

Pen

sion

s In

stit

utio

n CA

PITA

L

Exec

utiv

e D

irec

tor

IMA

HDA ilkotsi

mehT IL

OL oçiK AJARK najrA

Scop

e of

Act

ivit

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pple

men

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s Pr

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e Fu

nd

Supp

lem

enta

ry P

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ons

Priv

ate

Fund

Supp

lem

enta

ry P

ensi

ons

Priv

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Fund

Type

of

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Dom

esti

c pr

ivat

e st

ock

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pany

+ f

orei

gn s

tock

D

omes

tic

priv

ate

stoc

k co

mpa

nyD

omes

tic

priv

ate

stoc

k co

mpa

ny

Off

ice

Add

ress

Rr

. “M

usta

fa M

atoh

iti”

,

P.11

kat

ësh,

kat

i 2,

zyra

1,

Tira

naSh

eshi

Ske

nder

bej,

Hot

el “

Tira

na

Inte

rnat

iona

l”,

Kati

14,

Tir

ana

Rr.

“Der

vish

Him

a”,

Nr.

2/1,

Tir

ana

Tel.

/Fax

300 363 4 553 + ,000 843 4 553 + 440 562 4 553 + ,125 562 4 553+

8/702 042 4 553 +

Web

page

la.

moc.latipac.w

ww

moc.la-gistnarag.

ww

w la.

moc.afpa.w

ww

E-m

ail

iba@la-gistnarag

la.moc.afpa

@ofnisn

et.c

om

cont

act@

capi

tal.

com

.al

Dat

e of

St

arti

ng A

ctiv

ity

01 M

arch

200

601

Jan

uary

200

601

Jan

uary

200

6

A N N U A L R E P O R T ‘ 0 662

APPENDIX D: Statistical TablesM

ain

Mac

ro-E

con

omic

In

dic

ator

s 19

96 -

20

06

Gen

eral

In

dica

tors

M

easu

ring

Uni

t19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

Popu

lati

on00

0 3.

076

3.07

5 3.

055

3.05

4 3.

061

3.07

4 3.

094

3.11

1 3.

127

3.14

2 3.

159

Tota

l num

ber

of e

mpl

oyee

s

000

1.11

6 1.

107

1.08

5 1.

065

1.06

8 92

1 92

1 92

7 93

1 93

2 93

4

Regi

ster

ed u

nem

pl.

pers

ons

000

158

194

235

240

215

181

173

164

157

154

150

Une

mpl

oym

ent

%12

,3

14,9

17

,7

18,4

16

,8

16,4

15

,8

15,0

14

,4

14,2

13

,8

Gro

ss D

omes

tic

Prod

uct

(GD

P)

mln

ALL

35

1.11

3 35

3.64

2 41

7.00

9 48

0.58

1 53

2.97

7 59

0.28

2 62

8.52

7 69

4.01

8 75

2.36

7 82

2.03

5 89

9.70

0

incr

ease

(%)

0,7

17,9

15

,2

10,9

10

,8

6,5

10,4

8,

4 9,

3 9,

4

mln

US

$

3.36

0 2.

375

2.76

8 3.

490

3.70

9 4.

114

4.48

5 5.

695

7.32

0 8.

232

9.17

0

incr

ease

(%)

-29,

3 16

,6

26,1

6,

3 10

,9

9,0

27,0

28

,5

12,5

11

,4

mln

Eur

o

3.27

0 4.

020

4.59

5 4.

749

5.04

7 5.

893

6.61

9 7.

310

incr

ease

(%)

22

,9

14,3

3,

3 6,

3 16

,8

12,3

10

,4

Real

GD

P G

row

th%

9,

1 -1

0,9

8,6

13,2

6,

5 7,

1 4,

3 5,

8 6,

2 5,

6 5,

0

ALL

11

4.16

5 11

5.01

3 13

6.48

7 15

7.37

1 17

4.12

4 19

2.04

3 20

3.17

7 22

3.07

1 24

0.60

3 26

1.62

8 28

4.80

5

incr

ease

(%)

0,7

18,7

15

,3

10,6

10

,3

5,8

9,8

7,9

8,7

8,9

US$

1.

092,

5 77

2,3

906,

0 1.

142,

9 1.

211,

6 1.

338,

5 1.

449,

7 1.

830,

6 2.

341,

0 2.

619,

9 2.

903

incr

ease

(%)

-29,

3 17

,3

26,1

6,

0 10

,5

8,3

26,3

27

,9

11,9

10

,8

Euro

1.

070,

8 1.

313,

4 1.

494,

8 1.

535,

0 1.

622,

2 1.

884,

6 2.

106,

7 2.

314,

2

GD

P pe

r ca

pita

incr

ease

(%)

22

,6

13,8

2,

7 5,

7 16

,2

11,8

9,

8

Infl

atio

n

Ann

ual

aver

age

%33

,2

32,1

20

,9

0,4

0,0

3,1

5,2

2,2

2,9

2,4

2,4

E

nd o

f pe

riod

%

17,4

42

,1

8,7

-1,0

4,

2 3,

5 1,

7 3,

3 2,

2 2,

0 2,

5

Gen

eral

Indi

cato

rs

Sour

ce:

Min

istr

y of

Fin

ance

and

INST

AT


Indi

cato

rs

Mea

suri

ng U

nit

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

mill

ion

ALL

52

.294

58

.949

10

2.52

4 12

3.16

1 13

0.64

3 14

5.63

9 15

4.59

5 16

7.22

4 18

4.35

6 20

4.16

3 22

6.28

3

incr

ease

(%)

12,

7 73

,9

20,1

6,

1 11

,5

6,1

8,2

10,2

10

,7

10,8

To

tal

Reve

nues

% of

GD

P 14

,9

16,7

24

,6

25,6

24

,5

24,7

24

,6

24,1

24

,5

24,8

25

,2

mill

ion

ALL

45.5

79

72.5

76

83.5

66

104.

112

114.

294

128.

948

145.

388

165.

974

183.

816

205.

514

incr

ease

(%)

5

9,2

15,1

24

,6

9,8

12,8

12

,7

14,2

10

,7

11,8

T

ax R

even

ues

% of

GD

P

12,9

17

,4

17,4

19

,5

19,4

20

,5

20,9

22

,1

22,4

22

,8

mill

ion

ALL

87.5

96

100.

730

141.

628

165.

692

170.

620

186.

049

192.

517

201.

152

222.

439

232.

339

254.

762

incr

ease

(%)

15,0

40

,6

17,0

3,

0 9,

0 3,

5 4,

5 10

,6

4,5

9,7

Tota

l Ex

pend

itur

es

% of

GD

P 24

,9

28,5

34

,0

34,5

32

,0

31,5

30

,6

29,0

29

,6

28,3

28

,3

mill

ion

ALL

13.8

59

24.2

15

34.1

20

36.2

74

43.3

97

37.9

25

31.4

72

38.2

66

38.3

75

47.5

02

incr

ease

(%)

74,7

40

,9

6,3

19,6

-1

2,6

-17,

0 21

,6

0,3

23,8

In

vest

men

ts

% of

GD

P

3,9

5,8

7,1

6,8

7,4

6,0

4,5

5,1

4,7

5,3

mill

ion

ALL

-3

5.30

2 -4

1.78

1 -3

9.10

4 -4

2.53

1 -3

9.97

7 -4

0.41

0 -3

7.92

2 -3

3.92

8 -3

8.08

3 -2

8.17

6 -2

8.47

9 O

vera

ll D

efic

it%

of G

DP

-10,

1 -1

1,8

-9,4

-8

,8

-7,5

-6

,8

-6,0

-4

,9

-5,1

-3

,43

-3,1

7

mill

ion

ALL

82

.785

12

0.52

7 14

9.43

9 17

7.49

0 22

6.06

9 24

1.16

1 26

0.75

2 28

0.76

7 29

5.20

0 32

7.35

3 34

8.93

6 D

omes

tic

Dep

t %

of G

DP

23,6

34

,1

35,8

36

,9

42,4

40

,9

41,5

40

,5

39,2

39

,8

38,8

Mill

ion

$ 32

3,4

347,

5 46

0,5

550,

1 61

7,0

697,

7 97

9,6

1.20

0,4

1.38

9,9

1.35

6,1

1.55

3,3

Fore

ign

Dep

t %

of G

DP

9,6

14,6

16

,6

15,8

16

,6

17,0

21

,8

21,1

19

,0

16,5

16

,9

Sour

ce:

Min

istr

y of

Fin

ance

and

INST

AT

Publ

ic F

inan

ces

Indi

cato

rs

A N N U A L R E P O R T ‘ 0 664

Indi

cato

rs

Mea

suri

ng U

nit

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

Mill

ion

$ -6

78,3

-5

34,9

-6

03,7

-6

62,8

-8

21,0

-1

.027

,0

-1.1

55,2

-1

.336

,3

-1.5

91,6

-1

.887

,0

-1.9

53,0

Co

mm

erci

al B

alan

ce

% of

GD

P -2

0,2

-22,

5 -2

1,8

-19,

0 -2

2,1

-25,

0 -2

5,8

-23,

5 -2

1,7

-22,

9 -2

1,3

Mill

ion

$ 24

3,7

158,

6 20

8,0

275,

1 25

5,4

304,

6 33

0,2

447,

1 60

3,3

652

721

incr

ease

(%)

19

,0

-34,

9 31

,1

32,3

-7

,2

19,3

8,

4 35

,4

34,9

8,

1 10

,6

Expo

rt

% of

GD

P 7,

3 6,

7 7,

5 7,

9 6,

9 7,

4 7,

4 7,

9 8,

2 7,

9 7,

9

Mill

ion

$ 92

2,0

693,

5 81

1,7

937,

9 1.

076,

4 1.

331,

6 1.

485,

4 1.

783,

4 2.

194,

9 2.

539

2.67

4

incr

ease

(%)

35

,6

-24,

8 17

,0

15,5

14

,8

23,7

11

,6

20,1

23

,1

15,7

5,

3 Im

port

% of

GD

P 27

,4

29,2

29

,3

26,9

29

,0

32,4

33

,1

31,3

30

,0

30,8

29

,2

Mill

ion

$ -6

2,3

-253

,7

-65,

0 -1

32,9

-1

63,1

-2

17,9

-4

20,8

-4

06,7

-3

58,2

-5

76,2

-7

70,3

Cu

rren

t A

ccou

nts

Bala

nce

% of

GD

P -1

,9

-10,

7 -2

,3

-3,8

-4

,4

-5,3

-9

,4

-7,1

-4

,9

-7,0

-8

,4

Mill

ion

$ 90

,1

47,5

45

,0

41,2

14

3,0

207,

3 13

5,0

178,

0 34

1,3

238,

7 29

3,5

Dir

ect

Fore

ign

Inve

stm

ents

%

of G

DP

2,7

2,0

1,6

1,2

3,9

5,0

3,0

3,1

4,7

2,9

3,2

Tran

sfer

M

illio

n $

559,

4 26

4,4

523,

9 35

3,0

533,

0 57

0,5

613,

2 84

2,0

1.10

9,4

1.01

4 1.

065

Rese

rves

M

illio

n $

30

6,0

384,

0 48

2,0

608,

0 75

4,0

860,

0 1.

026,

0 1.

374,

0 1.

390

1.53

6

Rese

rves

M

onth

impo

rts

3,

5 3,

7 3,

8 4,

2 4,

6 4,

4 3,

9 4,

0 4,

1 4,

2

ALL/

Euro

10

4,50

14

8,93

15

0,64

13

7,69

14

3,71

14

3,48

14

0,15

12

1,86

10

2,78

99

,86

98,1

1 Ex

chan

ge r

ate

ALL/

Euro

146,

96

132,

58

128,

47

132,

36

137,

51

127,

67

124,

19

123,

07

Sour

ce:

Min

istr

y of

Fin

ance

and

INST

AT

Sour

ce:

Min

istr

y of

Fin

ance

and

INST

AT

Fore

ign

Trad

e In

dica

tors

Mon

etar

y Ag

greg

ates

Indi

cato

rs

Mea

suri

ng U

nit

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

mill

ion

ALL

90.4

06

91.6

67

83.7

29

103.

004

124.

041

142.

926

152.

741

144.

730

172.

833

227.

684

227.

500

Agg

rega

te M

1 In

%

1,

4 -8

,7

23,0

20

,4

15,2

6,

9 -5

,2

19,4

31

,7

-0,1

mill

ion

ALL

120.

646

162.

221

199.

264

239.

662

264.

497

305.

302

324.

727

349.

513

391.

411

426.

150

480.

500

Agg

rega

te M

2 In

%

34

,5

22,8

20

,3

10,4

15

,4

6,4

7,6

12,0

8,

9 12

,8

mill

ion

ALL

154.

553

198.

547

239.

526

292.

871

328.

101

394.

316

416.

685

448.

427

507.

206

578.

036

650.

600

Agg

rega

te M

3 In

%

28

,5

20,6

22

,3

12,0

20

,2

5,7

7,6

13,1

14

,0

12,6


Progress of Some Important Macroeconomic Indicators (1996-2007)

Gross Domestic Product and Rate of Growth(mio ALL)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

In m

illio

n A

LL

0

5

10

15

20

In %

Gross Domestic Product and Rate of Growth(mio Euro)

01,0002,0003,0004,0005,0006,0007,0008,0009,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

In m

illiio

n Eu

ro0

5

10

15

20

25

In %

Inflation

-10

0

10

20

30

40

50

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

In %

Yearly Average End of period

Investments

010,00020,00030,00040,00050,00060,00070,00080,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

In m

illio

n A

LL

012345678

In %

mio ALL as % to GDP

Public Debt as % to GDP

38.138.839.840.5 39.241.540.942.4

36.9

20.21816.5

1921.121.8

16.6 17

15.810

15

20

25

30

35

40

45

1999 2000 2001 2002 2003 2004 2005 2006* 2007**

Internal Debt Foreign Debt

Yield T-Bills Primary Market

0%5%

10%15%20%25%30%35%40%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

TB 3-months TB 6-months TB 12-months

2006 3-month Treasury Bonds

Month Deposits Interest

TB Yield

Inflation Rate

January 4,33% 5,36% 1,38% February 4,28% 5,14% 1,35% March 3,96% 5,13% 1,50% April 3,95% 5,04% 2,37% May 3,85% 5,07% 3,08% June 3,74% 5,13% 2,43% July 3,62% 5,19% 3,25% August 3,66% 5,34% 2,82% September 3,65% 5,69% 2,55% October 3,85% 5,17% 2,25% November 3,86% 6,23% 2,91% December 3,94% 6,38% 2,51%

3 Months T-Bills

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

Jan.

Feb.

Mar.

Apr.

MayJu

ne July

Aug.

Sep.

Oct.

Nov.

Dec.

Months

%

Deposit Rates Yield Inflation Rate

A N N U A L R E P O R T ‘ 0 666


Months Deposits Interest

TBYield

InflationRate

Months Deposits Interest

TBYield

InflationRate

January 4,95% 6,72% 1,38% February 4,71% 6,33% 1,35% March 4,80% 5,95% 1,50% April 4,60% 5,62% 2,37% May 4,46% 5,48% 3,08% June 4,35% 5,43% 2,43% July 4,23% 5,49% 3,25% August 4,26% 5,72% 2,82% September 4,31% 6,24% 2,55% October 4,50% 6,68% 2,25% November 4,51% 6,86% 2,91% December

JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember

4,64% 7,06% 2,51%


4,95% 6,72% 1,38% 4,71% 6,33% 1,35% 4,80% 5,95% 1,50% 4,60% 5,62% 2,37% 4,46% 5,48% 3,08% 4,35% 5,43% 2,43% 4,23% 5,49% 3,25% 4,26% 5,72% 2,82% 4,31% 6,24% 2,55% 4,50% 6,68% 2,25% 4,51% 6,86% 2,91% 4,64% 7,06% 2,51%

6 Month T-Bills

0,00%1,00%2,00%3,00%4,00%5,00%6,00%7,00%8,00%

Jan.

Feb.

Mar.

Apr.

MayJu

ne July

Aug.

Sept

.Oct

.No

v.De

c.

Jan.

Feb.

Mar.

Apr.

MayJu

ne July

Aug.

Sept

.Oct

.No

v.De

c.

Months%



12 Month T-Bills

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

Months

%
