r NSMAEI

I-ife irrsurance compafiY

iq$MAfi I..IFE JSC

/ Financial statements

P-or thelear ended Decetztber t1, 201 2

with Independent auditor's report
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LIFE INSURANCE COMPANY NOMAD LIFE
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JSC

TABLE OF CONTENT

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I Page

t STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND

APPROVAL OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31,
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Independent auditors' report

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LIFE INSURANCE COMPANY NOMAD LIFE JSC
I STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE
PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS

I FOR THE YEAR ENDED DECEMBER 31, 2072

I The following statement, which should be considered in conjunction with the auditors' responsibilities as preseated in
the Independent ,\uditor's Report, was prepared vdth a pu{pose to distinguish auditors' and
responsibiJities in relation to the financial statements of Life
management's
insurance company NON,L\D LIFE JSC (the "Company").

I N{anagement is responsible for the preparation of the financial statements that present fairly the financial position of
Life insurance company NONL\D LIFE JSC (the "Company") as of December 37, 20'1,2, and the results of its
operations, cash flows and changes in shareholders' equity for the year then ended, in compliance with International

I Financial Reporting Standards (*IFRS").

In preparing the financial statemeflts, malragement is responsible for:

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propedy selecting and applying accounting policies;
applyrng proved and reasonable estimates ahd assumptions;

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compliance with IFRS and the disclosure
statemeflts;
preparing of
of all sigrrificant deviations ftom IFRS in the notes to the financial

the financial statements on the going concern basis, that the Company will continue its activities in the
foreseeable future.

I N{anagement is also responsible for:

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designing implementing and maintaining of effective and reliable functionality of internal control system;
maintaining of proper accounting system, allowing preparation of the Company's financial position information at
any time with reasonable accuracy, and to ensure compliance with IFRS;

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maintaining of accounting records in accordance with legislation of the Republic of Kazakhstan;
adopting of measutes within its competence to safeguard assets of the Company; and
detecting and preventing fraud and other irregularities.

I The {lnancial statements

4pn126,201.3:
of the Compary for the year ended December 31, 2072wete approved by l\fanagement on

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Chairwoman of the board

t Chief accountant

I 4pn126,2013

Republic of Kazakhstan,,\lmaty

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l{} Grant Thornton An instinct for growth*

Audit . Tax. Advisory

I rGnnt Thornlonr LLP
Kazakhstan, 050059, Almaty
13Al Farabi Ave
BC rNurly Taur, 1V offce 701
T +7 (727) 3111 340

t F +7 (727) 3111 341

almaty@gdcz.com
w\rfw.granttlomton.kz
www.gti.org

I
I Independent auditors' report
I To the trIanagement and shareholders of Life insurance company NON'L\D LIFE,JSC

Sfe have audited the accompanying financial statements, prepared in accotdance with International Financial Reporttng
Standards ('IFRS'), of Life insurance company NON{,\D LIFE, JSC (the "Company"), which comprise the statement of
T financial position as at December31,2012, and the statement of comprehensive income, the statement of changes in
equiqv and rhe statement of cash flows for the year then ended, and a summary of significant accounting policies and
other explanatory information (h.ereinafte r " ftlandtaI statements").
T IVl..rnagemento s responsitrility for the fi nancial statements

I Nlanagement is responsible for the preparation and fa:u presentation of these ftnancizl statemeflts in accordance utith
IFRS and for such intemal control as management determines is necessary to enable the preparation of financial
statements that are free from rl;rateial misstatement, whether due to fraud or effof.

I Autliiors' resp,lnsibilin-

Our responsibiliq'is to express an opinion on these ftnancizl statements based on our audit. We conducted our audit in

I accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statemeflts ate free ftorn rr'aterial
misstatement.

I An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statemeflts. The procedures selected depend on the auditors'iudgment, including the assessment of the risks of material
misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

t considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the pulpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall

I presentation of the Enancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

I ooinion.

ll a /
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O 2012 Grant Thomton. All rights resewed.
Grant Thomton LLP in Kazakhshn is a rn€mber firm wihin Grant Tho.nhn Intematonal Lld ('Gnant Thomton Intemational').
GoantThomton Intemational and the memberfirms are not a woddlvide parhershh. Seftices are delivered by $e memberfirms in&pendently. Ne 0000043
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t # GrantThornton ; An instinct ror srowth-
Audit.Tax.Advisorv
I
Opinion

I In our opinion, the financial statements of Life insurance company NOI.{,\D LIFE JSC as of December 31,2012 ar,d
for the period then ended present fuAy, in all material respects, the financial position as of Decembet 3t,2012 and its

I financial performance and cash flows for the period then ended in accordance with Intemational Financial Reporting
Standards.

I Other matters

The audit of financial statements of Life insurance company NOI\{AD LIFE JSC as of Decemb er 37, 201.1and for year
then ended, was performed by another auditor, who issued an audit opinion without qualifications on March 5,2072.

I V7ithout qualifying our opinion, we dtaw your attefltion to the fact that n 201.2 the Compariy has changed its accounting
policy regarding recording of commission expense related to acquisition of insurance coritracts and performed
restatement of coresponding lines of financial statements as of December 31, 2011 QrTote 5).
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I Gz*"-d- eLt*-^'\--

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I b7o"n*to* 1"1
Klorllrt

I "Grant Thomton" LLP

Qualification certifrcate #N{(D-
B'i.niwririn

Jannry 20,2012

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I Govemmental litense for audit services on the te
Nb0000087. issued bv the N{inistrv of Finance of the
tan: sedes X,I@IO
Jurte 27,20t2
- 2,

I lrpin 26,201.3

Republic of Kazakhstan,,\lmaty
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I .ights r6erwd.
O 201 3 Grant Thornion. All

I Grant Thornton LLP in KaakKan b a ffiber fim

Grant Thomion Inigmational and the ||Hbs firc
within Grant Thornton International Ltd ('Grant Thomton Intrmational').
are rct a rcrldwide partneFhip, Soryicss are delivsrod by the memb€r fims ind€p€ndently
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LIFE INSURANCE COMPANY NOMAD LIFE JSC
I STATEMENT OF FINAhICIAL POSITION
AS OF DECEMBEId.3I,ML2

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t ASSETS
Cash and cash equivalents 6
7
4m,755
5$n,6n_
t79,281
t,049,705
23,5L0
605,000
Term deposits in banks

I Reverse REPO transactioos

Investments available-for-sale
Investments held-to-maturitY
8
9
10
\7m,923
1,367,632
559,037
718,687
809,735
60p03
652,087
643,907
53,214 26,481

I Property, plant and equipmeot 11 68,975

13 2,689,631 L20,854 213,684
Insurance and reinsurance receivables
t2 2,425,784 7,298
Insurance reserves, teinusuret's share
17 16,337 26
Deferred income tax asset

I Other assets
TOTAL ASSETS
EQUITYAND LIABILITIES
t4 107,212 30,27; 1,7,477

70,972

I 15 515,883 47,262
Insurance and reinsurance payables
t2 10,176,547 1,743,391 989,935
Insurance reserves
94,028 )rrdJ 1,778
Corporate income tax PaYable
t6 7t0-277 49
Other liabilities

I TOTAL LIABILITIES
Share capital
Investments available-for-sale revaluatioa reserve
18
11,035,031
2,130,000
(771)
7,906,107
1,470,000
46,901
1,712,417
1,130,000
15,787

I 883,616 97.777 73
Retained accumulated defici
ITY t-614.678 1,131,050
TOTAL
TOTAL LIABILITIES AND 14,047 3,520,785 ,467

I Acnmpanlixgnotes on pags 5 to 49 an au in*gral pat of thuefnaxcial statenents

I Chairwoman of the board

I Chief accountant

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Apnl26,2073

I Republic of Kazakhstan,,\lmatY

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LIFE INSURANCE COMPANY NOMAD LIFE JSC
I STATEMENT OF COMPREHENSIVE INCOME
FOR YEAR ENDED DECEMBER 37, 2012

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I Gross earned premiums
Premiums ceded to reinsurance
Ptemiums, net of reinsurerts shate
19
19
18,434,765
(4,059,541)
74,374,6?1
2,405,090
(2,141)
2,402,939
Chanse in UPR

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19 Q,934,059\ (12.079])
Premiums earned, net of reinsurefrs shafe 77,440,565 2,390,860
Claims paid 2t (6,742,929) (1,156,091)
Change in claim resen'es 21 (31473,373) Q42,675)
t Claims net of reinsuretts share
Other income from insurarce. bonus
Net insurance income
-- 20
(10,2L6,242) (1,898,766)
1,996,790
3,227,173 492,094

I Commission
Commission
income
expense
Net commission income
23
21492
(1,639,084)
(7,636,592\
(337.165\
(337,1,6s)
Interest income 380,506 1,89,743

I Impairment reserve on investments held-to-matudty

Other operating income
Other income
(112,008)
268,797
299
1,1.35
9,048
199,926

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Salary expenses (353,422) (1 1 1,585)
Operating expenses 24 (495,356\ (106,193)
Operating expenses (849,778) (217.778\
Ptofit before income tax expense 1,003,540 137,017

I lqry"olC expense
income ta,\
Net profit for the yeat
77 (2171707)
785,839
(24,563)
1,12,514

I Othet comprehensive income

Change in inr,'es nents available-for-sale revaluatiofl reserve
hensive income fot the
(47,672\ JT.I I+

I Accompanling notet on pages 5 to 49 are an integral pat of thuefinancial statementi

I Chairwoman of the board

I Chief accountant

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Aprt26,2013

I Republic of Kazakhstan, -\lmaty

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 LIFE INSURANCE COMPANY NOMAD LIFE JSC
I STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 3L, 2012 (CONTINUED)

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I CASH FLOWS FROI\T OPERATING ACTIVITIES
Profit before income tax expense
Adiustments for:
1,003,540 137,017

Depreciation and amortization 11 21,413 17,877

I Revaluation of securities at fai:, vahrc

Change in acrued interest
Impairment of secudties
22
10
(387,044\
112,008
(191,308)
(1,135)

I Insurance reserves, net ofreinsurer's share

(Increase)/decrease in opetating assets:
Due from banks
6,407,372

(4,448,144)
754,754

(384,600)
Reverse REPO transactions 562,314 (498,1,86)

I Insurance and reinsurance receivables

Other assets
Increase/ (dectease) of opemting liabilities:
(2,568,777)
(37,442)
92,830
(72,195)

I Insurance and reinsurance payables

Other liabilities
Net cash flows ftom opetating activities before intetest received
429,123
138,303
Q3,650)
60,479

I and income tax paid 7,?32,666 (s4,777)

I Interest received on secudties 135,3t4 723,678
I Interest received on due from banks 97,601
Income tax paid (145,793) Qr,072)
activities
I Net cash flows provided by opetating 113141388 4'7 9,2c)

CASH USED IN INVESTING ACTIVITIES:

Purchase of property, plant and equipment and intangible assets (37,421) (38,661)
I Proceeds from sale of properfy, plant and equipment and intangible
I assets 246 110
t Purchase of investments available-for-sale (1,045,601) (74,480)
Proceeds from sale of investments available-for-sale 1.1.1,862
Purchase of investments held-to-maturity (650168)
I Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
(1'732'914)
(230,889)
Q32,058)

Increase of share capital 6601000 340,000

I Net cash flows ptovided by financing activities

Change in cash and cash equivalents
ofthe
660,000
241,474
179,281
340,000
755,777
23,510
Cash and cash equivalents, beginning year

I Cash and cash equivalents, end of the

Acnmpanling
year

notes on pages 5 to 49 are an integral

4201755 179,281

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I Chairwoman of the board

I Chief accountant
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Republic of Kazakhstan,,\lmaty

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LIFE INSURANCE COMPANY NOMAD LIFE
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JSC

NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 37, 2072

I GENERAL INFORMATION

I Life insurance companv NOMAD LIFE JSC (the "Company") pnmarily registered in Republic of
I{azakhstan in N{arch 2008 as Life insurance company Astana-Finance JSC in accordance with legislation of
Republic of Kazakhstan. The Company was re-registeted on Januaty 10,2012 (registration certificate 91075-

I 1910 -JSC) and given a new name Life insurance company NOMAD LIFEJSC.

The Companv has license \b2.2.47 dated February 1,201,2, which gives a right to perform business activity in
the foilorving sectors:

t - ]ife insurance and annuiry insurance;

- rroluntarr- general insurance: accident insurance and health insurance;

t -
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obligatorv general insurance: employee insurance from accidents;
re-insurance activiq.

I License was given bv the Committee on control and supervision of the financial market and financial
organization of Nationai bank of the Republic of I(azakhstan ("I{FN').

The Companv's registered address is: 050040, Satpayev st.,30A, block #1, Almaty, Republic of Kazakhstan.

I As at December 31, 2012 rhe number

136 emplovees).
of emplolyes in the Company was 176 employees (December 3!,2011:

I As of December 31, 201.2 sharcholders of the Company were Sultan N.S. (25%), resident of the Republic of
I(azakhstan, N{vnbayev A.S. (65%), resident of the Republic of I(azakhstan, Mamysheva A.A. (570), resident
of the Republic of Kazakhstan and Salamatova S.S. (5%), resident of the Republic of I{azakhstan Q0l1:
Sultan N.S. (i00%), resident of the Republic of I{azakhstan).
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2, BASIS OF PREPARATION

I These financial statements have been prepared on a historical cost basis, except as described in the accounting
policies and the Notes to these financial statements. The Company maintains its accounting records in

I I{azakhstani Tenge ("Tenge" or "KZT") if otherwise indicated. All values in these financial statements are
rounded to the nearest thousands, except when otherwise indicated.

Statement of compliance
I The financial statements have been prepared in accordance with International Financial Reporting Standards
("IFRS") as issued bv the Internarional Accounting Standards Board f'IASB').

I Going concern

I The Company's management believes that the Company will be able to generate sufficient cash to pay its
debts as and when they fall due. The management of the Company does not have any intention or neiessity
to Jiquidate or significandy reduce the size of its business.

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LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 3l, 2012 (CONTINUED)

I 2. BASIS OF PREPARATION (CONTINUED)

I Operating environment

Economy of the Republic Kazakhstan continues to be characteized by certain signs of a developing

of
countr).. These signs include, but are not limited to the existence of a currency that does not have free
I convertibiliqv ootside the country and the low liquidity of debt and equity securities on stock exchanges.
Prospects for future economic stability of the Republic of Kazakhstan significandy depend 9n th9
effec'tiveness of economic measures undertaken by the govefnment, as well as the development of legal,

I political, and controi svstems, i.e. the circumstances that are beyond the Company's conttol.

Impact of global financial crisis

I The ongoing global liqurdity crisis that began in ffid-2007 has resulted in, among other things, a lower level
of funding oflapital markers and liquidity in the banking sector and, in some cases, hig-her rates of interbank
borrowing and a verv high level of volatility in stock markets. The uncertainty of the global f:rl'ancial matkets
t has also Gd ,o the insoh'enqv of some banks and to the need for measures to support them in the U.S.,
'Western Europe, Kazakhstan, Russia and other regions. Undoubtedly, it is clear that today it is impossible to
assess the full impact of the ongoing financial crisis or to provide absolute protection from its effects.

Ir The sitgarion of lov liquiditv may also affect the Company's receivables, which in turn can affect their ability

ll
to repay their debts. Deteriorating operating conditions for debtors may also affect the cash flow forecasts
and of cost reduction of financial and non-financial assets by management. Using existing
^si.rrrtrent
information, management believes that it properly reflected the revised estimates of expected cash flows in
its assessment of impairment.

lr Due to reductions in production and consumption around the wodd, as well as falling prices for major export
commodities of the countrJ', the Government has developed a stabilization plan that includes increased

ll government spending for the maintenance and rcvitaltzation of business activity. The anti-crisis program also
ii-. to prevent jobluts and massive layoffs in the teal sector. Under these conditions, the influence and
presence of the state in the economy of the country significandy increased.

Management does not har,r an ability to reliably estimate the impact on the ftnlryial position 9f $e

lr Companv of any other potential deterioration of liquidity of financial markets and their increased volatiJity-
Management beie.res ii is taking all necessary steps to maintain stability and growth of the Company's

ll activities in the current circumstances.

Foteign currency translation

lr
The financial statements are presented in Tenge, which is the functional currency and presentation currency
of the Company.

Transactions in foreign currencies are initially recorded in the functional currency at the market rate prewaiJing
at the transaction date. N{onetarv assets and liabilities denominated in foreign currencies ate translated at the
exchange rate prevailing at the balance sheet date. A11 foreign exchange differences are included to the

l: statement of comprehensive income as income or expense for the period.

Weig\ted
as official
^verage
currency
currency exchange rates/stablished by the l{azakhstan Stock Exchange (.'KASE") are used
exchange rates in the Republic of l(azakhstan.
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 37, 2072 (CONTINUED)

I 2. BASIS OF ITREPARATTON (CONTINUED)

Recognition of elements of financial statements

T
These financial statements include all the assets, liabilities, equity, income and expenses, forming elements the
financial statements. All elements of the financial statements are presented in the form of line items.
I Combining multiple elements of the financial statements in a single atticle carried based on their
character-istics (functions) in the Companyt activities. .Each material class of similar items is presented
separately in the financial statements. Articies of different nature or function are presented separately unless

I they are immaterial.

Foreign currency translation

I The currencv exchange rates of KASE as of December 31, 201.2 were 150.74 Tenge to 1 US Dollar. This rate
was used to translate monetary assets and liabilities denominated in US dollars as of December 31, 201,2
pecember 31.,201.1.: 1,48.40 Tenge to 1 US Dollar).
T
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I Preparation of Frnancial statements in accordance with IFRS requires from the management of the Company
to develop estimates and assumptions that have effect on amounts of assets, liabilities, revenue and expenses
for the reporting period as a result actual results may differ from these estimations. Differences between the

I estimations and acrual amounts most likely result from insurance reserves, setdement of claims and
determination of fain value of {nancialinstruments.

Insutance contracts
I Insurance contaacts are those contracts when the Company (the insuret) has accepted significant insurance
risk from another party (the policyholders) by agreeing to compensate the policyholders if a speciFred
I uncertain future event (the insured event) adversely affects the policyholders. As a genera| guideline, the
Company determines whether it has signifrcant insurance risk by comparing benefits paid with benefits
payable if the insured event did not occur. All liabilities and rights, adsing ftom deposit component of the

I insurance contract are recorded ifi full. Insurance contracts can also transfer financial risk.

Insurance contracts are further classified as being either with or without discretionary participation features
11 @PD. DPF is a contaactual right to teceive, as a supplemeflt to gua-ranteed benefits, additional benehts that
arei
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. Likely to be a significant portion of the total contractual benefits;

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The amount or timing is contractually at the discretion of the issuer;
That are contractually based on the profit or loss of the company.

I Financial assets

Initial recognition

I Financial assets in the scope of IAS 39 are classified as either financial assets at fair value through profit or
loss, h"eld-to-maturity investments, avallablyfor-sale financial assets or receivables, as appropriate.

I The Company determines the classification of its financial assets upon initial recognition.
-
All financial assets are recognized initially at far value. In the case of investments not at fair value through
I profit or loss, they are recorded fan value plus directly attributable transaction costs. The Company
^t
determines the classification of its financial assets upon initial recognition, and subsequendy can reclassi$'
t
financial assets in certain cases.

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LIFE INSURANCE COMPANY NOMAD LIFE
t NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, ?./J72 (CONTINUED)
JSC

I 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I Financial assets (continued)

Purchases or sales of financial assets that require delivery of assets within a time frame established by

I regulation ot convendon in the marketplace (regulat way trades) are recognized on the trade date, i.e., the date
that the Company commits to purchase or sell the asset.

I
Date of recognition

All regular purchases and sales of finanaal assets are recognized o.t ih. settlement date i.e. the date that an
asset is delivered to or by the Company. Regular way purchases of ftnancial instruments that will be

I subsequently measured at fair value betq/een trade date and settlement date are accounted for in the same way
as for acquired instruments. Regular way purchases or sales are puchases or sales of financid, assets that
require delivery of assets within the period generally established by regulation or convention in the

I marketplace.

Cash and cash equivalents

I Cash and cash equivalents consist of cash on hand and current accounts.

Term deposits

I In the normal course of business, the Company maintains time deposits with banks for different periods.
Term deposits ate measured at arnorttzed cost using the effective interest method.

T Investments available-for-sale

Investments available-for-sale are those non-derivative financial assets that are designated as available-for-sale

I or are not classified as (a) loans and accounts receivable, (b) securities held-to-maturity, (c) financial assets at
fair value through profit and loss.

I Shares and term bonds on institutional market are classifi.ed as available-for-sale and recognized at fair value.
The Company also has that ate not on institutional market but also are classifi.ed as AFS and rccogntzed at
fair value (because the management believes that far value can be determined reliably). Gains and losses,
arising from changes in fair value, ate recognised in other comprehensive income as part of revaluation
I investments fund, except for the cases when the investrnent is determined to be impaired, with permanent
character, interest income calculated using the effective interest rate afld exchange rate, which recognized in
income statement. At disposal or impairment of financial asset accumulated gains and losses that has been

I recognized in tevaluation investment fund refet to financial result in the period when disposal and
impairment occurred.

I The fair value of monetary assets in foleign cuffency classified as AFS is determined in the same foreign
currency and recalculated at the exchange tate at the reporting date. Foreign exchange differences attributable
to gains or losses are determined based on the amortized cost of the moneary asset. Otler foreign exchange
differences are rccogruzed in other comprehensive income.
I Instruments classified as AFS not listed n ar{acnve market and which fair value cannot be reliably measured
rrrclSi"ed at cost net of impairment losJes, measured at the end of each reporting period.

I ^r.

I
I
I
T
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 3L, 2072 (CONTINUED)

T 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I Investments held-to-maturity

Non-derivative Frnancial assets with fixed or determinable payments and frxed maturity are classified as held-

I to-maturity when the Companv has the positive intention and ability to hold them to maturity. Investments
intended to be held for an undefined period are not included in this classification. Held-to-maturiry
investments ate subsequendv measure d at amorttzed cost by using effective interest rate, net of impairment.

I If the Companv sells or reclassifies HTN{ for amount of more than material amount (except of special
events), full categorr should be reclassified as AFS. N{oreover, the Company will not have opportunity to
classify financial assets as HTNI during next two years.

I Impaitment of financial assets

I The Companv assesses at each reporting date u'hether there is any objective evidence that a financial asset or
a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be
impaired if, and onl.v if, there is objective evidence of impairment as a result of one or more events that has
occurred after the inidal recognition of the asset (an incurred 'loss event) and that loss event has an impact

I on the estimated future cash flows of the financial asset or the group of financial assets that can be reJiably
estimated.

I Evidence of impairment mav include indications that the debtors or a group of debtors is experiencing
significant Frnancial difFrculty, default or delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults.
T
Derecognition of financial assets and liabilities

I A financial asset (or, where applicable a part

is derecognized when:
of a financial asset or part of a group of similar financial assets)

T o the rights to receive cash flows from the asset have expired;
o the Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a 'pass-
t o
through' affangement;
and either (a) the Company has tansferred substantially all the risks and rewards of the asset, or (b)
the Company has neither transferred nor retained substantiah all the risks and rewards of the asset,

I but has transferred control of the asset.

V4ren the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the
T asset nor transferred control of the adset, the asset is recognized to the extent of the Company's continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee ovir the transfered
asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Company could be required to repay.
T
Rein€urance /
I The Company cedes insurance risk in the normal course of business. Amounts recoverable from reinsurers
are estimated in a manner consistent with the outstanding claims provision or settled claims associated in

t accordance vzith the related reinsurance contracr.

I
I
 t
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENpED DECEMBER 3l, 2012 (CONTINUED)

I 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reinsurance (continued)
T
Reinsurance assers are review-ed for impairment at each reporting date or more frequently when an indication
arises during the reporting year.. Impairment occurs when there is objective evidence as a
I of impairment
res.rlt
-of
an evenr that occutred after initial recognition of the reinsurance assets that the Company may not
receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable
impact on the that the Companv will receive from the reinsurer. The impairment loss is recorded in

I "*orr.ri.
the statement of comprehensire income.

Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders.

I Insurance receivables

Insurance receivables arc rccogruzed when telated income was earned. Review of insurance receivables fot
I impairment.is performed when there is an evidence
impairment is tecogrused in statement of comprehensive
that carrying
income.
amount may not be recovered and

Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in

ll derecognition of Frnancial assets have been met.

Property, plant and equipment

It Property, plant and equipment are carried

subsequent accumulated impairment losses.
at cost less any subsequent accumulated depreciation and

It Depreciation of an asset begins when it is available for use. Depreciation is calculated on a straight-line basis
over the following estimated usefirl lives:

lr Computers
\rehicles
10 years
5 ears

It Software
Other
5 ears
5 ears

ll The asset's residual values, useful lives

financial year-end.
and methods are reviewed, and adjusted as appropriate,

Costs related to repairs and renewals are charged when incured and included in other operating
at each

expenses'
unless they qrralry for capitalization.

Intangible assets

Intangible assets include software and licenses. Intangible assets are measured at cost at recognition. After
initial recognition, intangible assets arc caried at cost less any subsequent accumulated amofiirzation and
subsequent accumulated impafument losses. Intangible assets have limited useful life. Intangible assets are
amortized during their usefirl lives, which i;i 5 years, and reviewed for impairment if there is any evidence of
impa$ment of the intangible asset. Peri/d and methods of amortization of intangible assets with limited
useful lives are reviewed for impairment as at each reporting date as a minimum.

10
l LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FORYEAR ENDED DECEMBER3I' 2012

fl 3. sUMtsTARY oF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

t Provisions

provisions are recognised rv-hen the Company has a present legal or consffuctive obligation as a result of past
events, and it is probable that an outflo$i;f i.ro.rr.., embodying
economic benefits will be required to settle

I the obigatior,
"rrd ^
reliable estimate of the amount
some or all of a provision to be reimbursed, the
of obligation
reimburslement
related to
can be made. \X4rere the Company expects
is recognized as a sepatate asset but only
provisions ate recognized in the statement
when the reirnbursement is rirtually certain. Expenses

I of comprehensive income, net of teimbursement'

Deduction from employees' remuneration

I The Compan]- pa]-s social ta- to the Republic of Kazakhstan in accotdance with
I(azakhstan on a flat rate of 1L0/o of salaty'
the laws of the Republic of

I The Compan\- also withholds up to 1070 limited to 1.30,793 Tenge ln 201'2 (2011:
1L9,993 Tenge) fro- th. ,"l"r,o if it, .*ployees as the employees' contribution to
up to 1'0o/o limited to
theit designated pension
funds.

I Taxation

The current income 12s expense is calculated in accordance vzith the regulations of
the Republic of

lr Kazakhstan.

De;ferred income tax

It Deferred income tax is pror,-ided using the liability method on temporary differences
between the tas bases of'assets and fa;iliti.s and their carcyngamounts
for ftnancial
at the reporting date
reporting PurPoses.

It Deferred income tases assets are provided for all temporary differences, unused
forward and unused losses carried forward to the extent that r,rfhcient
temporaqr differences, unused deferred assets carried forward and
taxable
unused
proht

recognition
losses
of
deferred assets carried
will be available to allow
carried
asset
forward to be
ol liability in a
utiliied, .*."p, where the deferred income tax arises from the initial .an
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profrt or loss'

l: The carrl.ing amounr of deferred income tax assets is reviewed at each reporting date
extent that it is ,ro long.r probable that sufficient taxable ptofit will
deferred income tax aiset^to be utilized. Unrecognized deferred income
be available
tax
to
assets
that
allow
are
future
and reduced to the
all or part of the
reassessed at each
profit will
reporting date and are rccognized to the extent ttat it has become probable
taxable
allow the deferred tax asset to be tecovered'

Reinsutance assets

The Companv cedes insurance risk in the normal course of business for all of its businesses'
Reinsutance
ftom reinsurers
ur..,. ,"fr.sent balances due from reinsurance companies. Amounts recoverable associated with the are

ertirrylt.d in a manner consistent with th9loutstanding ciaims provision or setded

claims
reinsurer's policies and are in accordance with the related reinsurance conffact'

Reinsurance assets are reviewed for impairment at each reporting date or

more frequendy when an indication
of impairment arises dudng the reportin g yeaf. Impairment occufs when there is obiective evidence may
as a
I]9t
Company
,.r..lt tf an evenr that occtrired aftei initial iecognition of the reinsurance assets that the
reliably measurable
receive all outstanding amounts due under the te-rms of the contract and the
event has a

impact on the u-orrni, that the Company will receive from the reinsuter. The impairment loss is recorded in
the statement of comprehensive income'

1,',t
t
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 37, 2072 (CONTINUED)

I 3. SUM},IARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I Reinsurance assets (continued)

Gains or losses on bur-rng reinsutance arc recogniz,ed in the statement of comprehensive income immediately
of purchase and are not amortized. Ceded reinsurance affangements do not relieve the Company
t at the date
from its obligations to policrholders. Premiums and claims are presented on a gross basis for ceded
reinsurance. Reinsurance assets are detecognized when the contractual rights are extinguished
or expire or
when the contract is transferred to another party.

I Life insurance contract liabilities

I Life insurance liabilities are rccogdzed when cont{acts are entered into and premiums are charged. These
liabilities are measured br using the gross premium method. The liability is determined as the sum of the
discounted r.alue of the expected future benefi.ts, claims handling and policy administration expenses, less the
discounted value of the espected premiums that would be required to meet the future cash outflows based
t on the valuation assumpdons used. Furthermore, the liability for life insurance contracts comprises provision
fot claims outstanding, rr-hich includes an estimate of the incurred claims that have not yet been reported to
the Companr. Adjustments to the liabiiities at each reporting date are recorded in the statement of
t comptehensive income in gross change in insurance contract liabilities. The liability is derecognized when the
contract expires, is discharged or is cancelled.

I Liability adequacy test

At each reporting date, an assessment is made of whether the recognized insurance liabilities are adequate by
using a iiability adequaq' test. The liability value is adjusted to the extent that it is insuffrcient to meet future
benefits and expenses. In performing the adequacy test, current best estimates of future contractual cash
T flows, including related cash flows such as claims handling and policy administration expenses, as well as
investment income from assets backing such liabilities, are used. Any inadequacy is recorded in the statement

t of comprehensive income bv establishing an unexpired risk provision. In subsequent periods, the liability for
a block of business that has failed the adequacy test is based on the assumptions that are established at the
time of the loss recognition. The assumptions do not include a mary1n for adverse deviation. Impairment
losses resulting from liabilin- adequag' testing can be reversed in the future years if the impairment no longer
t exists.

Uability adequacy tests are performed for each line of business of insurance portfolio on the basis of
I estimates of furure claims costs.

For long duration contracts, if acotal experience regarding investment yields, mortality, morbidity,
I terminations or expense indicates that existing contract liabilities, along with the present value of future gross
premiums, uzill not be sufFtcient to cover the present value of future benefits, then a premium deficiency is
recognized.

I Non-life insurance contract liabilities

Non-life insurance contract liabilities include the outstanding claims provision and the provision for unearned
t ptemium. The outstanding claims provision is based on the estimated ultimate cost of all claims reported but
not setded at the reporting date and incurgad but not reported (IBNR), together with related claims handling
costs.Delays can be experienced in the n5tification and settlement of certain tlpes of claims, therefore the

t ultimate cost of these cannot be known with certainty at the reporting date. The liability is calculated at the
reporting date using rar'ge of standard acntanal claim projection techniques, based on empirical data. The
^ for the time value of money. No ptovision for equalization or
Iiability is not discounted catastrophe reserves

I
is recognized. The liabilities are derecognized when the obligation to pay a cla:rn expires, is discharged or is
cancelled.

I 1,2

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
T NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 37, 2072 (CONTINUED)

I 3. SLrv{}f.{RY OF SrGNrFrC,{-\T ACCOUNTING POLICIES (CONTTNUED)

I Non-life insurance contract liabilities (continued)

The pror''ision for unearned premiums represents that portion of premiums received or receivable that relates
to risks that harc not \-er espired at the reporting date. The provision is recognized when contracts are
t entered into and premiums are charged, and is brought to account as premium income over the term of the
conffact in accordance rrith the pattern of insurance senrice provided under the contract.

I The outstanding claims prosision of all claims incurred but not setded at the reporting date are measured on
a case-b1'-case basis, based on the facts and circumstances available at the time the provisions are established.
The estimates reflect management's informed judgment of claims based on general insurance reserving

I practices and knos,-ledge of the natLLre and value of a specific type of claim. These provisions are regulady
re-evaluated in the ordinafl- course of the settlement process and adiustments afe made as new information
becomes avaii.able.

I IBNR provisions are estabiished to recognize the estimated cost of losses that have occurred but where the
Company has not vet been notified. Since nothing is known about the occurreflce, the Company relies on its
past experience, adjusted for current trends and any other relevant factors. IBNR provisions are estimates

I based on prudent acnnri,al and statistical projections of the expected cost of the ultimate settlement and
administtation of claims. The analr.ses are based on facts and circumstances known at the time. Trends
relating to claim frequeno; ser-erifi' and time lag in reporting are exampies of factors used in projecting the

I IBNR provisions. IBNR pror.isions are reviewed and revised periodically as additional information becomes
available and actual claims are reported.

At each reporting date, the Companv reviews its unexpired risk and a liability adequacy test is performed to
I determine whether there is anv overall excess of expected claims and deferred acquisition costs over
unearned premiums. This calculation uses cutrent estimates of future contractual cash flows after taking
account of the investment reftun expected to arise on assets relating to the relevant non-life insurance

I technical provisions. If these esdmates show that the carrying amount of the unearned premiums (ess
related deferred acquisition costs) is inadequate, the deficiency is recognrzed in the income statement by
setting up a provision for premium deficiency.

I Discretionary Participation Features (DPF)

A DPF is a conractual right that gives holders of these contracts the right to receive as a supplement to
I guaranteed benefits, significant additional benefrts which are based on the performance of the assets held
within the DPF portfolio whose amount or timing is contractually at the discretion of the Company. Under
the terms of the contracts surpluses in the DPF funds can be distdbuted to policyholders and shareholders

I based on ptopottion established bv Board of Directors. The Company has the discretion over the amount
and timing of the distribution of these surpluses to poJicyholders. All DPF liabilities including unallocared
surpluses, both guaranteed and discretionary, at the end of the reporting period are held within insurance

I contract liabrhries as appropriate.

Insurance and reinsutance payables

t Fayables on direct insurance business comprise insurance benefits due but not yet paid, premium refunds not
paid and commissions due to agents. Payabfes are expressed at actual amount to be paid.

I Payables on reinsurance business comptise net reinsurance premiums due

brokers in connection with reinsurance business ceded.
to reinsurers and reinsurance

Share capital
I Share capital is recognized at initial cost.

I I3

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 3L, 2072

l SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I Lease

Operating - Companl at lessee

I Leases of assets under which the risks and rewards of ownership are effectively retained by the lessor are
classified as operating leases. Lease payments under an operating lease ate recognised as expenses on a
straight-line basis ovet the lease term and included into other operating expenses.

I Revenue recognition

I Gross premiums

Gross recurring premiums on life insurance contacts with DPF are tecognized as revenue when payable by
the policyholder. For single premium business, revenue is recognized on the date on which the poliry is

lr effective.

Gross general insurance written premiums comprise the total premiums receivable for the whole period of
cover provided by contracts entered into during the accounting period. They are recognized on the date on

It which the policy cofnlrrences. Premiums include any adjustments arising in the accounting period for
premiums receivable in respect of business written in prior accounting periods. Premiums collected by

lr
intermediaries, but not yet received, are assessed based on estimates from underwriting ot past experience and
are included in premiums wdtten.

ll Unearned premiums are those proportions of premiums wdtten ln a yeat that relate to periods of risk after
the reporting date. Unearned premiums are calculated on a daily pro rata basis. The proportion attributable to
subsequent periods is deferred as a ptovision for uneatned premiums.

Gross reinsurance premiums

Gross reinsurance premiums on life insurance contracts arc recognized as an expense on the earlier of the

l: date when premiums are payable or when the policy becomes effective.

Gross general reinsurance premiums wtiften comprise the total premiums payable for the whole cover
provided by contracts entered into during the period and are recognized on the date on which the policy
incepts. Premiums include any adjustments arising in the accounting period in respect of reinsurance
contracts incepting in prior accounting periods.

Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods

l: of risk after the reporting date. Unearned reinsurance premiums ate calculated on annual proportional basis.
Proportion related to the following period is recorded as unearned premium tesetve.

Commission expenses

Commission expense paid to agents and brokers that a vary and directly attributable to insurance contfacts.

Commission is recognized as expenses in period when such service was received (fJote 5).
fe
Investment income

Interest income is recognised in the income statement as it accrues and is calculated by using the effective
interest rate method. Fees and commissions that are an integral part of the effective yield of the financial
asset or liability are recognised as an adjustment to the effective interest rate of. the instrument.

T4
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS'
FOR YEAR ENDED DECEMBER 37, 2072

I 3. S{IMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I Investment income (continued)

Investment income also includes dividends when the right to receive payment is established. For listed
securities, this is the date the security is listed as ex dividend.
I Realised gains and losses

I Realised gains and losses recorded in the income statement on investrnents include gains and losses on
fnanc:ralassets. Gains and losses on the sale of investments are calculated as the diffetence between net sales
proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction

t Gross benefits and claims

Gross benefits and claims for life insurance contracts with DPF include the cost of all claims arising during
I the year including internal and external claims handling costs that ate direcdy related to the processing and
settlement of claims and policyholder bonuses declared on DPF contracts. Changes in the gross valuation of
insurance contract liabilities with DPF are also included. Death claims and surrendets are recorded on the

I basis of notif,cations received. Maturities and annuity payments are recorded when due.

General insurance claims include all claims occurring during the year, whether reported ol not, the related
internal and external claims handling costs that are directly related to the processing and setdement of claims.
I Reinsurance claims

I Reinsurance claims ate recognised when the related gross insurance claim is recognised according
terms of the relevant contract
to the

I New and revised IFRS

At the date of
-
authorizatioo
issued but not effective

of
these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective, and have not
I been adopted eatly b,v the ComPany.

Management anticipates that all of the relevant pronouncements will be adopted in the Company's

I u..o.r-ntirrg policies ior the first period beginning after the effective date of the pronouncement. Information
on ne.w ,Ita.td"tds, a-endmenti and interpretations that are expected to be relevant to the Company's
financial srarements is provided below. Certain other new standards and interpretations have been issued but

I ^te
not expected to have a mateial impact on the Company's fnancizl statements.

Amendments to IAS l Presentation of Financial Statements

l IAS 1 Amendments requhe an entity to group items presented in other comprehensive income into those
that. in accordance withother IFRSs: (") *ill flot be reclassified subsequently to profit or loss and @) will be
reclassified subsequently to proht or loss when specific conditions are met. It is applicable fot annual periods

I beginning ori or after July 1, 201.2. The Company's management expects this will change the current
pr.qStrtutio.r of items in other comprefensive income; however, it will not affect the measurement or
recognition of such items.

I Existing choice of elements presentation of other comprehensive income either befote tax or after tax
r.mainJd unchanged. Howe-rer, if the items of othet comprehensive income are presented before tax,

I changes to IAS 1 iequires that the tax relating to the category was presented separately.

I 15

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, 2072

I 3. SUMI\,IARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards, amendments and interpretations to existing standards that ate not yet effective
and have
I not been adopted ear$ by the Company

At the date of authodzadon of these financial statements, certain new standards, amendments and
interptetations to esisting standards have been published by the IASB but are not yet effective, and have not
been adopted earlv br the ComPanv.

Management anticipates that all oi the releyant pronoun-cements will be adopted in the Company's
n..orri,ing policies fo. the fitst period beginnng after the effective date of the pronouncement. Information
on riew Jandards, amendmeot-s and interpreotio.tt that are expected to be relevant to the Company's
financial statements is prosided below-. Cerrain other new standotds and interpretations have been issued
but
afe not expected to hate a riraterril impact on the Company's financial statements'

Amendments to IFRS ? Financial Instruments: Disclosures

Requirements to disclosure of information on transfer of assets are increased, and for bettet understanding
of possible risks, remaining wirhin the entig uansferring assets. In accordance with these amendment
additional disclosures t.qoir.d in case of unproportionally significant amount of transactions on ttansfer
^t.
of assets, executed at the end of the reporting period'

IFRS 9 Financial Instruments

Adoption of IFRS 9 fromJanuarv 1,20L3 is obligatory, early adoption is allowed.

The IASB aims to replace L{S 39 Financial Instnrmefits: Recognition and Measurement in its entirety, IFRS 9
is being issued in phases. To date, the chapters dealing with recognition,,classification, measurement and
d.r".of-,'ition of financial assets and liabilities have been issued. These chaptets are effective for annual
periodJ beginning Janua4. 1, 201.3. Further chapters dealing with impairment methodology and.hedge
u..orrnting"^r..i1-b.itrg'developed. The Compatry's -anagement can't yet assess the impact of_this new
standard on the Compariy's finarrcial statements. However, they do not expect to imp-lement IFRS 9
until all
of its chapters have been published and they can comprehensively assess the impact of all changes.

IFRS ilt Fair Value Measutement

IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about
fair value measurements. IFRS 13 applies prospectively for annual pedods beginning on or after Januaty 1,
201.3. Management has yet to .ompl.te its assessment of their impact on the Company's fnancial
statements.

The Company plans to adopt this standard starting from January 1, 201'3 and now is in the process of
reviewing its impact dn the Company's ltnancial statements'

4, SIGNIFICANT ACCOLINTING JUDGMENTS AND ESTIMATES

The preparation of the Company's f,nancial statements requires management to make fu{g19nts, estimates
irrrr-ptions that affect-the reported amounts of revenues, expenses, assets and liabilities, and the
"rd
disclpsure of contingent liabilities, a[ the4eporting date. Howeveq uncertainty about these assumptions_ and
estirfiates could resit in outcomes ttrat'.""td t.q.rit" arr;ratetral adjustment to the carrying amount of the
asset or liabilitv affected in the future.

In the process of applving the Company's accounting policies, mlnaqemelt has used the following iudgments
and made estimateJ which significantly affect the amounts recognized in the financial statements:

1.6
t
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, 2072 (CONTINUED)

I 4, SIGNIFICANT ACCOUNTINGJUDGMENTSANDESTIMAIES(CONTINUED)

t Allowance for bad debt

The detetmination of allowance for bad debt requires from the management assumptions based on the best
estimates of the Company's abil-ity to reaize these assets. Due to changes in overall economy and othet
t similar circumstances after the reporting date, the management can make estimations that can differ from
estimations made dudng the preparation of these financial statements.

I Deferred tax assets

Deferred tax assers are assessed at each reporting date and are adjusted accotding to the likelihood of
suffrcient taxable profits available in the future, against which all or pan of the asset may be offset.
I Assessment of that probability includes judgments based on the expected performance.

Useful life of ptoperty, plant and equipment and intangible assets

I The Companv considers useful life of property, plant and equipment and intangible assets at the end of each
reporting period. Estimation of the useful life of the asset is dependent on factors such as the economic use,

I program for repair and maintenance, technological improvement and other business conditions. Management
review of the useful lives of property, plant and equipment and intangible assets reflects t1le relevant
information at the date of these frnancial statements.

I Estimation uncertainty

In the process of appiying the Company's accounting policies, management has used its judgments and made
I estimates in determining the amounts recognised in the financial statements. The most significant use of
judgments and estimates are as follows:

I Taxation

Tax, currencv and customs legisiation of the Republic of l{azakhstan is subject to varying intelpretations, and
changes, which can occur frequendy. Management's interpretation of such legislation as applied to the
I transactions and activiw of the Comp any m y be challenged by the relevant regional and state authorities. As
such, signifrcant additional raxes, penalties and interest may be assessed. Fiscal periods remain open to teview
by the authorities in respect of taxes for five caiendar years proceeding the yeat of review. Under cettain
I circumstances reviews mav covet longer periods.

There are uncertaintv about tnterpretatlon of new Tax Code, which came into on January 1', 2012, amounts

I and terms of future taxable income as well as temporary differences that affects on deferred income tax.
Taking into account wide spread of such assumptions or future changes in these assumptions there can be
necessity in future cofrections on income and expenses fiom income tax that akeady recognized.

I The management believes rhat as at December 31, 201,2its interpretation of legislation appropriate and the
Company's position on tax, currency and customs legislation will be approved.

t Fair value of financial instruments

As d&cribed in Note 25, forestimation {, ,n value of financialinstruments, the Company uses method,

I which takes into account primarily data which is not based on the market data. In Note 25 there is detailed
information about key assumption used in estimation of fur value of Fnancial instruments as vzell as detailed
analysis of sensitivity of estimates in regard to these assumptions. The management believes that selected
methods of estimations and used assumptions are appropriate for fak value estimation.
I
I L7

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS'
FoR YEAR ENDED DECEUEEB!119g CONTINUED

I 4. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

(CONTINUED)

I Valuation of insurance contract liabilities

Ii;fe insuran ce contract liabilities

I The liability for life insurance contracts is either based on cutrent

at inception of the conrract, reflecting the best estimate at the
of
assumptions or on assumptions established
time' A[ contracts are subiect to a liability
future cash flows'
ua.q"*y test, which reflect -"rug.r.rJrrt's best current estimate
I The main assumptions used telate to mortality, -*o-rbidi.,y, Igngwity, expenses.
Company bases mortaliry and morbidity on standard and'natiorial
mortality
and discount rates' The
industry tables which reflect
unique*risk exposure' product
historical expertences, adiusted when appropriate to reflect^the Company's.
I character-istics, target -urk.r,
^rd
o*'.luitrs severity and frequencyixperiences'
insure risk related to longevity, prudent allowance is made based
bn established
For
mortality
those
levels'
contracts that

I Estimates are also made as to future investment income

contracts. These estimates are based on current market returlls, "r
arising from the assets backing life insuance
*"[ as expectations about future
based on either level of expenses existing at
economic
and financial developments. Assumpdons on future expense ate

I the date of issuance of insurance contract for life iniurance contracts,

annuity insurance contfacts. Discount
Company's own risk exPosure.
fates afe based on cuffent
ot statutory level of expenses for
industry risk rates, adjusted for the

I The car'ing value at the reporting date of life insurance contracts liabilities
and 201,0:zero), the *r.1-j -rdoif urrrrnity insurance liabilities
is 1,8,231' thousands tenge (2011
is 4,21'6,680 thousand tenge (2011: 1',729,840
thousand tenge; 2010: 989,302 thousand tenge)'
I N o n- /zfe i ns uran ce contract lia bi litiet

expected ultimate cost of claims

I For non-life insurance contracts, estimates have to be made both for the
reported at the reporting date and for the expected ultimate cost of
the reporting date (IBNR). It can take a ,igpi€.ot t p.191-:f time
claims incurred, but not yet reported' at
before the ultimate claims cost can be
established with certain ty and, for some typ;f policies, IBNR claims
form the maiority of the liability in the
I s tatement o f fitancial Position.

standatd acfuadal claims proiection

rr The ultimate cost of outstanding claims is estimated by using a taflge of
techniques, such as the Chain Ladder method'
I
claims development experience
The main assumpuon undedying these techniques is that a company's past

I can be used to project futore .ti'i*s de-.elopment and hence ultimate

claims costs' As such, these methods
upol"t. th" d.-ritop-ent of paid and incured losses, aver ge costs pef claim
and claim numbers based on
"*t observed development of eadier years and expected lors Ltior. Historical claims development is mainly
the
types. Large claims are usually separately
analyzedby accideni years, by signifrcant business lines and claim
I addressed, either by u.itrg t.rl*it at the face value of loss adiuster
.Jti-ut.t or separately projected in order
to reflect their futute de#lopr.,..rl In most cases, no explicit as-*umPtions ul" T?q. legarding.
future.rates of
implicit in the historical claims
claims inflation or loss ratios. Instead, the "ssomptiorn used are those

I development data on which the ptoiectigns are based'

.r/
Similar judgments, estimates and assumptions afe employed in the assessment
of adequacy of provisions for
insurance contract
,r.r."..r.d fr.-irrrrr. The carrying ,ralre as at 3L December 201'2 for these general
I liabfities is 4,960,151 thorrsand teige (2011: 1,2,397 thousand tenge; 2010: 318 thousand tenge)'

I
t 18

I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, ?]72 (CONTINUED)

4. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

Allowance for impairment of insurance receivable and reinsurance assets

The Company regulady reviews its insutance receivables and reinsurance assets to assess impairment.

Irrecoverable amounts and specifrc credit risks are written off by charging dfuecdy against gross premiums.
A.llowances for impairment based on past expedence are necessary in respect of receivables due from
policyholders and agents/brokers on direct insurance and in respect ofcounterparties on reinsurance.

5, RESTATEMENTANDRECI.ASSIFICATIONS

In 201.2 the Company's management decided that agent commission should be fi:lly expensed when the
insurance (reinsurance) contract is concluded for fatr ptesentation of financial statements. In accordance with
IAS 8 "Accounting policy, changes in accounting estimates and effors" financial statements were restated.

In addition, the Company performed several reclassi-fications to bring financial statements in conformity with
the presentation of ltnancial statements for the year ended December 37,201,2.

Results of restatements and reclassifications disclosed below:

STATEMENT OF FINANCIAL POSITION

ASSETS
Cash and cash equivalents 719,28'1. 179,281,
Term deposits in banks 7,049,705 1,049,705
Reverse REPO transactions 559,037 559,037
-\vailable-for-sale investment secudties 718,687 778,687
Investment held-to-ma rurit1' 809,735 809,735
Property, plant and equipment 53,214 53,274
Insurance and reinsurance receivables 720,663 797 120,854
Insurance reserves. reinusurer's share 74,966 Q4,966)
Advances g{ven 19,832 L9,832
Deferred income tax asset
Other assets 30,463 Q0,023) 30,272
TOTAL ASSETS 3,595,751 - (74,966) 3,520,785
EQUITYAND LIABILITIES
Insurance and reinsurance oavables 1.1.2,444 /(( 1ar\
\vJrLe-) 47,262
Insurance reserves 1,743,391 1,143,397
Corporate income ta-x payable 5,183 5,183
Other liabilities 45,089 65,182 - 110.271
TOTAL LIABILITIES 7,906,707 1,906,1,07
Share capital 1,470,000 370,000
Investments available-for-sale revaluation
reCrve / 46,901. 46,907
Retained eamings 772,743 oq.seit 97,777
TOTAL EQUITY 1.689.644 1..674.678
TOTAL LIABILITIES AND EQUITY 3,595,751 3,520,785

1.9
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER3I,MTZ (CONTINUED)

I 5. RESTATENTENT AND RECr.-ASSTFTCATTONS(CONTTNUED)

I STATEMENT OF CONIPREHENSIVE INCOME

I
I Gross eamed premiums
Premiums ceded to reinsurance
2,419,065
(15,1,26)
2,479,065
(15,1.26)
Ptemiums, net of reinsuretrs shate
I
2,402,939 2,402,939
Change in UPR (12,079) (12,079)
Ptemiums eatned net of teinsuterts
share 2,390,860 2,390,960

t Claims oaid
Change in clarn reserses
Claims net of reinsurerts share
(7,754,974)
(742,675)
(1,897,649)
(1,,11,7)

(1,717)
(1,156,091)
(742.675\
(1,898,766)

I Other income from insurance. bonus

Net insutance income
Lofiuilsslon rlrcome
493,271 (1,LLt) 492,094

Comrnission expense (446,715) 109,55; (337 J6;\

I Net com-ission income

Interest income
Impairment resewe on invesments held-to-
(446,715',)
206,850 (7,10;)
109,550 (337,165)
r89,743

t maturitv
Other impairrnenr reserves 1,8;
650
7,735
(1,135)
R ?C)R
1,735

I Salaryexpenses
Operating expenses
208,635
-
(227,604)
(8,709)
(111,585)
121,411
-
-
199,926
(111,585)
(106,193)
extrrcnse -
I Profit befote income tax

Corporate income ta-\ expense

Q27r604\
Q4,563)
9,826 (217.778\

Q4.563\
Net profit for thgyear
I
2,964 109,550 112,574
Other comprehensive income
Investments available-for-sale revaluation
reserve 3t-774 31.174

I Total comptehensive income for the year 34,078 - 109,550 143,628

I
I /
I
I
I 20

I
I
LIFE INSURANCE COMPANIY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 3r, 2012 (CONTINUED)

I 6, CASH AND CASH EQUNTEI-ANTS

I Cash and cash equivalents, included in statement of cash flow, as at the end of the year comprise:

I Cash on hand
Cash on cufient bank accouats 177,729
179,281
22,362
23,5'.1.0

I As at December 31, 201,2 araid 2011 cash and cash equivalents iocluded current accounts in Kazakhstani banks
and were denominated in Teoge

l4
fJ 7. TERNIS DEPOSITS IN BANKS

r As at 31 December 2012, amownts due ftom credit institutions compdsed term deposits with Kzzal<htan
II banks generating interesr at rates mngng ftorr' 4,5oh to 9o/o (2011: ftom 7oh to 9oh) pet annum and maturity
in February 201.3 - November 201.5 Q077: N{arch-October 201,2) and wete denominated in Tenge.

I Short term deposits 5,478,586 1,030,000

1c) 705
Accrued interest 152,041

I Term deposits were in the following banks:

I
JSC Eurasian Bank 8% 7,029,140

t JSC AsiaCreditBank
JSC Temirbank
7o/o
4,50/o
1,000,000
785,988
623,844
280,000

301.,225
JSC Delta Bank 7o/o

I JSC Kazlvestbank
JSC Baflk Kassa Nova
JSC Tsesnabank
7%
8%
6%
417,344
402,667
400,000
fl1,02;

JSC Alfa Bank 7% 370,732

I JSC Bank Center Credit

JSC,\TFBank
JSC Alliance Bank'
6%
8%
7%
369,572
231,400 214,g80
150,000
rcry0;

I JSC Kazkom Bank 6% 103,500

JSC Nurbank 9% 230,437
Halvk Bank of Kazakhstan go 102,24',t
TSC
5,630,627 1,049,705 605,000

I 8. REVERSE REPO TRANSACTIONS

I In
of
the Companv entered into reverse REPO agteemeflts on I(azakhstan Stock Exchange. The subject
201,1.,
these agreements were treasury billsrof the Ministry of Finance and NBRI{ notes issued by the
GovCnment of the Republic of Kazakh{tan with a fair vaLue of 559,037 thousands tenge as at December
31,,20L1, with interest rate ngqng fuom 0.035o/o to 6,50/o per anmrm and maturing n January 2072 Q01.0: fut

I value - 60,003 thousands tenge, annual rates from 0.40o/o to 0.41,o/o maturing trl 201,1). As at December 31,
2012 the Company did not have any agreements on teverse REPO agfeements.

I
I zl

I
I LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS'
FOR YEAR ENDED DECEMBER3\,m7?

I 9. INTESTMENTSAVAII-ABLE-FOR-SALE

I Investments available-for-sale comprise:

I Debt securities:
Corporate bonds of Kazakhstan companies
Treasu5' boads of the \{inisgy of Finance and notes of the
1,093,067 250,468 172,097

394,287 423,599 298,648

I National Banl< of the Republic of Kazakhstan

Corporate bonds of KazaLhstan banks
boads of
-- ?33,569

x20,gLt
44,620 40,997
740.345

I
I Corporate bonds of Kazakhstan companies
751,355
JSC National comparr Kazrkhstan
engineenng

I JSC NC Food Contract CorPoration

JSC Atameken -\ro
JSC Fun of Guaranteed insurance benefits
2/10,390
107,207
707
140,277
t70,779
60,772
109,102

8 tz ) )1)

I JSC Kazakhstan \Iortgage ComFanI

RG Brards
1,093Jtri- 250,468
11.
172,091

I Corporate bonds of Kazakhstan banks:

I JSC Sberbank ofRussia

JSC BankCentedredit
ATFBank
40,988

I
I Corporate bonds of foreign companies:

I As at December 31,,2012 investment available-for-sale included accrued interest in the amount

thousand tenge (2011: 1'6,074 thousand tenge).
of 1'9,033

I 10. II{!'ESTNIENTS HELD-T O-MATURITY

Investments held-to-manrnty compflse:

I Debt securities:

I Corporate bonds of Kazakhstan companies

Corporate bonds of Kazakhstan banks
Treasury bonds of the Nlinistry of Finance and notes of the
1,198,740
2U,097
527,038
29t,822
564,018
91,934

National Bank of the Republic of Kazakhstari 50,t97 412

I Less allowance for

1,532,962 863,057

809,73s
698,364
457
907

I 22

I
I LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 37, 2012 (CONTINUED)

I 10. TNVESTMENTSHELD-TO-MATURTTY(CONTTNUED)

I Including:

I Corpotate bonds of Kazakhstan compeniss3

JSC
JSC
Kazakhstan \Iortgage Company
NC Food Contract Corporation
662,774
156,686 158,636
7,092
760,582

I Central Asian Energr Companv 114,379 '1.77,450 708,574

JSC
JSCNlangistauskara Energr Distribution Company - 59,966 63,048 66,1.39
JSCEkoton + 39,665 40,367 20,716
Burlingazstror 36,766 34,M6

I
JSC 33,741.
JSCAstana Nedvizhimost 129,564 773,09t 97,558
LLP Concem Tsesna -\sttk 69.616
7,lggr740 527,038 564,018
impairment (1651330) (53,322)
I Less allowance for
1,033,410 467.776
(54,457)
509.561

I Corporate bonds of Kazakhst^n banks:

JSC Sberbank ofRussia 192,764 199,428

t TSC Eurasian ba"k 91,333

2U,097
92,394
291,822
91.934
97,934

As at December 31, 2012, invesrnents held-to-maturity included accrued interest in amount of

I
32,665
thousand tenge (2011: 40,235 thousand tenge).

The movement in the allowance was as follows:

I
Jarnnry 1 ($$n)
I _(Qitegqltqqqr"ry
December 31
(112,008)
(54,457)
t,735
(165,330) (s3.322\
(54.457)
,54.4s7.)

t During the yeat ended December 31, 2012 the Company identified objective evidence of impairment of
Astana NedvizhimostJSC bonds for amount of 'J.1.2,008 thousand tenge.

I
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T
I LIFE INSURANCE COMPAAIY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER3L,nTZ (CONTINUED)

I 12, INSURANCE RESERVES

t Insurance reserves b,v class of insurance:

I Reserve on annuih' insurance 4,216,690 4,216,690

I Reserve
Reserve
Reserve
on
on
on
life insurance
accident insurance
general insurance
*70
18,231

5,947,566 Q.425.784\
18,231
70
3.975.782
Insurance contract liabilities 10,176,547 (2,025,784\ 8,150,763

I
I 1,729,840 7,729,840

l Reserve on life insurance

Reserve on accident insurance
Reserve on general insurance
Insurance contract liabilities
637
12,920
7,743,397
637
12,920
t,743,39r

I
I Reserve
Reserve
on
on
annuity iasurance
life insurance
989,302 (1,298) 988,004

t Reserve
Reserve
on
on
accident iasu.raoce
general insurance
Insutance contact liabilities
OJJ

989.935 (1,298)
633

988,637

I Insurance reserves by tvp. of liabiliqr

t
4,960,75L 2,946T456
Reserve on not incurred expenses 4,2?3,2m 4,2Tl,l3l
T Reported but not settle4 claims reserve 539,999 539,999
Incurred but not reported claims reserve 441,486 447,486

I Other reserves
Insurance contract liabilities
11,691
10,776,547 (2,025.784\
11,69l
8.150.763

I
I Uneamed premium reserve
Reserve on not incurred expenses
Reported but not settled claims reserve
r2,397
1.,722,586
525
1.2,397
7,722,596
525
Incurred but not reported claims reserve

I
629 629
Other reserves 7.254 - 7 -254
Insutance contract liabilities _ f

I 25

I
I LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS'

FOR YEAR ENDED DECEMBER 3L, 2072

I 12. TNSURANCE RESERVES (CONTINUED)

I Insurance reserves by Tp. of liability (continued):

I Uneamed premium reserFe 318

985,981 (1,298)

I Reserve on not-incurred expnses

Reported but not settled reserve
Incurred but note reported reserve
- 2r0
105
3)Z I
Other reserves

t Insutance contact liabilities

Liabilities on life insurance and annuity insurance can be analyzed as follows:

I
I
I December 3L20n

I WithDPF

l Without DPF

I
709,970
T

I
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I 26

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t
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS'

FOR YEAR ENDED DECEMRER 31' 2012

I L2. INSURANCERESERVES(CONTINUED)

I Reserves on general insurance can be analyzed as follows:

December 31.2012

I Reported but not settled claims reserve 539,999 (12,089) 527,910

44

I Incurred but not reported claims reserve

Reserves on contract liabilities
Uneamed premium resewe
-- 981,485 (1r"089) 969,396
2,946,456
1,636

tr Decembet 3l'2011

ll Reported but not setded claims reserve 525

lr
629
Incurred but not reported claims teserve
Reserves on contract liabilities
1,154
12,397
Uneamed premium reserve

270 210
Reported but not setded claims reserve

ll
105 105
lncurred but not clairns resewe
315 Jl)
Reserves on contract liabilities
318 317
Unearned
633 632

The provision for unearned premiums may be atalyzed as follows:

318
anuarv 1
premiums written drrrjng the
9,827,145 (4,057,L75) 4,769,970 (6) 77,535
yef
Premiums eamed during the
2,043,480 91 6 5++

2,946,456 12,397
December 31

13. INSURANCE AND REINSUR+NCE RECEIVABLES

ot
Insurance receivables comPrise:

28
I
LIFE INSURANCE COMPAIVY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, 2072 (CONTINUED)

I 14. OTHERASSETS

I Other assets comorise:

I lnventolT
Receivables from employees
57,675
'z3,7gl
19,832
5,994
8,214
3,484
74,777 1,099 4,728

I Deferred expenses
Taxes and other payments
Other
*
4,073
2,942
4,054
1,652
1.497
2t9
998
53

I
107,212 30,272 17.477

15. INSURANCE AND REINSURANCE PAYABLES

t Insurance and reinsurance payables comprise:

t ljue to retrsurers
Due to agents and brokers
4811666
281597
30,863
2,1,34
I,JJ Z
51,056
Pqq to policyholders 5,620 r4.265 78.524

I 16, OTHER LIALBILITIES

515,883 47,262 70.912

I Other liabilities comprise:

I Other fi nancial liabilities:

Trade payables to suppliers 14,130 20,577 6,326

I to Fund of

Other non-financial liabilities:

insurance benefits 37
51,579 '/ll \l / r- 7.rA

t
Not setded payments 111,851 22,348
Advances received 60,81t 42,081 fi,21;
Taxes. other tlan income tax 70,234 17,762 5,191
Unused vacation resefve 6,015 9,740 8,339

I Payables to employees
Other
4,501

196,994
3,663

89.754
760
11,578
1.,211
43,527

I 17. TAXATION

I Taxation is performed in accordance with Tax legislation of the Republic of I(azakhstan.

Starti4! fuom January 1, 2ol2insurance /*pu.ri., were transferred from special tax regime to general tax

I regime. The Company is taxed by 20% co{porate tax on net taxable income (2011: special regime). It is worth
of noticing that authorized body did not issue transitional provisions.

I
Deferred tax balances, calculated by upplyt"g the statutory tax rates in effect at the respective reporting dates
to the temporary differences between the tax basis of assets and liabilities and the amounts reportedin the
{tnancid, statements. Temporary differences as at December 31, 201,2 and 2011 mostly were due to difference
in method of tevenue and expense recognition as well as accoundng of value of certain assets.

I 29

I
l LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, 2OI2 (CONTINUED)

I 17. TAXATION(CONTINUED)

I Below disclosure shows calculation of income tax using official fate of 20oh Q017: special regime, 1o/o, 4oh
and 8oh depending on income from insurance) on income before tax expressed in the financial statements
and income tax expenses taken into account in financial statements:

I Current income tax 234,038

(76,337)
Deferred income tax

t Taxable income
217.701

1,003,540
m%
I Official rate

Tax effect ftom petmanent differences:

200,708

Changes in unrecognized deferred tax assets from tax loss carry forwards (8,478)

I Other/Corrections 25,477
217.70L

I Income tax expense

Gross insuraoce premiums
Insurance Dremiums. reinswers' share
2,416,726
(1',339)
Taxable income 2,4L5,397

I Standard tax rate

Income ta-x, using standard tax rate
Income ta-x, using increased tax nte,4oh
1%
24,048
462

I Income ta.x, using increased tax rate,8oh 27

Cutrent income tax exltense 2/11537
Deferred income ta-\ expense ftom uneamed premium reserve,4oh 26
Deferted income ta:( expetrse

I 24,563

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l:HE
I LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 3',t, 2012 (CONTINUED)

I 22. INIVESTMENT INCOME

I Inves tment income comprise:

Intetest income:

I Term deposits in banks

Investments secudties
Reverse REPO transactions
224,379
159,388
3,277
60,105
130,355
848

I Loss from amortizarion of premium -

387,044
(6,538)
380,506
191,308
(1,s6s)
189,743

I 23, COMMISSION EPXENSE

Commission expense compdse:

I Insutance companies and brokers L,795,026 284,435

I ,\gents u4,058
1,639,094
52,730
337 -165

24. OPERATING EXPENSES

I Operating expenses compdse:

I Obligatory contribution to Fund of grraranteed insurance benefits

Education expenses
776,809
67,6m 24;
Rent 52,321 )) )))
t Consulting
I,faterials
Professional service
34,474
26,766
21,445
42
5,682
4,525

I Depreciation and amorttzanon

Bank services
Communication
2L,413
21,156
20,478
11,877
5,551
8,072
Transportation 14,864 3,356

I Nlarketing
Business trips
Repair and maintenance
12,986
5,966
5,252
)7 c)\)
3,809
784

I
Utilities 4,831 567
Orgatization of events 4,1:24 361
Other 72,451 11.204
106,793

I 25. COMMITMENTS AND CONTINGENCIES

I bgn/

In ire ordinary course of business, th{ Co^punv is subject to legal actions and complaints. Management
believes that the ultimate liability, if any, arising from such actions or complaints wiil not have a matenal
I adverse effect on the financial condition or the results
provisions created in these financial statements.
of future operations of the Company and no

I
I JJ

I
t
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, 2012 (CONTINUED)

I 25. COMMTTMENTSANDCONTTNGENCTES (CONTTNUED)

I Taxation

I(azakhstani commercial and tax legislation may lead to different opinions and can be retroactive. Moreover,
the management's interpretation of tax legislation may differ interpretation of tax authorities, operad.ons can
I be disputed by the tax authorities that can lead fees and penalties. The management believes all tax payments
were paid and there is no need for any reserves in the financial statements. Tax authodties can inspect
company's taxation for the last five years.

I Pension

I In accordance with Kazakhstani legislation the Company's personnel receive pension from pension fund. As
at December 31, 201.2 ar,d 201.1. the Company does not have any obligation to pay additional pension
payments, medical setvice after retirement, insurance payments or any other benefits after retirement of its

I current and former emDlovees.

ltate

I As at December 31, 2012 and2011 the Company does not have any obligations related to lease.

Capital Corztnitmentt

I As at December 31, 2012 the Company does not have any obligation related to capitalized costs.

I 26, RISK MANAGEMENT

Risk management is critical matter in insurance activity and is one of the key elements of the Companyt

I business. The main risks the Company is exposed are insurance risk, investrnent rislg credit risk, market risk,
interest risk, foreign exchange risk and liquidity risk. The Company's politics on risk management are
described belovz

Insurance framework
T
The Compaoy sets regulations aod limits on insurance that describe who and what risk can be taken and to

I what amount. Monitoring of these limits is performed by underwriting departrnent on regular basis.

The Companyt Business activity spreads thtoughout the territory of Kazakhstan. The Company's

I reinsurance portfolio in respect to geographical concentration is diversified through foreign reinsurers.

Reinsurance

I In the normal course of business, the Company enters into obligatory reinsurance treaties vzith local and
foreign reinsurers. Reinsurance contracts do not relieve the Company ftom its obligations to policyholders.
The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risks
appeared for similar geographical regions, type of activities or economic characteristics of the reinsurers, to
T mnryze its exposure to significant losses reinsurers'insolvencies.
fom

t Insurance fesefves

The-Company uses acn;anal methods and assumption in estimation of insurance and reinsurance liabilities.
Insurance reserves are disclosed in Notes 12 and 21. The Company performs analysis of changes in such
I fesefves.

I J+

I
 t LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, 2OI2

I 26. RISK MANAGEMENT (CONTINUED)

Investment risk
I The Company follows a number of principles in its investment policies: it makes investments from which it
expects an appropdate return, and the level of accepted risk in appropriate pedod of time. Kazal<h insurance
I companies are highlv tegulated by insurance supervisor in this arca and are not allowed to act as a
professional participant in the securides' market. For this reason, the Company perfotms its investment
activity through a trust management company, vzhich cardes out such operations on the Company's behalf.

il The Companv's Investment portfolio consists of financial instruments that are selected in based on
profrtabitiql maturity and levef of investment risk. Formed in such way Portfolio ptovides steady income for
ihe period of investrnent. Invesrment income usually is reinvested in order to inctease the value of potfolio.

It Insutance risk

ll The principal risk the Compaoy faces under insurance contracts is that the actual claims and benefi.t payments
ot th. drnrg thereof, diffin from expectations. This is influenced by the frequency of claims, severity of
claims, actoalbenefits paid and subsequent development of long-term claims. Therefore, the obiective of the

lr
Company is to ensure that sufficient reserves are available to covet these liabilities.

The risk exposrre is mitigated by diversificadon across alarge portfolio of insurance contracts. The variability
of risks is ilso improoed by carefirl selection and implementation of underwriting strategy guidelines, as well
as the use of reinsurance affangements.

The Company purchases reinsurance as part of its risk mitigation program. Reinsurance ceded is placed on
both a proportional and non-proportional basis. The majority of ptoportional reinsurance is quota-share
reinsurance-which is taken out to reduce the overall exposure of the Company to certain classes of business.

ll Non-proportional reinsurance is ptimarily excess-of-loss reinsurance designed to mitigate the Company's net
.*po*t. to catastrophe losses. Retention limits for the excess-of-loss reinsurance vaf'y by product line and
territory.

Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims
provision and are in accordance uzith the reinsurance contracts. Although the Company has reinsurance
Lt"ng.*.trts, it is not relieved of its direct obligations to its policyholders and thus 1 credit exposure exists

lt with iespect to ceded insurance, to the extent that reinsurer is unable to meet its obligations assumed under
such reinsurance agreements.

The Companv's loss ratio comprises:

Loss ratio, life insurance 0%

Loss ratio firsulance 528o/o

The table below sets out the concentration of the claims liabilities by type of contract:

Life insutance 860,761 860,761

Obligatory and voluntary insurance ftom accidents 5,941,636 (2,025,78;) 31915,852
Annuity insurance 3,374,\50 3r374,750

35
I LIFE INSURANCE COMPA]VY NOMAD LIFE JSC

T NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 37, 2012 (CONTINUED)

I 26. RrSK MANAGEMENT (CONTINUED)

Insurance risk (continued)

I
I Life insurance 242,453 242,453
Obligatory aod voluntarr insurance ftom accidents 13,551 -
I
13,557
Annuity insurance 1,487,387 - 7,487,381
1,743,391 1.743.391

I
I Life insurance
Obligatow and voh:narr insurance from acci.dents
709,970
633
(7,298) 708,672
633
,\nnuin- insurance 879,332 21c) \7)

I Key assumptions
989,935 (1,298) 988,637

I Life insurance contracts

Material judgment is required in determining the liabilities and in the choice of assumptions. Assumptions in
I use are based on past expedence, curellt internal daa, external market indices and benchmarks which reflect
current observable market pdces and other published information. Assumptions and prudent estimates are
determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary

I with&awals. Assumptions are frrrther evaluated on a continuous basis in order to ensure realistic and
reasonable valuadons.

of liabilities
I The key assumptions to rxrhich the estimation

Mortality rates
is particulady sensitive are as follows:

I Assumptions are based on standard industry and national tables, according to the type of contract written.
They reflect recent historical experience and ate adjusted when appropriate to reflect the Company's own
experience. An appropriate, but not excessive, prudent allowance is made for expected future improvements.

I Assumptions are differentiated by sex, age and contract q?e.

An increase in rates will lead to a larger number of claims and claims could occur sooner than anticipated,

I which will increase the expenditure and reduce profits for the shareholders.

Expenses

I Operating expeflses assumptions reflect the projected costs of maintaining and servicing in-force policies and
associged overhead expeflses. The curtent fvel of expellses is taken as an appropriate expense base, adjusted
for expected expense inflarion if appropriate.

I An increase in the level of expenses would result in an increase in expenditure thereby reducing profits for
the shareholders.

I
I 36

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 37, 2012 (CONTTNUED)

I 26. RrSK MANAGEMENT (CONTTNUED)

I Discount rate

Life insurance liabilities are determined as the sum of discounted value of the expected benefits and future

I administration expenses direcdy related to the contracl less discounted value of the expected premiums that
would be required to meet these future cash outflows. Discount rates are based on the current industrv risk
rates, adjusted for the Company's own risk exposu.re.

I A decrease in the discount rates will incease the value of the insurance liabilitv and therefore reduce profits
for the shareholders

I Sensitivity

The analysis which follows is performed for reasonably possible movements in key assumptions with all other

I assumptions held constanq showing the impact on gross and net insurance contract liabilities and profit
before tax. The correlation of assumptions will bave a signific"nt effect in determining the ultimate .l"irtrt
liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on
an individual basis. It should be noted that movements in these assumptions are non-linear.

I
I
I Expenses
rate
?Ioh
m%
(%0.458)
G7.322)
Q60.4s8)
(87.322)
260.458
87.322
Disconnt -10% 523.60L S23.6Ot (523.601)
p"y-eots -10% (36.830)
I Iod.*ation of ilnsurance (36.830) 36.g30

The effect on gross and net insurance contract liabilities due to changes in assumptions is the same since life
insurance resefves ceded to reinsurers is not calculated.
I
I
I Expenses
zoah
20%
62,114)
(3,841)
(42,71,4)
(3,84r)
42,774
3,847
Discount rate -10% 131,005 131,005 (131,005)
payments .
I Indexation of insurance 7o/o 44,8% 44,g% (44,W

I
I Discount rz;te
-70"/o
|\oh
50,731.
50,731
(44,044\
49,433
(42,746\
Q2,855)
79,654

t l!_e nr;ncipal assumption underlying the liability estimates is the Company's future claims development
follow a similar pattern to past claims development experience. This includes assumptions in ^respect of
will

avetage claim costs, claim handling costs and claim numbers for each accident year.

I 37

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 3I, 2OI2 (CONTINUED)

I 26. RrSK MANAGEN{ENT (CONTINUED)

I Sensitivity (continued)

For insurance contracts, claims provisions (comprising provisions for claims incurred but not setded and

I claims incurred but not rq>orted by policyholders, IBNR) are established to cover the ultimate cost of
settling the liabilities in respect of claims that have occurred and arc estimated based on information available
at the reporting date, including potential outstanding loss notifications, experience with similar claims and
case law at the reporting date. The Company has used all possible and currently available information to

I estimate provision for claims reported by policyholdets including claims' adjustment expenses according to
every class of insurance contract.

I As at December 31, 2012 rhe Company does not have enough statistical data for calculation
insurance risks.
of other

I Credit risk

The Company traces reparvment of accounts receivables from insurance and reinsurance on regular basis. For
all bad debt provisions were charged in the financial statement. Counteragents in reinsurance are reliable
I 11lSUrer.

The ruaximum expo.tare to redit rirk

I The maximum exposure car. v ry depending on individual risks related to certain assets and general market
risks. The table below shows the maximum credit risk exposure for the components of the statement of
fnancial position, including dedvatives. The maximum exposure is shown gross, before the effect of
I mitigation through the use of master netting and collateral agreemerits.

I Cash and cash equivalents 4m,755 420,755

I Term deposits in ban-ks 5,630,627 5,630,627
I Investments available-for-sale 7,720,923 1.r7m1923
Investments held-to-maturitv 1,367,631 7,367,631
Insurance and reinsurance receivables 216891637 2,689,631

I 77,829,567 7r.829.567

t Cash and cash equivalerrts 179,281 179,281

Term deposits in banks 1,049,705 1,049,705

I Reverse REPO transactions

Investments available-for-sale
Investments held-to-marurity
559,037
7t8,697
809,735
(559,037)
718,687
809,735

I
Insurance and reinsurance receivables r20,854 120,854

t
I
I 38

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, m7Z

I 26, RISK MANAGEMENT (CONTINUED)

I Credit risk (continued)

The maxinum expovre to credit risk (continued)

I January l,20ll

t Cash and cash equivalents

Term deposits in banks
Reverse REPO transactions
* 23,5t0
605,000
60,003 (60,003)
23,570
605,000

652,08r 652,081

I Investments available-for-sale
I nvestments held-to-maturitY

Insurance and reinsurance receivables

643,907
213,684
643,907
273,684

t Tables below indicate the classification

December 31', 201'2 and 201'1' -
of financial assets of Company by Moody's credit rating as at

I December 2072

I Cash and cash equivalents

Term deposits in banks
Investments available-for-sale
420,755
5,630,627
1,225,699 495,2?A
420,755
51630,627
7,720,923

I 1,327,968 39,664 1,367,632

Investment held-to-maruriw
Insurance and reinsurance receivables I
Sil605'^049

I December 3l'20n

I 1,79,281 r79,281
Cash and cash equivaleats
1,049,705 1,049,705
Term deposits in banks
559,037 559,037
Reverse REPO transactions
Investments available- for-sale 784,909 fi3,77; 718,687

I Investments held-to-maturity
Insurance and reinsurance receivables
513,506 296,229
'l

950,86i
809,735
120,854
437

I
I Cash and cash equivalents
Term deposits in banks
Reverse REPO transactions
23,570
605,000
60,003
23,510
605,000
60,003

I Investments available-for-sale 535,099 71,6,982 652,081

Investments held-to-maturity 368,927 274,980 643,907
In0rance and reinsurance receivables / 2l ztJ
539 605 198.185

T Insurance companies are subject to credit risk related to financial instruments. The Companyb ctedit tisk is
concentrated in the Republic of Kazakhstan. Level of ctedit risk is monitored on a regolat basis in order to

I ensure compliance with the limits in accordance with the Company's policies on risk management.

I 39

I
 I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS'

FOR YEAR ENDED DECEMBER 3L, mp

I 26. RISK MANAGEMENT (CONTINUED)

t Credit risk (continued)

The naxirnun expuure to credit risk (vntinued)

I Table below shows carrying value

by the time of the debt:
of impaired assets and assets that are oot impafued that are also classified

December 2012

Ir
lr Cash and cash equivalents 420,755 420,755

lr
5,630,627 5,630,627
Term deposits in banks
Investments available-for-sale 1,720,923 \7m,923
1,367,631 1,532,961
Tnves tments held-to-maturitY
Insurance and reinsurance receivables

lr December 3l,20l1.

r79,281 779,287
Cash and cash equivalents
7,049,705 r,049,705
Term deposits in banks

ll
559,037 559,037
Reverse REPO transactions
71.8,687 778,687
Investments available-for-sale
Investments held-to- maturity 809,735 $32; 863,057
720
Insurance and reinsuraace receivables
3.490.621

23,570 23,5r0
Cash and cash equivalents
605,000 605,000
Term deposits in banks
60,003 60,003
Reverse REPO transactions
652,087 652,081
Investments available-for-sale
643,907 54,457 698,364
Investments held-to-maturity
213,684 21
Insurance and reinsurance receivables
2,198,185 54,457

e /

40
t
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 37, 2072 (CONTINUED)

I 26. RrSK MANAGEIIIENT (CONTINUED)

I Geographical concentration

The geographic concentration of assets and liabilities indicated in the following able:

I December 3

t Assets:
Cash and cash equivalents
Term deposits in banks
-4m,755
51630,6n
420,755
5,630,627

I
Investments availa$ls-6or-trL \7m,923 1,720,923
Investments held-to-marurirr 1367,631 1,367,631
Insurance and reinsurance receivables 2,699,631 2,689,631
l\,929,567 11,829,567

I Liabilities:
Insurance and reinsurance parables
Other fi:raocial liabilities
491,606
51,579
24,277_ 515,883
57,579

I
543,185 24.277 567.462
Net assets 11,286,383 Q4,277t 17,262,706

t Assets:

I Cash and cash equivalents

Term deposirc 1o 6anks
Reverse REPO transacdons
779,28r
1,049,705
559,037
779,287
L,049,705
559,037
Investments available-for-sale 778,687 778,687

I Investments held-to--o rudlr

Insurance and reinsurance receivables
809,735
720,954
3,437,299
809,735
120,854
3,437,299

I Liabilities:
Insurance and reinsurance parables
Other finanoal liabilities
45,961
20.517
1,301. 47,262
20,517
66,478 1,301 67,779

I Net assets 3,370,821 (1,301) 3.369.520

I Assets:
Cash and cash equivalents 23,510 23,570

I Term deposits in ba.ks

Reverse REPO transactions
Investments available-for-sale
605,000
60,003
652,081
605,000
60,003
652,087

I Investments held-to-maruritv
Insurance and reinsurance receivables
643,907
213,684
2,198,185
643,907
273,684
2,798,1.85

I Insurance and reinsurance payables

Other financial liabilities
70,972
6,326
77,238
70,912
6,326
77.238

I Net assets 2,720,947 2,120,947

I 41

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I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 31, 2012 (CONTINUED)

I 26. RISK MANAGEMENT (CONTINUED)

I Liquidity risk (continued)

The Company does not include insurance reserves in analysis of liquidity, including amourits from reinsures
to fact do not estimated maturity date. Moreover, acttal
I classified as reinsurers' assets, due that reserves have
amount may differ from teserve amount and are not included in the table above.

Market risk
I The Company is also subject to market risk relatdd to open positions in interest rate and currency influenced
by general and specific fluctuations on market. The Company manage market risk by periodic estimate of

I potential expenses resulted ftom negative changes in market conditions, as well as seffing and support of
adequate limits on allowzble losses and requirements in regard to rate of return.

I
I Effect on capital 172,092 (172,092) 77,869 Q1,869)

I Currency risk

In 201.2 the financial assets were denominated in Tenge. Currency risk is the risk of change in value of
finandaJ. instrument due to changes in foreign exchange rates that have effect on financial position and cash

I flouz As at reporting date most of the ftnancial assets and liabilities were denominated in foreign currency,
effect fiom change in foreign currency was non-signifi.cant on the statement of comprehensive income.

I Operational risk

Operational risk is the risk ofloss arising from systems failure, human etror, fraud or external events. W4ren

I controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory
implications, or c rL lead to financial loss. The Company cannot expect to eliminate all operational risks, but
by initiating a rigorous control framework and by monitoring and responding to potential risks, the Company
is able to manage the risks. Controls include effective segregation of duties, access controls, authorisation and
I reconciliation procedures, staff education and assessment processes, including the use of the internal audit.

27. FAIR VALUES OF FINANCIAL INSTRUMENTS

I Below calculation of fm value of financial instruments is matches the requirement of IFRS 32 "Financial
instruments: disclosure and representation" and IFRS 39 "Financial instruments: recognition and estimation".

I Fair value is calculated as cost at which financial instruments can be putchased at trade between
knowledgeable, willing to make such deal, independent, except cases of forced or liquidation sale. Presented
estimation may not express amourits that Company could get at actual sale of available portfolio of financial
instruments.
I bet 31,7-072

I Investments available-for-sale
Decembet 3lr20Tl
Investments available-for-sale
1,720,923

718,687
1,720,923

718,687
January l,20ll
I -\vailable-for-sale investment securities 652,081 652,081

I 44

I
I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
t NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, ?,072 (CONTINUED)

I 27. FAIR VALUES OF FTNANCTAL TNSTRUMENTS (CONTINUED)

t The Company uses the following 3 level hierarchy for determining and disclosing the fair value
instrumenis based on available information:
of financial

I Level 1: quoted (Level 1) - valuation is based on quotes on acdve markets of identical assets and
liabiJities, for which Company has access. Adjustments and package discounts are not attributable
to these finanoal instruments. Due to valuation us based on quotes, which are regulady accessible

I on the active markets, valuadon of these products does not require significant level of judgment.
I*vel 2; techniques for which all inputs are obsewable (kvel 2) - Yiluaion is based on data, for
which all inputs are observable, directly or indirectly, and also valuation based on one or more
observable quotes, received as a result of standard transactions on the market that arc considered
I active: and
Level 3: techniques which use inputs that arc not based on observable market data pevel 3) -
Valuation is based on data, which is not observable and significant for general estimation of fatr
I value.

I
I
Assets:
Cash and cash equivalents 420,755 420,755
Term deposits in banks 5,630,627 5,630,627
Investments available-for-sale \7m,923 1,444,355 Q76,568)

I Investments held-to-maturits
Insurance and reiasurance receivables
1,367,631
2,699,637
1,367,631
2,699,631

Liabilities:
I Insurance and reinsurance payables
Other financial liabilities
Total unrecognized change in unrealized fair value
5151883
511579
515,883
51,579
(276.568\

I
I Cash and cash equiValents '1,79,287
179,281.

I Term deposits in banks

Reverse REPO ftansactions
Investments available-for-sale
r,049,705
559,037
779,697
1,049,705
559,037
71,8,687
Investments held-to-marudw

I
809,735 836,345 26,610
Insurance and reinsurance receivables 120,854 720,954

Liabilities:

I Insurance and reinsurance payables

Other financial liabilities
Totalrunrecognized change ia unrealized f/it value
47,262
20.517
-
47,262
20-577
- 261610

t
I
I 45

I
T
LIFE INSURANCE COMPANY NOMAD LIFE JSC

I NOTES TO FINANCIAL STATEMENTS,

FOR YEAR ENDED DECEMBER 37, 20\2 (CONTINU

T 27. FAIR V-ALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

I
I Assets:
Cash and cash equivalents
Term deposits in banks
23,570
605,000
23,510
605,000

I Reverse REPO transactions 60,003 60,003

Investments available- for-sale - 652,081 618,110
Investments held-to-maruritv 643,907 643,907
Insurance and reinsurance receivables 2r3,684 273,684

I Liabilities:
Insurance and reinsurance payables 70,912 70,912
6,326

I Other financial liabilities

Assets for which fair value approximates carrying value

I For financial assets and financial liabilities that arc liquid or having a short term maturity (less than thtee
months) it is assumed that the carrying amounts approximate their fair value.

I 28. TRANSACTION \ITTH REI-ATED PARTIES

In accordance with IAS 2rl 'T.elated Party Disclosures", parties afe considered to be related if one party has
I the ability to control the other party or exercise signiFrcant influence over the other party in making ftnarrcial
or operational decisions. In considering each possible related party relationship, attention is directed to the
,rbriar.. of the reladonship, and not merely the legal form. Related parties may enter into transactions
I which unrelated parties might nog and transactions between related parties may not be effected on the same
refms, condidons and amounts as transacdons between unrelated parties.

I Related parties or operations with related parties

Disclosute" ate shown belo.qz
in accordance with definition under IAS 24 "Related party

When considering possible relationships betq/een the related parties attention is paid to the substancd of the

I relationships and not only o their legal form.

I
I
I /

I
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I 46

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I
LIFE INSURANCE COMPANY NOMAD LIFE JSC
I NOTES TO FINANCIAL STATEMENTS,
FOR YEAR ENDED DECEMBER 31, 2012 (CONTTNUED)

I 29. SOLVENCY MARGIN ADEQUACY RATIO

I Regulatoty solvency ratio

The Financial Market Supervision Committee (the "FMSC") requires insurance companies to maintain
solvenry margin at the level of no less than one, which is calculated based on the financial statements of the
I Company prepared in accordance with the FMSC instructions. As at 31 December 2011 and 2010, the
Company complies with the solvency margins adequacy ratio which is as in the folloving table:

I Actual solvenc,v margin

Nlinimum solvencv margrr
'7,177,738
7,100,661
1,282,927
850.326
942,803
650,239

t Solvency margin

3CI. SUBSEQUENT E\ENTS

1.51 1.44

t In February and N{arch, 2013 the Company paid advance for purchase of office in business center Nudy Tau
for amount of 350,000 thousands tenge. Office is now under constuction. Construction is to be finished in
third quarter of 201,3.
I In April, 2013, N{vnbayev A.S. became the sole shareholder of the Company by purchasing3loh of ordinary
shares from other shareholders.

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