STATUTORY CAPITAL REQUIREMENTS

3 Months Ended

Jun. 30, 2024

The Company has two insurance subsidiaries operating in Kazakhstan: Freedom Life (a regulated life insurer) and Freedom Insurance (a regulated property and casualty insurance entity). The Law of the Republic of Kazakhstan No. 126-II "On Insurance Activities" (the "Insurance Law") is the main law regulating the insurance sector in Kazakhstan. It establishes a framework for insurance activities, registration and licensing of insurance companies and regulation of insurance activities by the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market (“ARDFM”).

Freedom Life and Freedom Insurance are required to notify and receive verbal approval from the ARDFM of any proposals to declare or pay a dividend on its share capital. The amount of dividends these subsidiaries are permitted to declare is limited to the relevant subsidiary’s realized retained earnings and dividends can only be paid to the extent they will not cause a breach to the minimum solvency and capital requirements of the relevant subsidiary. As of June 30, 2024 and March 31, 2024, Freedom Life and Freedom Insurance were in compliance with the ARDFM dividend, minimum solvency and minimum capital requirements. Freedom KZ in its capacity of an insurance holding is also limited in declaration and payment of dividends if such payment leads to breach of capital ratios applicable to insurance companies Freedom Life and Freedom Insurance.

There are no significant differences between the statutory accounting practices and statements prepared in accordance with U.S. GAAP for the insurance subsidiaries.

In addition, our subsidiaries operate under various securities brokerage, banking and financial services regulations and must maintain such licenses in order to conduct their operations. As of June 30, 2024 and March 31, 2024, we, through our subsidiaries, held: (a) brokerage licenses (i) in Kazakhstan issued by ARDFM and the Astana Financial Services Authority (the "AFSA"), (ii) in Cyprus issued by the Cyprus Securities and Exchange Commission ("CySEC"), (iii) in the United States issued by FINRA, (iv) in Armenia issued by the Central Bank of Armenia, and (v) in Uzbekistan issued by the Ministry of Finance of the Republic of Uzbekistan; (b) a banking license for foreign currency operations license in Kazakhstan issued by the ARDFM; (c) a banking license for corporate and retail banking services in Kazakhstan issued by the ARDFM (including for currency exchange operations); and (d) payment service provider in Kazakhstan is specially registered in such capacity with National Bank of the Republic of Kazakhstan, payment services providers in Uzbekistan and Kyrgyzstan hold licenses from the National Bank of the Kyrgyz Republic and the Central Bank of Uzbekistan, respectively.

The table below presents net capital/eligible equity, required minimum capital, excess regulatory capital and retained earnings as of June 30, 2024 for each of the regulated entities that is material for our condensed consolidated financial statements.


(amounts in thousands)	Regulated activities	Net Capital/Eligible Equity		Required Minimum capital/solvency		Excess regulatory capital		Retained earnings

Freedom KZ	Brokerage	$	98,663	$	392	$	98,271	$	119,274
Freedom Bank KZ	Bank	287,384		180,584		106,800		158,915
Freedom Life	Life Insurance	42,612		11,746		30,866		65,887
Freedom EU	Brokerage	269,057		10,971		258,086		567,393
Freedom Insurance	Property and Casual Insurance	31,981		11,746		20,235		23,447
Freedom Global	Brokerage	133,246		22,597		110,649		161,302
Freedom Armenia ("Freedom AR")	Brokerage	13,055		775		12,280		12,791
Other regulated operating subsidiaries	Other	9,304		154		9,150		(17,652)
		$	885,302	$	238,965	$	646,337	$	1,091,357

According to the requirements of National Bank of Republic of Kazakhstan, the regulator of Freedom KZ and Freedom Life, capital is adjusted through subtraction of non-liquid assets. Consequently, it may result that net capital for regulatory purposes may be lower than retained earnings balances. As per capital requirements Freedom EU regulated by The Cyprus Securities and Exchange Commission and Freedom Global regulated by Astana Financial Services Authority, current year profit is not included within net capital for regulatory purposes, as profits can only be included in net capital after a statutory audit is completed.

The table below presents net capital/eligible equity, required minimum capital, excess regulatory capital and retained earnings as of March 31, 2024 for each of the regulated entities that is material for our condensed consolidated financial statements.


(amounts in thousands)	Regulated activities	Net Capital/Eligible Equity		Required Minimum capital/solvency		Excess regulatory capital		Retained earnings

Freedom KZ	Brokerage	$	107,064	$	413	$	106,651	$	122,416
Freedom Bank KZ	Bank	329,738		196,594		133,144		193,376
Freedom Life	Life Insurance	50,757		12,395		38,362		57,085
Freedom EU	Brokerage	269,424		10,868		258,556		319,484
Freedom Insurance	Property and Casual Insurance	30,011		12,395		17,616		19,773
Freedom Global	Brokerage	16,428		12,352		4,076		117,468
Freedom Armenia ("Freedom AR")	Brokerage	7,317		763		6,554		6,447
Other regulated operating subsidiaries	Other	8,533		155		8,378		(11,665)
		$	819,272	$	245,935	$	573,337	$	824,384

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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